Kansas City Office Market
Absorption in the third quarter of 2023 totaled negative 99,958 SF. Total net absorption has averaged negative 286,439 SF per quarter during the past three years, demonstrating a contractionary environment. Net absorption during the past four quarters totaled negative 1.0 million SF. The 497,210-SF construction pipeline has fluctuated between 300,000 SF and 700,000 SF during the past four years with a limited number of major projects. Vacancy and rent both increased year-over-year. Vacancy increased to 16.7% as negative net absorption continued across multiple submarkets. Expansive amenity renovations, combined with solid demand for prime Class A space, drove slow but positive 12-month rent growth of 2.4%.
Kansas City Industrial Market
Absorption in the third quarter of 2023 totaled 1.5 million SF, down from 1.9 million SF of absorption last quarter but rebounding to a normal level after a slow first quarter. Total net absorption during the past four quarters totaled 11.5 million SF, equating to an increase of 12.3% compared with the average annual absorption during the pandemic period. The 8.6-million-SF construction pipeline decreased significantly as 4.2 million SF delivered to the market during the quarter. As delivered speculative inventory becomes leased, the next construction cycle will offer very few alternatives, leading to a tightening of vacancy. Vacancy increased 70 basis points to 4.9% during the quarter as unleased space across 13 buildings delivered to the market. The increase in vacancy is not due to a weakness in leasing fundamentals, as seen in other markets.