Kansas City Industrial Market – 3Q25
The market recorded 1.2 MSF of positive net absorption in third-quarter 2025, following up the second-highest quarterly absorption total in the market’s recorded history (7.5 MSF) in first-quarter 2025. Robust leasing activity was ongoing in late second-quarter and continued in third-quarter 2025. Steady demand and a slowing speculative construction pipeline drove vacancy down 50 basis points year over year to 4.9%. Of the 6.1 MSF construction pipeline, more than 4.8 MSF (80%) is currently dedicated to build-to-suit projects including Panasonic’s 2.35 MSF, Amazon’s 630,000 SF and Church & Dwight’s 553,000-SF distribution center. Upon fully leasing Building 5, VanTrust has commenced construction on Raymore Commerce Center 4, a 577,500-SF facility which will be built on a speculative basis.
The region’s labor market loosened as macroeconomic conditions shifted. August’s unemployment rate increased to 4.5%, 20 basis points above the national average of 4.3%. Year-over-year, job growth was strongest in the Construction sector, followed by Other Services. Business and Professional and Information posted the largest job losses over the past 12 months. Industrial firms are recalibrating workforce needs. Locally, employment increased in one of three key industrial sectors: Construction, up 5.8%; Manufacturing, down 0.1 and Trade/Transportation/Utilities, down 1.9%.
- Average Asking Rent: $5.98/SF
- Vacancy Rate: 4.9%
- Net Absorption: 1,147,535 SF
Kansas City Office Market – 3Q25
The market recorded 67,924 SF of net absorption during the quarter, bringing the four-quarter total to 1.1 million SF. This marks the fifth 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 84,500 SF currently under construction. Vacancy remained flat at 16.2% but is expected to trend downwards to 15.8% as the market stabilizes and Class A product continues to experience strong leasing momentum. Asking rental rates increased $0.46 to $23.42/SF in the quarter, approaching a new record high.
The region’s labor market loosened as macroeconomic conditions shifted. August’s unemployment rate increased to 4.5%, 20 basis points above the national average of 4.3%. Year-over-year, job growth was strongest in the Construction sector, followed by Other Services. Business and Professional and Information posted the largest job losses over the past 12 months. Professional business and technology firms are reassessing their workforce needs, with local employment declining in two out of the three office-occupying sectors compared to the prior year.
- Average Asking Rent: $23.42/SF
- Vacancy Rate: 16.2%
- Net Absorption: 67,924 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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