NAI Martens 2021 Year End Multifamily Report

2 0 2 1 WICHITA KANSAS YEAR END MULTIFAMILY REPORT

Ridgeport Apartments

1330 E. Douglas Ave. Wichita, KS 67214 (316) 262-0000 naimartens.com

YEAR END REPORT Multifamily investments in the Wichita MSA stayed strong through the end of 2020 and throughout 2021. The total value of transactions in the market hit a record level in 2020, and the 2021 total surpassed it. Transactions were steady throughout 2021, with the most notable over the past 12 months being the Fidelity Management portfolio consisting of seven properties and 730 units; Riverwalk Apartments, a 558-unit complex in southeast Wichita; Horizons East on Rock Road, a 288-unit Class B property; and SunStone at Marketplace in Andover, a 208-unit Class A property. These sales helped make 2021 a record year for Wichita multifamily, with transactions totaling nearly $240,000,000 in value.

Multifamily Dollar Volume Sold - Wichita, KS $275,000,000

2021 MULTIFAMILY The demand for quality investment properties with low cost of capital has continued to drive down cap rates, most notably in the Class C market. The lack of available on-market properties, mixed with unmotivated sellers, has also encouraged cap rates to drop and prices to increase. Class A and B rates have been mostly steady over the last year, with Class A averaging approximately 5.5% to 6.0% - similar to 2020 - and Class B dipping below 7.0%. – slightly under the 2020 average. Class C saw the biggest change with a 100-basis point decrease from 2020 and the average cap rate dipping below 8.0%. Occupancy escalations, along with rental rate increases (approximately 9% year-over-year from 2020 to 2021), have also created a rise in demand along with an increase in overall volume.

$225,000,000

Multifamily Cap Rates - Wichita, KS $175,000,000

9.0% 8.5%

$125,000,000

8.0% 7.5%

$75,000,000

7.0% $25,000,000 2013

2014

2015

2016

2017

2018

2019

2020

2021

6.5% 6.0% 5.5%

Multifamily Units Sold by Class - Wichita, KS

5.0%

4,000

2018

3,500

2019 Class A

3,000

2020 Class B

2021

Class C

2,500 2,000 1,500 1,000 500 0

2013

2014

2015

2016

Class A

2017

2018

Class B

2019

2020

2021

Class C

The number of units sold in Wichita again increased, surpassing annual levels from the past decade. As in years past, Class B and C units made up the majority of sales, with the two accounting for 91% of units sold in the market in 2021. Wichita saw a record-breaking 3,700 units sold in 2021, more than 1,100 over the record 2,600 sold in 2020. For reference, from 2013 to 2019 an average of about 2,100 units sold per year.

The outlook for multifamily investments in 2022 is very positive. The Wichita MSA was able to weather the Covid-19 storm. Rent collections remaining high along with low interest rates led to multifamily being one of the safest real estate investments in the marketplace. Investor confidence and stable properties will allow for cap rates to remain at all-time lows, while demand for multifamily investments is still high. Available supply in the marketplace will be the biggest hurdle to overcome in 2022; along with potential interest rate increases, which could affect cap rates and transaction volume moving forward.

1330 E. Douglas Ave. • Wichita, KS (316) 262-0000 • naimartens.com

MULTIFAMILY TEAM Jeff Englert

Senior Vice President (316) 847-4924 jenglert@naimartens.com

NEARLY 100 MULTIFAMILY TRANSACTIONS CLOSED Nathan Farha, CCIM Senior Vice President (316) 263-9669 nfarha@naimartens.com

$300,000,000+

Trent Garman

Multifamily Specialist (316) 210-2061 tgarman@naimartens.com

IN MULTIFAMILY PROPERTIES SOLD

Carla Sandwell

Assistant (316) 928-8612 csandwell@naimartens.com

1330 E. Douglas Ave. Wichita, KS 67214 (316) 262-0000 naimartens.com

6,000+ UNITS SOLD