Multifamily 2020 Year End Report

2020

YEAR END REPORT

WICHITA, KANSAS

MULTIFAMILY

435 South Broadway Wichita, KS 67202 (316) 262-0000 naimartens.com

YEAR END REPORT

WICHITA KANSAS

COVID-19 has affected every aspect of life and business in 2020. This holds true for commercial real estate and the multifamily In Wichita the market across the country. According to the dollar volume of US Census Bureau, nationally 27% of renters reported struggling to pay rent—in Kansas transactions the figure was 25%(1). Transaction volume in 2020 was in the U.S. was down 59% for multifamily nearly double and 61% for all commercial properties yearthat of 2019. over-year in Q2 and Q3(2). Still, multifamily continues to be perceived as the lowest risk investment across all property types due to cap rates. The Wichita market has proven the attractiveness of multifamily investment and has not followed the national trends. In fact, in Wichita the dollar volume of transactions in 2020 was nearly double that of 2019.

Multifamily Dollar Volume Sold - Wichita, KS $200,000,000 $175,000,000 $150,000,000 $125,000,000 $100,000,000 $75,000,000 $50,000,000 $25,000,000 2013

2014

2015

2016

2017

2018

2019

2020

Nationally and locally, the market came to a halt in Q2 2020, but Wichita multifamily came back strong in Q3 with over $84 million in transactions closed in August and September. Two notable transactions led the unprecedented quarter: the 202-unit Class-A River Vista Apartments, built in 2018 and located in downtown Wichita along the Arkansas River, and a four-property portfolio which included more than 600 units throughout Wichita and sold for over $40 million. These two transactions contributed to a record year for multifamily in Wichita, with a total transactions value of more than $175 million.

435 South Broadway • (316) 262-0000 • naimartens.com

The number of units sold in Wichita increased in 2020, surpassing levels of the previous 5 years. The increased dollar volume is due to both decreasing cap rates and demand for quality product. Despite the continuing pandemic and the two-month period during the second quarter with nearly no closed transactions, 2020 is among the strongest years in units sold. Preliminary concerns about the market quickly dissipated as it became clear that in most cases rent collections had not decreased and occupancies remained steady.

This led to multifamily being viewed as the low-risk real estate investment.

Multifamily Units Sold - Wichita, KS 3,000

2,500

2,000

1,500

1,000 2013

2014

2015

2016

2017

2018

2019

2020

Demand for quality assets and the low cost of capital have driven down cap rates on Class B properties in Wichita. In 2020, 75% of transactions were Class B properties, an increase from previous years which saw a closer to even split between Class B and C assets. This shift contributed to the increase in overall transaction dollar volume and the decrease in Class B cap rates. The outlook for the multifamily market is positive. As long as interest rates remain low and there is no significant decline in rent collections or occupancies due to COVID-19, it is expected this trend will continue and 2021 will be another strong year for Wichita multifamily.

Multifamily Cap Rates - Wichita ,KS 9.00% 8.50% 8.00% 7.50% 7.00% 6.50% 2016

2017 Class B

2018

2019

2020

Class C

References: (1) – US Census Bureau Household Pulse Survey Week of October 12 (2) – Real Capital Analytics

MULTIFAMILY TEAM Over the past 6 years...

50+

MULTIFAMILY TRANSACTIONS CLOSED

Jeff Englert (316) 847-4924 jenglert@naimartens.com

$200,000,000+

IN MULTIFAMILY PROPERTIES SOLD

Nathan, Farha CCIM (316) 263-9669 nfarha@naimartens.com

435 South Broadway Wichita, KS 67202 (316) 262-0000 naimartens.com

4,000+ UNITS SOLD

Trent Garman (316) 210-2061 tgarman@naimartens.com