Kansas City Industrial Market – 1Q26
The market recorded 1.9 MSF of net absorption in 1Q26, bringing the past four-quarter total to 3.2 MSF. While many markets experienced a tepid 2025, Kansas City posted positive absorption, demonstrating its importance as a centralized intermodal hub. Kansas City is benefiting from a broad base of industry types occupying space across the metro. Robust leasing activity drove vacancy down 50 bps during the quarter to 4.5%. Of the 6.9 MSF construction pipeline, 3.9 MSF (56%) is currently allocated to BTS projects; however, this proportion has already declined significantly in 1Q26, as nine spec projects are now under construction and three major developments, I-35 Logistics Park Building 5, K-7 Logistics Corridor and Hedge Industrial Park North Building A, are scheduled to commence in 2Q26. Asking rents increased 3.7% year over year and are expected to continue to increase 3.00% to 4.25% over the next four quarters. Kansas City, the 31st-largest MSA by population, ranks 15th in industrial market size, third in lowest aggregate vacancy rate – sixth lowest in deliveries SF – and 11th largest in under construction SF in 1Q26 and 10th in largest bps vacancy decrease year over year among the top 30 U.S. industrial markets.
- Average Asking Rent: $6.23/SF
- Vacancy Rate: 4.5%
- Net Absorption: 1,864,780 SF
Kansas City Office Market – 1Q26
The market tightened with 463,336 SF of net absorption in the quarter, equating to an impressive 1.1 MSF during the past four quarters. Leasing activity is expected to increase for the remainder of 2026, especially in the Class A segment, as tenants pursue favorable long-term strategies in prime spaces. Vacancy rates for Class A properties are above 18.0% in the Downtown/Crown Center, North Johnson Co., South Johnson Co. and Wyandotte Co. submarkets, offering various opportunities. Office to multifamily conversions in Downtown continue to lessen overall vacancy. Expansive amenity renovations and constant demand for prime Class A space is expected to sustain momentum in 2026. Average asking rents decreased $0.20/SF to $22.87/SF in 1Q26, registering a 0.2% YoY increase. Rental growth should approach the 2.50% to 3.25% range in by year-end 2026.
- Average Asking Rent: $22.87/SF
- Vacancy Rate: 15.2%
- Net Absorption: 463,336 SF
Kansas City Retail Market – 1Q26
Kansas City continues to outperform regional and national retail benchmarks as leasing activity exceeded new deliveries by six-to-one in the past four quarters. Robust tenant demand combined with occupancy levels of 95.4% and limited new supply on the horizon for the remainder of 2026 reflect an expanding growth market. Retail investment volume for all-sized deals peaked at $725 million over the past 12 months, a 55.5% increase year-overyear, with sustained activity in core infill areas and community shopping centers. National brands and local operators will continue to procure in-demand prime space in the Metro as the sector is expected to outperform historical fundamentals in 2026.
- Average Asking Rent: $15.02/SF
- Vacancy Rate: 4.6%
- Net Absorption: -607,186 SF
Kansas City Capital Markets – 1Q26
The pace of investment activity in the Kansas City market accelerated over the past four quarters, with total sales volume reaching $4.2 billion, an increase of 20.6% compared to the prior five-year average. Among the 13 largest Midwest markets, the Kansas City metropolitan area ranked fourth in total transaction volume over the past year, with multifamily and retail assets accounting for a combined 66.1% of activity.
- 12-Month Capitalization Rates: 6.1%
- 12-Month Total Sales Volume: $4.2 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.
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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.
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