By Doug Stockman, Helix Architecture + Design
Straddling two states, Kansas City is one of the country’s most distinctive real estate markets. Since 1992, our firm has designed workplace, cultural, higher education and multifamily projects of all types in the city, with specialized expertise in adaptive reuse. We see multifamily as the most active segment in 2026.
Compared with other states, Missouri’s support for new housing projects is about average. Kansas is near the bottom, because the state lacks the revenue to incentivize housing. Inventory on the Kansas side is also less, with most multifamily housing located outside the city.
Looking ahead, low-income housing tax credit (LIHTC) incentives will ideally accelerate Kansas City’s biggest market demand — affordable housing. The Kansas City Affordable Housing Set-Aside Ordinance presents some obstacles. To receive city subsidies, multifamily developments must have 12 or more units, 20 percent of which need to be affordable for households earning 60 percent or less of the area median income (AMI). Alternately, developers can pay $100,000 into the city’s Affordable Housing Trust Fund.
Further, developers must navigate a complex process of zoning approvals and community engagement meetings that culminates with a city council hearing. If approved, developers on the Missouri side must also comply with the city’s MBE/WBE program to receive the incentives. Since the ordinance went into effect, the Downtown Council of Kansas City estimates only 35 to 50 affordable units have been built downtown.
Most market-rate developers who worked in Kansas City five years ago have fled to the suburbs, where green fields, lower taxes and fewer restrictions make projects more cost effective. Thus far, Helix remains committed to designing projects that improve lives for our fellow Kansas City neighbors, and we remain hopeful that some of those opportunities come from a consistent level of reinvestment within the urban core and historic neighborhoods.
Potential solutions
The housing shortage coincided with the rise of the short-term rental market, specifically Airbnb and Vrbo. I don’t think we’ve fully understood the impacts these companies have had on housing availability.
If the federal government supported a sustainable, long-term affordable housing program through HUD, that would level the market’s peaks and valleys. Climbing out of the valleys is slow in markets such as Kansas City, where the market can’t support significant annual rent increases. A pipeline would help sustain the market at all socioeconomic levels.
If we stop making upper-market units, people will move down to the next cost level to find housing. Then mid-level renters are forced down. At the lowest end of the rent structure — the most affordable units — people will be pushed onto the street; Los Angeles is one case study. Consistent federal subsidies could mitigate this cascade effect.
Lower construction costs
In 2026, I think the administration will continue to pressure the Fed to cut interest rates. If that actually unfolds, it might trigger investors to reposition some of their investments from the stock market back to real estate.
Although construction financing might be more affordable in 2026, materials and labor costs will continue to be a challenge. We estimate that as much as 90 percent of the products that go into our projects come from overseas and are potentially subject to tariffs. That said, construction costs definitely tempered in 2025, reversing the previous trend of supply chain shortages and escalating prices.
Beyond 2026, onshoring of manufacturing will eliminate tariffs, but the cost of domestic labor could keep materials prices comparable to current levels — unless the majority of manufacturing can be automated.
Adaptive reuse, micro units
Office vacancies lead to residential conversion conversations. Kansas City’s West Bottoms neighborhood is best suited for adaptive reuse conversions right now, led by developer SomeraRoad Inc. These industrial buildings are more viable for conversion than large floorplate offices, thanks to heavy timber construction and lofty spaces.
One successful adaptive reuse project we recently completed in the Power & Light District involved the conversion of the Historic Register-listed Midland Office Building into Midland Lofts for The Cordish Cos. The Midland building’s numerous windows helped make it viable for housing. To address a shortage of worker-attainable housing, we designed micro unit studios as small as 300 square feet to offer monthly rents under $1,000, and also to increase the number of units.
Odd-shaped spaces in the building, which formerly housed a bowling alley, became community areas: coworking space, a fitness center, commercial kitchen and more. Amenities that aren’t accommodated in the apartment building are available within the neighborhood.
The pandemic created the desire for larger spaces, features particularly attractive to aging renters who have resources but don’t want the maintenance obligations of owning a house. However, we see low-income and worker-attainable multifamily housing as Kansas City’s two prominent market needs in 2026.
A shining moment for Kansas City is the completion of the streetcar extension from the Plaza to the University of Missouri-KC. Once the entire project is completed, it will tie together three major economic nodes. We foresee transit-oriented development opportunities along the line for quite a while, including several multifamily projects.
Doug Stockman is principal and director of architecture with Helix Architecture + Design. This article originally appeared in the January 2026 issue of Heartland Real Estate Business magazine.