Kansas City Market Reports
Kansas City Industrial Market – 1Q23
The Kansas City industrial sector tightened during the first quarter of 2023. Although the market displayed the first signs of a reduction in the pace of total net absorption during the quarter, the market registered a record-breaking 7.5 million square feet of net absorption in the fourth quarter of 2022, equating to 3.5 million square feet above a six-year record registered in the fourth quarter of 2021. Net absorption during the past four quarters totaled 13.0 million square feet, with projections indicating 14.7 million square feet of total net absorption could occur during the next six quarters. Asking rental rates for modern industrial buildings have increased by 8.1% during the past four quarters and are forecasted to rise at a similar pace for the remainder of the year. Rental rates increased $0.05/SF during the past quarter, up $0.43/SF during the past year.
- Average Asking Rent: $5.71/SF
- Vacancy Rate: 3.80%
- Net Absorption: 541,713 SF
Kansas City Office Market – 1Q23
Market vacancy in Kansas City increased to 16.1%, up 100 basis points from the prior quarter and 200 basis points higher compared with the prior year. The increase in vacancy during the quarter was primarily due to three Class B structures within the Central Business District. Both the Centennial Building, located at 210 W. 10th St., and the Poindexter Building, located at 333 W. 9th St., realized total net absorption of negative 492,690 square feet as the former SS&C Technologies, Inc. Buildings officially converted to vacant space. Total net absorption of negative 340,270 square feet was realized at the former AT&T Building, located at 500 E. 8th St. The market realized an increase in asking rental rates in the first quarter of 2023, as rents climbed to a record high of $21.68/SF, up $0.09/SF from the fourth quarter of 2022. Net absorption totaled negative 720,695 square feet during the first quarter of the year, equating to negative 1.2 million square feet during the past four quarters.
- Average Asking Rent: $21.68/SF
- Vacancy Rate: 16.1%
- Net Absorption: -720,695 SF
Kansas City Retail Market – 1Q23
The Newmark Zimmer Midwest Retail Group anticipates steady demand for retail space. National, regional and local retailers are actively expanding. However, continued pressure on the delivery of retail space due to supply issues in the construction sector will remain an issue, as well as increased construction costs and inflation. The traditionally rigid delivery schedules demanded by retailers will be compromised and require flexibility and creative thinking by all parties.
- Average Asking Rent: $14.86/SF
- Vacancy Rate: 4.4%
- Net Absorption: -110,428 SF
Kansas City Capital Markets – 1Q23
The pace of investment activity in the Kansas City market slowed during the past four quarters, with sales volume totaling $3.5 billion, a decrease of 33.1% compared to the prior year. As a leading second-tier market, the Kansas City Metropolitan area ranked fifth out of the largest thirteen Midwest markets in total sales volume during the past twelve months, with multifamily and retail assets combining for 71.2% of the Metro’s activity. Capitalization rates increased 175 basis points (bps) compared to the past twelve months, registering 7.0% in the first quarter of 2023. Top quantile capitalization rates increased 230 bps compared to the past twelve months, registering 6.3% in the first quarter of 2023.
- Class A Capitalization Rates: 7.0%
- 12-Month Total Sales Volume: $3.5 Billion
- 12-Month Total Transactions Volume: 214 Transactions
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