Kansas City Industrial Market – 4Q24
The region’s labor market remains historically strong despite evolving macroeconomic conditions. November’s unemployment rate of 3.6% was 30 basis points below the 10-year historical average of 3.9%. Year-over-year, job growth has been most notable in the services sector, which continues its recovery from the pandemic. Leisure and Hospitality led all industries in job gains over the past 12 months, followed by Education and Health, and Construction. Industrial firms are recalibrating their labor needs. Locally, two of the three industrial sectors experienced growth over the past year: Construction grew by 1.9%, Trade/Transportation/Utilities increased by 1.1%, and Manufacturing contracted by 0.3%.
The market tightened with 739,865 SF of net absorption during the fourth quarter of 2024. Vacancy held steady at 5.4%, as net absorption offset 359,809 SF of new deliveries. Leasing activity and rent growth for midsized and small-bay industrial spaces are expected to remain strong in 2025. The construction pipeline contracted to 10.3 million SF, down from 10.7 million SF in the previous quarter. As the recently completed inventory is leased, the next construction cycle will present limited alternatives, likely driving vacancy rates lower. Of the total 10.3 million SF build-to-suit and speculative pipeline, over 7.9 million SF (76%) is allocated to build-to-suit projects, including Panasonic’s 4.7 MSF facility, Ace Hardware’s 1.5 MSF, Heartland Coca-Cola’s 600,000 SF, and Walmart’s 330,000-SF beef plant.
- Average Asking Rent: $6.09/SF
- Vacancy Rate: 5.4%
- Net Absorption: 739,865 SF
Kansas City Office Market – 4Q24
The region’s labor market remains historically strong despite evolving macroeconomic conditions. November’s unemployment rate of 3.6% was 30 basis points below the 10-year historical average of 3.9%. Year-over-year, job growth has been most pronounced in the services sector, which continues its recovery from the pandemic. Leisure and Hospitality led all industries in job gains over the past 12 months, followed by Education and Health and Construction. 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 41,729 SF of net absorption during the quarter, reducing the year-to-date total to negative 323,575 SF. This marks the second consecutive quarter of positive absorption, driven by tenants taking advantage of favorable leasing conditions. The non-owner-occupied construction pipeline has remained inactive since the fourth quarter of 2018, with just 60,100 SF currently under construction. Vacancy rates decreased by 10 basis points to 16.7% and are projected to decline further toward 16.0% as the market continues to stabilize. Asking rental rates are anticipated to ease in the coming quarters. Year-over-year, asking rental rates increased by 2.1% in 2024.
- Average Asking Rent: $22.73/SF
- Vacancy Rate: 16.7%
- Net Absorption: 41,729 SF
Kansas City Retail Market – 3Q24
Consumer habits combined with market demands for retail space will continue to be a driving force behind the acquisition and use of space. Location has always been a dominating factor in site selection, but a lack of desirable locations is leading to more flexibility in prototypes. Retailers are adjusting to smaller formats both in the food service and soft goods retail sectors. They are also moving away from a strict template as far as size and store frontage width, and stressing design of the space and how it translates to the brand, marketing and relevance among social media and consumers. We anticipate this continues to be a priority for retail and restaurants as vacancy will remain tight for the foreseeable future.
- Average Asking Rent: $15.05/SF
- Vacancy Rate: 3.9%
- Net Absorption: 56,313 SF
Kansas City Capital Markets – 4Q24
The pace of investment activity in the Kansas City market slowed during the past four quarters, with sales volume totaling $2.2 billion, a decrease of 34.9% compared to the prior five-year average. As a leading second-tier market, the Kansas City Metropolitan area ranked sixth out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and retail assets combining 71.2% of the Metro’s activity.
- 12-Month Capitalization Rates: 7.1%
- 12-Month Total Sales Volume: $2.2 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.
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