Investors from across the globe are sinking their dollars into Kansas City’s commercial real estate stock. And this isn’t surprising. As a new report from Cushman & Wakefield says, the Kansas City metropolitan area saw growth across all of its commercial real estate sectors last year.
Cushman & Wakefield’s Kansas City Annual Report contained plenty of good news for brokers working this market. As the report said, the Kansas City market saw 7 million square feet of industrial space absorbed during 2018. That is the second-highest amount of industrial absorption in this market, trailing only the 9.2 million square feet of industrial absorbed in 2017.
Industrial construction was strong, too, with developers adding 7.1 million square feet of new industrial space last year.
The office market was a strong one, too, with Cushman & Wakefield reporting thta 100,000 square feet of office space was absorbed during each of the first three quarters of the year. The fourth quarter was basically flat, with 18,000 square feet of absorption. Overall office vacancy in the Kansas City market dropped to 14.4 percent by the end of 2018. That is 190 basis points lower than where this rate stood at the end of 2017.
The area’s retail market did see its challenges, with the overall vacancy rate in this sector rising 27 basis points. But there are some positive developments here. Cushman & Wakefield pointed to the new Nordstrom set to be built on the western edge of the Plaza development in Kansas City.
The only downside here? Nordstrom is relocating from a 200,000-square-foot site. Its new site will only be 122,000 square feet, a reduction of about 39 percent in size. This, Cushman & Wakefield says, reflects the ways in which retailers are adapting, doing business from smaller locations.
Cushman & Wakefield predicts that 2019 will be a busy year in the capital markets space. Sprint, for instance, plans to sell its entire office campus in nearby Overland Park, Kansas, to an institutional investor. The 3.9-million-square-foot campus is expected to rank as the largest and most expensive office transaction to ever hit Kansas City.
Multifamily transactions last year totaled just under $1 billion for the year and accounted for more than half of the Kansas City market’s capital markets transactions.
“Over the past few years, Kansas City has emerged as one of the strongest and most expansive industrial real estate markets in the country, and the continuing growth of logistics and transportation is likely to reinforce this trend,” said Michael Mayer, Cushman & Wakefield Managing Principal. “From an office standpoint, the market began to see the benefits of new construction that is focused on providing higher-class product than we’ve ever seen. From an investment standpoint, interest in Kansas City multi-family properties has never been higher.”