Kansas City Market Reports

Kansas City Office Market

The Kansas City office market loosened in the third quarter of 2020, as vacancy increased 230 basis points over the past year, from 9.1% to 11.4%, while asking rental rates increased by $0.18/SF to $20.95/SF. Total net absorption in the third quarter measured negative 348,315 square feet, bringing the total for the past four quarters to negative 1.5 million square feet. 81,000 square feet of space at 1300 Washington Street in Downtown, 42,245 square feet of space at 9225 Indian Creek Parkway in South Johnson County and 39,547 square feet of space at 4601 Madison Avenue in Midtown/Plaza were all exited in third-quarter 2020, driving total net absorption downward. Construction projects currently underway total 108,000 square feet. A total of 225,028 square feet delivered to the market during the quarter.

Kansas City Industrial Market

The Kansas City industrial market experienced a total of 2.0 million square feet of deliveries during the quarter and a significant 11.6% increase in average asking rental rates quoted on a triple net basis (increasing from $5.77/SF to $6.44/SF). Offerings quoted on a triple net basis are generally modern, Class A and Class B+ properties, and rents have pressed upward as demand in this sector continues to rise. The average asking rental rates quoted on an industrial gross basis decreased by $0.07/SF to $4.67/SF. Several institutionally owned Class B portfolios transitioned from being quoted on an industrial gross basis to triple net which, in part, resulted in a 10.0% decrease in the number of industrial gross spaces from the prior quarter. Projects under construction decreased from 6.9 million square feet to 5.8 million square feet but that figure will rise as multiple projects in the proposal phase will officially change to “under construction” over the next six months. As a result of the significant deliveries during the quarter, overall vacancy increased 90 basis points, from 4.9% to 5.8%.