KANSAS CITY, Mo.--- January 20, 2020 --- Block Real Estate Services, LLC (BRES) has completed its annual comprehensive report on the Kansas City Commercial Real Estate Market for 2020. The report features information on the global, U.S., and local Kansas City economies, along with a thorough analysis of the market activity in 2019 and projections for 2020. While market conditions in the Kansas City Metro are addressed in the report, the largest and most important commercial real estate deals from 2019 are also identified.
Kenneth G. Block, Managing Principal at BRES, said, “the metropolitan Kansas City commercial real estate market was very active in 2019 and we recommend our clients read the market report to help them take advantage of the significant opportunities that will be available in 2020.”
An in-depth study of the area’s Office, Retail, Industrial, Multifamily, and Investment markets are provided with special attention paid to the Downtown submarket. In 2019, Kansas City generally experienced a strengthening across all product types and submarkets.
- The Kansas City office market saw rental rates increase from $19.62 per square foot in 2018 to $20.31 in 2019. This compares to the national office rental rate increasing to $33.83 per square foot in 2019 from $25.49 per square foot in 2018. This market also experienced positive absorption of nearly 38,800 square feet in 2019, down from 77,069 square feet in 2018. BRES is set to deliver it’s second of four office buildings at CityPlace in 2020 just one year after the opening of the first. The 120,268 square foot, four-story, Class A building is expected to be completed in June 2020. Plans are already underway for the third 180,000 square foot Class A office building.
- Kansas City’s industrial market has been experiencing an unprecedented expansion for the past several years which continued through 2019. Industrial leasing in 2019 totaled 10.48 million square feet with net absorption of 6.3 million square feet. With a slowdown in speculative construction, it is anticipated that vacancy rates will increase slowly over the next few years to around 6.5% while rents continue to increase in the market. BRES started construction on the 249,150 square foot Lenexa Logistics Centre East Building 3 in 2019. When completed, the four-building logistics park will total 1,125,171 square feet. Also, in 2019, BRES finalized the acquisition of 148.5 acres immediately adjacent to, and east of, Lenexa Logistics Centre North for the development of Phase II of the logistics park.
- The retail industry continued its evolution in 2019 as the development of greenfields slowed while the refacing of older, yet viable, centers at strong intersections increased. An increased number of mixed-use developments brought retail straight to the consumer beneath luxury apartments. There continues to be new retailers filing for bankruptcy protection while others attempt to evolve through right-sizing their brick and mortar footprints and expanding their ecommerce offerings. Overall, vacancy rates barely changed across the metro, moving from 6.0% at the end of 2018 to 6.3% at the end of 2019, while average rental rates decreased slightly, $0.19, to $12.97.
- The Kansas City multifamily market remained strong in 2019 with 2,533 units absorbed. Average vacancy remained relatively unchanged down to 6.6% in 2019 from 6.7% in 2019. Market rents grew 2.6% in 2019, with current average market rent per unit per month sitting at $977, up from $953 in 2018. BRES continues to be active in the multifamily market with multiple developments in process contributing to the 9,997 units currently under construction, including: Galleria 115, 44 Washington, The Villas at Waterside, The Clearing at Anderson Pointe, and The Apex at CityPlace.
BRES expects 2020 to be a very strong real estate year if the interest rates stay in check and the global economy does not deteriorate further. Some of the major real estate projects occurring, include:
- Advent Health – Currently expanding their main hospital location with the 63,000 square foot B.E. Smith Family Center and a 100,000 square foot building for primary care and physician clinics that will come online in 2020 along with an outpatient campus at College Boulevard and Metcalf Avenue. Work continues at their South Overland Park campus to include an 85-bed hospital and plans are in development for a 200-patient hospital and 25-acre wellness campus at 87th Street and Renner Boulevard in the Lenexa City Center.
- Paragon Star – Located in Lee’s Summit, at the intersection of I-470 and View High Drive, the $250 million project will be anchored by a sports complex. The ten regulation soccer fields will open for games in the spring of 2020 while retail, restaurants, hotels, and apartments are under development.
- Waddell & Reed Financial, Inc. – Announced yearend 2019, Waddell and Reed will move their headquarters from Overland Park to a new $140 million headquarters at the southwest corner of 14th and Wyandotte Streets in downtown Kansas City. They will benefit from state and local incentives totaling more than $95 million as the commitment was made before the completion of the new border war treaty between Kansas and Missouri. The treaty will limit the use of incentives to encourage the movement of companies from one side of the state line to the other without increasing new jobs for the region.
BRES’ principals and top associates personally author each section of the Market Report leading to more accurate information for clients. They spend the time necessary to examine specific trends and transactional activity while providing market analysis.
BRES is a full-service commercial real estate company managing over 43 million square feet of retail, office, and industrial properties and its affiliate, Block Multifamily Group manages 7,350 multifamily units for equity partnerships and third-party owners. BRES’ expansive portfolio of services enable us to continue in our role as the most comprehensive commercial real estate firm in Kansas City. Our services include, but are not limited to, providing and specializing in real estate brokerage services, tenant representation, investment services, asset and property management, economic incentives consultation, financial services, construction and development services, and the Block Funds. For more information, visit our website at www.blockllc.com
The entire report can be downloaded at: www.blockllc.com/marketreport