Why FRH targets Kansas City

Demand drivers

Population and jobs

• The Kansas City MSA had 2,270,682 residents on July 1, 2025 (Census Vintage 2025) ¹.
• From 2024 to 2025, Johnson County, KS added 6,074 residents and Jackson County, MO added 3,871. Cass County, MO grew 1.7%, the fastest rate in the metro ².
• Total nonfarm employment rose by 8,500 jobs (+0.7%) from August 2025 to August 2026, per preliminary BLS data. BLS does not rate the change as statistically significant ³.

Employers and anchor investments

• Panasonic Energy, De Soto, KS. The EV battery plant opened in July 2025. As of February 2026 it employed about 1,400 people and was ramping toward half of its production capacity. It projects about 4,000 employees at full capacity, and two lines in a second wing are expected to run in 2027 ⁴. We treat De Soto, Lawrence and Olathe as growth-driver submarkets of Kansas City, and we underwrite to jobs that actually exist, not to the full-capacity number.
• Logistics and industrial. CBRE reported Kansas City industrial vacancy at 4.1% in Q3 2026, with 2.1 million sq. ft. of net absorption and 3.8 million sq. ft. under construction ⁵. That tight market supports demand for older shallow-bay and flex space.

Infrastructure

• The metro is served by BNSF (including Logistics Park Kansas City), Union Pacific, Norfolk Southern and CPKC, and sits where I-35, I-70, I-29 and I-49 meet. The Missouri River adds barge terminals, at modest volume.
• Public DC fast-charging coverage is moderate: Missouri has 896 DC fast ports and Kansas has 388 ⁶.

Housing supply and affordability

New supply is the near-term headwind. Northmarq counted about 6,300 units under construction in mid-2026. Net absorption fell below 100 units in the first half of 2026, and Northmarq expects vacancy to reach about 8% by year-end as completions near a decade high ⁷. That pressure falls mainly on new Class A lease-ups. Older, lower-tier product has held up better. Asking rents in North Kansas City, Gladstone/Liberty and Independence rose an average of 3.1%, and the median lower-tier sale price rose 29% to $129,300 per unit ⁷.

For FRH this matters in two ways. First, competition from new lease-ups will cap rent growth at the top of the market for the next few quarters, so we underwrite flat-to-modest rent growth. Second, cap rates averaged about 5.2% in the first half of 2026 ⁷. That sets the bar for our yield-on-cost test of market cap rate plus 150 bps, which favors buildings where renovation and management can move NOI.

Where FRH strategies fit

Captured within about 75 minutes: Lawrence, Topeka (about 1h05), St. Joseph (about 55 min), Olathe, Lee's Summit, Leavenworth and Warrensburg. Drive times are approximate.

Key risks

• Supply overhang. About 6,300 units under construction and rising vacancy will pressure Class A rents and concessions through at least 2026 ⁷. Older buildings can still feel that pressure through renters moving up.
• Modest job growth. The +0.7% job gain is not statistically significant ³. We do not count on battery-plant hiring beyond what has been reported.
• Two states, many jurisdictions. Property tax, licensing and landlord-tenant procedure differ between Missouri and Kansas and from one city to the next. We underwrite each address under its own rules.
• Pricing has moved. A 29% jump in the lower-tier median sale price ⁷ means fewer bargains. Our basis discipline has to hold even if it means fewer deals.