Kansas City Office Market
The market tightened with 267,827 SF of net absorption this quarter, bringing the total to negative 24,163 SF over the past year. This marks the second consecutive quarter of positive absorption as tenants capitalize on favorable leasing conditions. Since the fourth quarter of 2018, the non-owner-occupied construction pipeline has been inactive, with just 60,100 SF currently under construction. Vacancy decreased by 30 basis points to 17.0% and is projected to decline further toward 16.0% as the market continues to adjust. Asking rental rates are expected to ease over the coming quarters, with the market rental rate increasing 2.3% year-over-year.
Kansas City Industrial Market
The market tightened with 1.5 million SF of net absorption during the third quarter of 2024. Vacancy decreased by 10 basis points to 5.4%, as net absorption offset 695,000 SF of new deliveries. Leasing activity and rent growth for midsized and small bay industrial spaces will continue to be robust over the next year. The construction pipeline expanded to 10.6 million SF, up from 9.9 million SF last quarter. As the recently completed inventory is leased, the next construction cycle will offer limited alternatives, likely reducing vacancy rates. Of the combined 10.6 million SF build-to-suit and speculative pipeline, over 9.0 million SF (84%) is dedicated to build-to-suit projects, including Panasonic’s 5.5 MSF, Ace Hardware’s 1.5 MSF, Heartland Coca Cola’s 600,000 SF, and Walmart’s 330,000-SF beef plant.