As the multifamily sector evolves in 2025, we at TownSquare Capital are keeping a close eye on where the next wave of smart opportunities lies. While many investors are reeling from oversaturation in Sunbelt markets, we’re focusing on supply-constrained Midwest metros with strong fundamentals and sustainable rent growth. One market that has our attention right now is Kansas City — and for good reason.
Multifamily Moves Toward Balance
According to Apartments.com, apartment absorption nationwide is up 35% year-over-year, a sign that the market is steadily regaining balance. While rent growth remains modest overall, Midwest markets are outperforming. Kansas City led the nation in rent growth in Q1 2025 at 3.5%, supported by limited new supply and strong demand fundamentals.
Meanwhile, many Sunbelt markets like Austin, Denver, and Phoenix are digesting a flood of new deliveries, with negative rent growth and softening occupancy. A recent panel of institutional investors confirmed that some of these markets may take another 1-2 years to stabilize. We’re not out of those markets entirely, but we’re pivoting our strategy to focus on where the numbers make more sense right now.
Why Kansas City?
Kansas City has climbed into the top 5 rental markets nationally according to RentCafe’s rental activity rankings. Listing availability is down 7%, and renter interest is up sharply (23% increase in favorited listings). We see this as evidence of healthy demand in a constrained supply environment — a recipe for continued rent growth and value-add potential.
With a central U.S. location, a diverse employment base, and relative affordability, Kansas City is drawing interest from renters across the Midwest and beyond. And as larger metros become less affordable, Kansas City stands out as a market that offers upside without overpaying.
Demographics Are on Our Side
The millennial generation, now in their 30s and 40s, is forming families, delaying homeownership, and renewing leases at historic rates. Apartment living has become a lifestyle choice, not just a temporary stopgap. At the same time, housing affordability remains a challenge, with the cost of owning a home nearly twice the average rent. That affordability gap is driving sustained demand for quality rental housing in markets like Kansas City.
Our Strategy at TownSquare Capital
We continue to focus on two core investing strategies:
- Local acquisitions (15-40 units) within a 4-hour drive of Knoxville, TN, where we operate properties directly with third-party management.
- Capital allocation partnerships with experienced operators in strong markets like Dallas, Charlotte — and now Kansas City, where we can leverage local expertise to access larger, institutional-quality deals.
We’re always looking ahead, guided by data and long-term fundamentals rather than hype or headlines. And right now, Kansas City checks all the right boxes: rent growth, renter demand, stable occupancy, and affordability.
If you’re a busy professional wondering where to place your next investment, let’s talk. Multifamily real estate, when chosen wisely, can offer predictable income, tax advantages, and long-term wealth creation — and markets like Kansas City are showing us where the smart money is headed.
— Tom Kirkpatrick
Founder, TownSquare CapitalSource: GlobeSt / ALM Global, LLC (2025)
