As the rental demand booms and the multifamily industry continues to flourish across the country, we find both investors and lenders everywhere are continuing their efforts to meet the demands.

Seeking a better understanding of these market trends, we take a closer look at one of the most active markets in the country, the City of Fountains Kansas City, Missouri.

Our case study finds the Kansas City metropolitan area has 16 separate construction project with a reported 3,520 units either recently finished, currently in progress, or prepared to break ground this year. These projects look to invest approximately $475 million into the community and looks to be a major job creator for the area.

When looking back at the last decade or so, 2013 has turned out to be Kansas City’s best year for construction growth since the 2001. Banks across the country know that as the need for affordable rental units go up, so does the occupancy rates of area apartment buildings.

The average rent in Kansas City has gone up 7.1% compared to the national average of only 6.1%, to hover right around $744.36 a month. The national average, according to Reis firm, has averaged just over $1,109 a month since 2008.

In addition Reis reports Kansas City’s vacancy rate to be 4.4% as of the second quarter of 2013, which is down about 2.8% since this same time in 2008 and right on par with the national vacancy rate average of 4.3%.

As this trend continues to emerge, bankers see a public that now prefers to rent rather than purchase as an opportunity. When this fact is coupled with a rise in rents and low vacancies it seems the banking industry has found its next place to invest.

It’s for this reason that the area banks and lending institutions are so willing to lend money for this type of construction project even though the commercial real estate market on the whole isn’t necessarily back on its feet yet.

According to the HBA of Greater Kansas City, this trend has seen local government agencies issuing a whopping 229% more building permits this year compared to this time last year. Another recent study posted by Market Square reports that Kansas City’s “supply and demand” ranking for the multi-family market falls in the country’s top 25%, while to contrast that ranking we find that the commercial office market in the area received a score that lands within the country’s bottom 25%.

This type of venture is considered speculative at best by lending institutions, but with all the data supporting the incredible potential, it seems banks are responding aggressively towards these new construction deals.

Are you a multifamily or apartment investor? Have you seen these same trends in your local markets?