Kansas City Industrial Market – 1Q25
The region’s labor market remains resilient in the face of broader macroeconomic uncertainty. February’s unemployment rate stood at 4.3%, 40 basis points above the 10-year historical average of 3.9%. Year-over-year, job growth has been strongest in the services sector, which continues to recover. Education and Health led all industries in job gains over the past 12 months, followed by Financial Activities and Government. Industrial firms are recalibrating workforce needs. Locally, employment increased in one of three key industrial sectors: Manufacturing, up 0.2%.
The market recorded 7.5 MSF of positive net absorption in first-quarter 2025, the second-highest quarterly absorption total in the market’s recorded history. The absorption was a result of three primary factors: multiple build-to-suit deliveries (Ace Hardware in 1.5 MSF, Blue Buffalo in 727,350 SF and Heartland Coca-Cola Bottling in 677,000 SF); bulk building leasing (USPS subleased the 1.1-MSF Coleman building); and above-average first quarter demand resulting from a softer-than-expected 4Q24. While steady demand and a slowing speculative construction pipeline drove vacancy down 90 basis points year over year to 4.6%, the elevated net absorption recorded in 1Q25 is not expected to become a continuing trend.
- Average Asking Rent: $6.00/SF
- Vacancy Rate: 4.6%
- Net Absorption: 7.5 MSF
Kansas City Office Market – 1Q25
The region’s labor market remains resilient despite uncertain macroeconomic conditions. February’s unemployment rate of 4.3% was 40 basis points above the 10-year historical average of 3.9%. Year-over-year, job growth has been strongest in the services sector, which continues its post-pandemic recovery. Education and Health led all industries in job gains over the past 12 months, followed by Financial Activities and Government. Professional business and technology firms are recalibrating their labor needs, with two of the three office-occupying sectors reporting year-over-year employment growth.
The market recorded 75,411 SF of net absorption during the quarter, bringing the four-quarter total to 269,465 SF. This marks the third 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 120,100 SF currently under construction. Vacancy decreased by 10 basis points to 16.4% 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 0.8%.
- Average Asking Rent: $22.97/SF
- Vacancy Rate: 16.4%
- Net Absorption: 75,411 SF
Kansas City Retail Market – 4Q24
The Kansas City retail market remained stable in Q4 2024, with steady leasing activity and strong demand for retail space. Vacancy rates experienced minimal fluctuations, reflecting high occupancy levels, while rental rates saw moderate increases, particularly in high-traffic and mixed-use areas. Consumer spending remained solid, supported by holiday shopping, though inflationary pressures tempered overall growth. New retail developments were limited, with a primary focus on mixed-use projects, and investor interest persisted in well-performing submarkets.
- Average Asking Rent: $14.92/SF
- Vacancy Rate: 3.7%
- Net Absorption: 37,885 SF
Kansas City Capital Markets – 1Q25
The pace of investment activity in the Kansas City market increased during the past four quarters, with sales volume totaling $2.7 billion. As a leading second-tier market, the Kansas City Metropolitan area ranked sixth out of the 13 largest Midwest markets in total sales volume during the past 12 months, with multifamily and industrial assets combining for 70.8% of the Metro’s activity.
- 12-Month Capitalization Rates: 7.1%
- 12-Month Total Sales Volume: $2.7 Billion
State of Space Report – Kansas City Office Market
The State of Space Report is a snapshot of the current Kansas City office market and provides detailed information that is useful for both owners and occupiers of office space throughout the Kansas City metropolitan area.
Download PDF
Big Box Report – Kansas City Industrial Market
The Big Box Report is a summary of all existing, under construction and announced Class-A vacancy in the Kansas City Metropolitan market. Inquire with the Industrial & Logistics Heartland Team to receive the report.
Request ReportSuccessful Strategies from Beginning-to-End.
We believe real estate decisions should be made with consideration of long-term goals. We articulate goals and objectives with our clients up front and propose strategies with a clear understanding of the execution.
Contact Us