The 432,600-square-foot distribution center is quiet as David Hinchman walks across its floors. But Hinchman, senior vice president with the Kansas City office of CBRE, doesn’t expect this quiet to last.
Hinchman said that two proposals have already been made for the LogisticsCentre IV Distribution Center, the latest building added to the KCI Intermodal BusinessCentre in Kansas City, Missouri, a sprawling business park located on the edges of Kansas City International Airport.
Hinchman says that the interest doesn’t surprise him. The new building, he says, represents what he calls a state-of-the-art warehouse facility.
“We always knew what we had here, what we could offer here,” Hinchman said. “And now the rest of the market has caught up with us.”
Construction started on the KCI Intermodal BusinessCentre, co-developed by Trammell Crow Company and Clarion Partners, in 2008. That, of course, was a difficult time for commercial real estate. But the fortunes of this business center changed in 2011. That’s when Blount International, a manufacturer of chainsaws and mower blades, leased a 350,000-square-foot build-to-suit facility here, the first building built in the park.
In 2013, construction crews began work on the second building in the business park, a 351,200-square-foot speculative building. Walker, Michigan-based Challenge Manufacturing, which builds auto parts, filled that entire building in 2015.
Now, LogisticsCentre IV is available. Hinchman said that demand for industrial space, especially modern space, is so high in Kansas City today, that he expects to fill the center soon.
“The industrial market is so strong here, we might blow through the next recession without seeing any kind of real dip in industrial activity in the Kansas City area,” Hinchman said. “There has to be a hit at some time. But right now, the market for industrial space is incredibly strong.”
Why is this? Hinchman said that Kansas City is the ideal location for industrial users. It’s easy to distribute products to the entire country from the city. It’s also an affordable city, and one that isn’t cursed with snarling rush-hour traffic.
Hinchman also praised Kansas City’s labor force.
“The people here know how to work hard,” he said. “And they’re not afraid to do it.”
Recent industrial market numbers released by the Kansas City office of Newmark Grubb Zimmer back up Hinchman’s optimism. According to the company, the Kansas City market saw 1.9 million square feet of net absorption in the industrial sector during the first quarter of 2017. Average quoted rents for industrial space here jumped to $4.78 a square foot during the quarter, according to Newmark Grubb Zimmer.
The company also reported that 823,566 square feet of new industrial space was delivered to the Kansas City market during the first quarter of the year, while an impressive 8.1 million square feet of space was planned for delivery.
The overall vacancy rate in this sector dropped 40 basis points from the last quarter of 2016, falling to 6 percent, according to Zimmer.