Newmark Zimmer’s Kansas City market reports provide a comprehensive overview of current real estate conditions by sector and submarket.

Kansas City Industrial Market – 2Q22

The Kansas City industrial sector ended the first half of 2022 with solid leasing activity, achieving new records for current development and future projects in the pipeline. Although the market displayed the first signs of a reduction in total net absorption compared to the past six quarters, with 1.5 million square feet of net absorption during the second quarter of 2022, projections indicate 16.1 million square feet of total net absorption could occur during the next six quarters. Net absorption during the past four quarters totaled 10.3 million square feet. Increases in land pricing, construction pricing and general demand have pressed rental rates upward in the Metro. However, rent increases have been, to some extent during the past 10 quarters, countered as bulk industrial buildings continued to deliver to the market, pressing the average per-square-foot rate down. Rental rates increased $0.20/SF during the past quarter, up $0.92/SF during the past two years, equating to a 9.7% annual increase.

  • Average Asking Rent: $5.68/SF
  • Vacancy Rate: 4.4%
  • Net Absorption: 1,465,868 SF
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Kansas City Office Market – 2Q22

Market vacancy in Kansas City increased to 14.4%, up 50 basis points from the prior quarter. The market realized an increase in asking rental rates in the second quarter of 2022, as rents slightly increased to $21.36/SF, up $0.11/SF from the first quarter of 2022. While the overall trend in asking rental rates since the second quarter of 2020 continues to increase, tenants are often seeing more concessions in the form of free rent and tenant improvement allowances to offset the increase, as well as longer lease terms to accommodate the ever-increasing construction costs. As trailing 12-month inflation continues at 40-year record levels, real asking rental rate growth is stagnant across many metro markets in the U.S. Total market net absorption in the quarter measured negative 137,877 square feet, bringing the total for the past four quarters to negative 972,582 square feet. Construction projects currently underway total 319,492 square feet.

  • Average Asking Rent: $21.36/SF
  • Vacancy Rate: 14.4%
  • Net Absorption: -137,877 SF
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Kansas City Retail Market – 2Q22

The overall Kansas City retail market tightened year-over-year in the second quarter of 2022, realizing a 110-basis-point decrease in vacancy to 4.9%. Net absorption totaled 1.7 million square feet for the past four quarters, as well as during the past two years due to negative absorption in both the third quarter of 2020 and fourth quarter of 2020. The average quoted rental rate is $14.07/SF, up $0.09/SF from one year ago.

  • Average Asking Rent: $14.07/SF 
  • Vacancy Rate: 4.9% 
  • Net Absorption: 404,369 SF 
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Kansas City Capital Markets – 2Q22

The pace of investment activity in the Kansas City market improved significantly during the past four quarters, with sales volume totaling $4.9 billion, an increase of 53.0% 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 multihousing and industrial assets combining for 71.2% of the Metro’s activity. Capitalization rates decreased 140 basis points (bps) compared to the past twelve months, registering 5.1% in the second quarter of 2022. Top quantile capitalization rates decreased 130 bps compared to the past twelve months, registering 4.0% in the second quarter of 2022.

  • Class A Capitalization Rates: 5.1% 
  • 12-Month Total Sales Volume: $4.9 Billion 
  • 12-Month Total Transactions Volume: 378 Transactions 
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