Kansas City Real Estate Market Reports

Kansas City Office Market

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.

Kansas City Industrial Market

The market tightened as solid leasing activity resulted in 739,865 SF of net absorption during the quarter, keeping vacancy steady at 5.4% as absorption offset 359,809 SF of new deliveries. Consistent demand and a slowing speculative construction pipeline are expected to drive down the vacancy rate over the next four quarters. Of the 10.3 MSF construction pipeline, over 7.9 MSF (76%) is dedicated to build-to-suit (BTS) projects, including Panasonic’s 4.7 MSF, Ace Hardware’s 1.5 MSF, Heartland Coca-Cola’s 600,000 SF, and Walmart’s 330,000-SF beef plant. Asking NNN rental rates rose by 3.7% year-over-year to $6.09/SF. The 2.3 MSF of available sublet space, representing just 0.7% of inventory, has minimal impact on the market, with the former Coleman distribution center accounting for half of this total. Kansas City, the 31st largest MSA by population, ranks 15th by industrial market size, third in percentage of construction underway relative to market size, and eighth in quarterly net absorption to market size among the top 30 U.S. industrial markets.