The numbers add up to good news for Kansas City, according to Michael Mayer, managing principal of the Cassidy Turley office in this city. Everything from job growth to commercial real estate leasing activity show that this Midwest city is in the middle of a slow but steady recovery, Mayer told Midwest Real Estate News during a recent phone interview.
Here’s some of what Mayer had to say about the city in which he does business.
MREN: What is your outlook on the current health of the commercial real estate sector in the Kansas City region? Michael Mayer: I focus on the broader economic indicators. Those are all pointing in the right direction here. Employment is what drives our business here in Kansas City. Kansas City is adding more jobs. What’s important is that during three of the last four months of the year we showed increased employment levels. That’s a positive trend. We expect it to continue in 2012. We are on the right track as far as employment goes. There are a lot of indicators pointing toward a better 2012 for this region. It should be a good year not only for people looking for jobs, but for landlords, too. As businesses ramp up, they’ll need more space. My prediction is that 2012 will be a positive year for Kansas City real estate.
MREN: Are there other signs that things are looking up in Kansas City? Mayer: If you take a look at the four major products – multi-family, office, industrial and retail – they all showed a growth of occupancy in 2011. We are expecting that to continue in 2012. The other key number that I look at is real GDP. That for Kansas City was up 1.5 percent from 2009 to 2010. I’m anxious to get the latest numbers for 2011. A lot of that growth is coming in health care, agriculture and manufacturing. Those are the areas that we hang our hat on in Kansas City. As far as the office market goes, last year we saw 176,000 square feet of positive net absorption during the fourth quarter. We saw a total of 564,000 square feet of positive net absorption in the Kansas City office market all last year. The average annual absorption level in this market sine the late 1990s is 401,000 square feet. That tells me that activity is increasing. That tells me that things are improving.
MREN: Why are these positive trends taking place now? Mayer: We are stabilizing as far as employment goes. Kansas City is a pretty insulated market. We don’t experience the highs and lows so much. So we’ve been stable. Our clients are starting to look at the possibility of growing again. A lot of people looking for space are cautious, but they are looking to take advantage of certain opportunities that fit their businesses.
MREN: Has Kansas City’s conservative nature helped during these challenging economic times? Mayer: We did not have a lot of developers building spec space. A lot of landlords hunkered down. No one was parachuting down to build new spec buildings. The local landlords now seem to have weathered the storm. They are making deals now. They are aware of what’s going on in Kansas City. They are waiting for the cycle to turn. Hopefully, we’ll see that turn this year. It is going to happen. It’s just a matter of when.