Newmark Zimmer’s Kansas City market reports provide a comprehensive overview of current real estate conditions by sector and submarket. Newmark Zimmer is constantly monitoring market indicators, tracking and analyzing supply and demand drivers, cyclical patterns and industry trends. The following quarterly research data examines the multifaceted Kansas City commercial real estate market.
The Kansas City industrial market recorded 315,126 SF of positive net absorption in second-quarter 2025, following the second-highest quarterly absorption total in the market’s recorded history (7.5 MSF) in 1Q25. Robust leasing activity was ongoing in late second-quarter to early third-quarter with the expectation that this will translate into strong net absorption for 3Q25. Steady demand and a slowing speculative construction pipeline drove vacancy down 40 basis points year over year to 5.1%. Of the 6.9 MSF construction pipeline, more than 6.3 MSF (92%) is currently dedicated to build-to-suit projects including Panasonic’s 4.7 MSF, Amazon’s 630,000 SF and Church & Dwight’s 553,000-SF distribution center.
The Kansas City office market recorded 116,174 SF of net absorption during the quarter, bringing the four-quarter total to 1.1 million SF. This marks the fourth consecutive quarter of positive absorption, driven by tenants capitalizing on favorable leasing conditions. The non-owner-occupied construction pipeline has remained inactive since the fourth quarter of 2018, with just 108,600 SF currently under construction. Vacancy decreased by 10 basis points to 16.1% and is expected to edge down toward 16.0% as the market continues to stabilize. Asking rental rates are anticipated to soften in the coming quarters, following a modest year-over-year increase of 1.1% to $22.96/SF.
The Kansas City retail market continues to outperform regional and national retail benchmarks as leasing activity exceeded new deliveries by more than six-to-one during the past year. Occupancy levels of 95.9% combined with a 2.3% year-over-year rent increase reflect solid tenant demand and limited new supply. Retail investment volume for all-sized deals topped $520 million over the past 12 months, with sustained activity in core infill areas and community shopping centers. Leasing velocity remains robust across both national brands and local operators, with many tenants locking in terms of further tariff-induced price increases.
The pace of investment activity in the Kansas City market increased during the past four quarters, with sales volume totaling $2.6 billion. As a leading second-tier market, the Kansas City Metropolitan area ranked sixth out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and industrial assets combining 73.2% of the Metro’s activity. Average capitalization rates across all property types increased by 40 basis points compared with the past 12 months, registering 7.1% in the second quarter of 2025. Net absorption across the industrial, office, and retail sectors totaled 11.4 million SF over the past four quarters, an increase of 184.6% compared with the preceding year. Multifamily realized 4,909 units of net absorption during the past four quarters, an increase of 20.7% during a similar period a year ago.
For a more detailed view of the industrial, office, retail and investment commercial real estate markets, please visit the research section of Newmark Zimmer’s website. Additionally, national reports and market insights are available online through Newmark.
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