Kansas City Industrial Market – 2Q25
The region’s labor market remains resilient despite uncertain macroeconomic conditions. May’s unemployment rate of 3.8% was 10 basis points below the 10-year historical average of 3.9%. Year-over-year, job growth was strongest in the Construction sector, followed by Education and Health. Information and Leisure and Hospitality posted the largest job losses over the past 12 months. Industrial firms are recalibrating workforce needs. Locally, employment increased in two of three key industrial sectors: Construction, up 5.1% and Manufacturing, up 0.3%.
The market recorded 315,126 SF of positive net absorption in second-quarter 2025, following the second-highest quarterly absorption total in the market’s recorded history (7.5 MSF) in 1Q25. Robust leasing activity was ongoing in late second-quarter to early third-quarter with the expectation that this will translate into strong net absorption for 3Q25. Steady demand and a slowing speculative construction pipeline drove vacancy down 40 basis points year over year to 5.1%. Of the 6.9 MSF construction pipeline, more than 6.3 MSF (92%) is currently dedicated to build-to-suit projects including Panasonic’s 4.7 MSF, Amazon’s 630,000 SF and Church & Dwight’s 553,000-SF distribution center.
- Average Asking Rent: $5.90/SF
- Vacancy Rate: 5.1%
- Net Absorption: 315,126 SF
Kansas City Office Market – 2Q25
The region’s labor market remains resilient despite uncertain macroeconomic conditions. May’s unemployment rate of 3.8% was 10 basis points below the 10-year historical average of 3.9%. Year-over-year, job growth was strongest in the Construction sector, followed by Education and Health. Information and Leisure and Hospitality posted the largest job losses over the past 12 months. Professional business and technology firms are recalibrating their labor needs, with two of the three office-occupying sectors reporting year-over-year employment retraction.
The market recorded 116,174 SF of net absorption during the quarter, bringing the four-quarter total to 1.1 million SF. This marks the fourth consecutive quarter of positive absorption, driven by tenants capitalizing on favorable leasing conditions. The non-owner-occupied construction pipeline has remained inactive since the fourth quarter of 2018, with just 108,600 SF currently under construction. Vacancy decreased by 10 basis points to 16.1% and is expected to edge down toward 16.0% as the market continues to stabilize. Asking rental rates are anticipated to soften in the coming quarters, following a modest year-over-year increase of 1.1% to $22.96/SF.
- Average Asking Rent: $22.96/SF
- Vacancy Rate: 16.1%
- Net Absorption: 116,174 SF
Kansas City Retail Market – 2Q25
Kansas City continues to outperform regional and national retail benchmarks as leasing activity exceeded new deliveries by more than six-to-one during the past year. Occupancy levels of 95.9% combined with a 2.3% year-over-year rent increase reflect solid tenant demand and limited new supply. Retail investment volume for all-sized deals topped $520 million over the past 12 months, with sustained activity in core infill areas and community shopping centers. Leasing velocity remains robust across both national brands and local operators, with many tenants locking in terms of further tariff-induced price increases.
- Average Asking Rent: $14.91/SF
- Vacancy Rate: 4.1%
- Net Absorption: -188,713 SF
Kansas City Capital Markets – 2Q25
The pace of investment activity in the Kansas City market increased during the past four quarters, with sales volume totaling $2.6 billion. 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 industrial assets combining 73.2% of the Metro’s activity.
- 12-Month Capitalization Rates: 7.1%
- 12-Month Total Sales Volume: $2.6 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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