Kansas City Market Reports

Kansas City Office Market

Market vacancy in Kansas City decreased to 14.3%, down 10 basis points from the prior quarter but 130 basis points higher compared to the year prior. The market realized an increase in asking rental rates in the third quarter of 2022, as rents slightly climbed to $21.30/SF, up $0.02/SF from the second quarter of 2022 and near the record high of $21.46/SF reached in the third quarter of 2021. Net absorption totaled 63,376 square feet during the third quarter of 2022, equating to negative 781,608 square feet during the past four quarters. Construction projects currently underway total 839,887 square feet, with 69.6% of construction occurring in the Northland and South Johnson County submarkets. No projects delivered to the market this quarter.

Kansas City Industrial Market

The Kansas City industrial sector ended the third quarter of 2022 with robust leasing activity, achieving new records for both asking rental rates and current development activity. Although the market displayed the first signs of a reduction in the pace of total net absorption during the second quarter of 2022, the market readjusted upwards to 2.5 million square feet of net absorption in the third quarter of 2022. Net absorption during the past four quarters totaled 10.4 million square feet, with projections indicating 16.2 million square feet of total net absorption could occur during the next six quarters. Increases in land pricing, construction pricing and general demand have pressed rental rates upward in the Metro. While asking rental rates for new, bulk industrial buildings have increased by 10.0 percent year-to-date, market wide rental rates have been reigned in as a result of all the large buildings delivered in the market. Rental rates decreased slightly $0.05/SF during the past quarter but increased $0.74/SF during the past year, equating to a 15.7% increase.