OAK IQ INVESTMENTS • MARKET PERSPECTIVE • Q1 2026 KANSAS CITY MULTIFAMILY MARKET RECAP

Why We’re Still All In on Kansas City Multifamily

The markets nobody talks about are often the ones quietly outperforming. Here’s why Kansas City remains our conviction market in 2026 and beyond... and the numbers backing it up.

Conventional wisdom in multifamily investing goes something like this: follow the growth, follow the migration, follow the headlines.

For the last few years, that pushed capital toward markets like Florida, Austin, Phoenix, and Nashville. Everybody saw the population surge data and made the same call.

But in this Q1 2026 Kansas City multifamily market recap, the scoreboard on that call looks rough. Austin posted negative 5.4 percent rent growth.

Phoenix was down 3 percent. Denver was down 3.6 percent. Tampa vacancy crossed 10 percent. Jacksonville hit 12 percent.

Cape Coral lost 9 percent of rents in a single year.

Understanding Where Every Market Sits Right Now

Not all markets are experiencing the same thing. There are three distinct buckets, and which bucket a market is in determines which way the wind is blowing, and whether you're operating with the wind or against it.

Bucket 1

Supply Constrained

Kansas City. Cincinnati. Cleveland. Milwaukee. Chicago. Upper Midwest and parts of the rustbelt. These markets didn't get overbuilt in the last cycle, but maintain steady demand. Almost nothing under construction. Best rent growth in the country, quietly.

Bucket 2

Overbuilt,
But Recovering

Phoenix. Nashville. Denver. Columbus. Got hammered by supply. The current construction pipeline is collapsing, and the demand is still real. These markets should rebalance, but it could still take a couple of years. Patience is key.

Bucket 3

Overbuilt + Structural Headwinds

Florida metros. Houston. Austin. San Antonio. Same supply overshoot as Bucket 2, plus insurance costs, property taxes, and input cost inflation that typically doesn't normalize when supply does. (When was the last time your property taxes went down? Exactly.)

Kansas City at 3.7 percent rent growth. Chicago matching it. Nobody is writing headlines about these places. That's the point. The opportunity is almost always in the market nobody's talking about. Not because it's second-rate, but because it hasn't been over-loved yet.

And there's a structural reason these markets keep outperforming: the cost structure is simply better. Property insurance in Florida averages nearly $6,000 a year per property, more than double the national average, roughly three times what you pay in Ohio or the Midwest. Texas carries some of the highest property tax burdens in the country. These aren't cyclical headwinds. They're permanent costs that suppress profit margin, and they are built into the operating model.

In Kansas City, those inputs are stable. Operating costs are more predictable. And when rents grow, more of that growth flows through to NOI instead of being absorbed by insurance ortaxes.

"Growth is not safety. Growth is not yield. And growth, all by itself, does not protect your capital."

Why Higher Rates Are Actually a Tailwind for KC

Most people hear "higher-for-longer" and assume it's bad news across the board. For supply-constrained markets, it's the opposite.

Higher financing costs make new development harder to pencil and capitalize in most markets. That means fewer new development starts. Fewer starts mean less new supply coming online in 2027, 2028, even 2029.

Markets that were already tight get tighter. Subsequently rents continue to move up. The cash flow thesis only gets stronger with market capital constraints.

For the Bucket 3 markets, the dynamic is uglier. Sponsors on floating rate debt can't refinance. Insurance keeps climbing. Property tax assessments induce panic attacks. The margin doesn't ease, and the growth headlines just aren't enough to cover the structural costinflation.

That's the difference between a cyclical correction and a structural problem. And it's why where you invest matters as much as what you invest in.

The Reserve at Copper Creek: Proof of Concept

We broke ground on The Reserve at Copper Creek in Lenexa, Kansas at the end of 2025. Vertical construction is underway right now. Hold your applause... but, it's kind of a big deal.

And the numbers at the project level tell the full Kansas City story.

Hard costs for luxury multifamily in Kansas City are running $175–$250 per square foot. Our GMP contract on The Reserve at Copper Creek came in at $176. Across most coastal gateway markets, the same product costs $300, $350, $380 or more per square foot. In many cases, those markets are delivering lower rents per square foot than Kansas City right now, due to elevated vacancy and concession pressure.

The math creates a margin of safety that simply doesn't exist in overheated markets. You're building at a lower cost basis. You're delivering into a market with less competitive supply. And you're capturing rent premiums in a submarket, Johnson County, that attracts exactly the high-income renter who wants a luxury product and will pay for it.

The spread between what it costs to build and what the market will pay in rent is the core of the investment thesis. You can't just "find a cheaper place to build" or "find a cheaper way to build." You have to find a market where the rent-to-cost ratio justifies the capital stack and still leaves room for investor returns.

In most markets, the build cost bar is taller than the rent bar. The math doesn't work, at least not without significant appreciation assumptions or compressed yield expectations. In Kansas City, it flips. The rent bar leads. That's a fundamentally different risk profile, and it'sthe reason we broke ground when we did.

Three Questions to Ask Before You Allocate Capital

Before placing capital in any multifamily opportunity, there are three questions that separate the right market from the wrong one:

Those three questions tell you which bucket you're in. And over the next three to five years, the bucket matters more than the headline growth story you heard at a conference.

The Bottom Line

Kansas City is not a story about chasing the next hot market. It's the opposite. It's a story about recognizing that the quiet, overlooked, cost-stable market with real demand and no supply pressure is the right answer, even when it doesn't make for a good cocktail party conversation.

The Reserve at Copper Creek is proof the thesis works at the project level. Hard costs locked at $176 per square foot. Luxury finishes. Strong submarket demand. Rent targets above $2 per square foot. Ground broken. Vertical construction underway.

We said Kansas City in 2025. We're saying it again in 2026. The fundamentals haven't changed. They've only gotten stronger as the higher-rate environment chokes off new supply and leaves the market tighter than it was when we started.

If you want to understand how we underwrote this deal, what the full capital structure looks like, or how the submarket thesis holds up under stress, reach out. We're happy to walkthrough it.

Oak IQ Investments• Caleb Edwards, Managing Partner

This communication is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security. Past performance is not indicative of future results. All projections are forward-looking and subject to change.