Kansas City Market Reports
Kansas City Industrial Market – 3Q23
The region’s labor market remained historically strong amid shifting macroeconomic conditions. August’s 2.8% unemployment rate was significantly lower than the 4.2% 10-year historical average. Year-over-year, job gains have been most pronounced in the services industry, which is still making up for lost ground during the pandemic. Construction led all sectors in job gains during the past 12 months. Industrial firms are continuing to adjust labor needs. Locally, one out of the three industrial sectors experienced growth during the past year. Construction experienced growth of 5.2%, trade/transportation/utilities remained flat at 0.0% and manufacturing registered negative 5.1%.
Absorption in the third quarter of 2023 totaled 1.5 million SF, down from 1.9 million SF of absorption last quarter but rebounding to a normal level after a slow first quarter. Total net absorption during the past four quarters totaled 11.5 million SF, equating to an increase of 12.3% compared with the average annual absorption during the pandemic period. The 8.6-million-SF construction pipeline decreased significantly as 4.2 million SF delivered to the market during the quarter. As delivered speculative inventory becomes leased, the next construction cycle will offer very few alternatives, leading to a tightening of vacancy. Vacancy increased 70 basis points to 4.9% during the quarter as unleased space across 13 buildings delivered to the market. The increase in vacancy is not due to a weakness in leasing fundamentals, as seen in other markets.
- Average Asking Rent: $5.77/SF
- Vacancy Rate: 4.9%
- Net Absorption: 1,515,539 SF
Kansas City Office Market – 3Q23
The region’s labor market remained historically strong amid shifting macroeconomic conditions. August’s 2.8% unemployment rate was significantly lower than the 4.2% 10-year historical average. Year-over-year, job gains have been most pronounced in the construction, education and health industries, which are still making up for lost ground during the pandemic. Technology firms are continuing to adjust labor needs. Locally, all three office-occupying sectors experienced employment growth compared with the prior 12 months. The financial activities sector led all office-occupying sectors, displaying an increase of 2.7%.
Absorption in the third quarter of 2023 totaled negative 99,958 SF. Total net absorption has averaged negative 286,439 SF per quarter during the past three years, demonstrating a contractionary environment. Net absorption during the past four quarters totaled negative 1.0 million SF. The 497,210-SF construction pipeline has fluctuated between 300,000 SF and 700,000 SF during the past four years with a limited number of major projects. Vacancy and rent both increased year-over-year. Vacancy increased to 16.7% as negative net absorption continued across multiple submarkets. Expansive amenity renovations, combined with solid demand for prime Class A space, drove slow but positive 12-month rent growth of 2.4%.
- Average Asking Rent: $21.80/SF
- Vacancy Rate: 16.7%
- Net Absorption: -99,958 SF
Kansas City Retail Market – 3Q23
In Kansas City and beyond, the outlook for retail real estate is optimistic. Increasing rental rates, decreasing availability and new development projects lacking in the pipeline have created a landlords’ market in the world of retail. We are continuing to see tenants and landlords get creative in filling space, including conversions of office to multifamily, hotel and mixed-use development projects. Entertainment concepts are actively seeking big-box space, and drive-thru concepts are continuing to seek out prime pad sites.
- Average Asking Rent: $15.19/SF
- Vacancy Rate: 4.4%
- Net Absorption: -183,620 SF
Kansas City Capital Markets – 3Q23
The pace of investment activity in the Kansas City market slowed during the past four quarters, with sales volume totaling $2.7 billion, a decrease of 27.4% compared to the prior five-year average. As a leading second-tier market, the Kansas City Metropolitan area ranked fifth out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and retail assets combining for 70.2% of the Metro’s activity. Capitalization rates increased 81 basis points compared with the past 12 months, registering 6.4% in the third quarter of 2023.
- Class A Capitalization Rates: 6.4%
- 12-Month Total Sales Volume: $2.7 Billion
- 12-Month Total Transactions Volume: 194 Transactions
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 compilation of Class-A industrial product that is existing, sublease, under construction or announced and contains a portion of vacancy.View the Report
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