Newmark Zimmer’s Kansas City market reports provide a comprehensive overview of current real estate conditions by sector and submarket.

Kansas City Industrial Market – 4Q23

The region’s labor market remained historically strong amid shifting macroeconomic conditions. November’s 3.0% unemployment rate was significantly lower than the 4.1% 10-year historical average.

Year-over-year, job gains have been most pronounced in the financial activities and  government industries while job losses have been most pronounced in the information and manufacturing sectors.

Industrial firms are continuing to adjust labor needs. Locally, all three industrial sectors experienced retraction during the past year. Construction registered negative 0.3%, trade/transportation/utilities registered negative 0.3% and manufacturing registered negative 1.3%.

Absorption in the fourth quarter of 2023 totaled 340,849 SF, down from 1.9 million SF of absorption last quarter. Total net absorption during the past four quarters totaled 4.5 million SF, equating to a decrease of 25.0% compared with the average annual absorption during the pre-pandemic period from 1Q15 to 4Q19.

The 9.1-million-SF construction pipeline decreased as 1.5 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 50 basis points to 5.4% during the quarter as unleased space across four buildings delivered to the market. The increase in vacancy is not due to a weakness in leasing fundamentals, as seen in other markets.

  • Average Asking Rent: $5.87/SF
  • Vacancy Rate: 5.4%
  • Net Absorption: 340,849 SF
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Kansas City Office Market – 4Q23

The region’s labor market remained historically strong amid shifting macroeconomic conditions. November’s 3.0% unemployment rate was significantly lower than the 4.1% 10-year historical average.

Year-over-year, job gains have been most pronounced in the financial activities and  government industries while job losses have been most pronounced in the information and manufacturing sectors.

Technology firms are continuing to adjust labor needs. Locally, two out of three office-occupying sectors experienced employment retraction compared with the prior 12 months. The financial activities sector led all office-occupying sectors, displaying an increase of 4.0%.

Absorption in the fourth quarter of 2023 totaled negative 129,831 SF. Total net absorption has averaged negative 256,375 SF per quarter during the past three years, demonstrating a contractionary environment. Net absorption during the past four quarters totaled negative 761,727 SF.

The 429,370-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 17.0% 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%.

  • Average Asking Rent: $22.10/SF
  • Vacancy Rate: 17.0%
  • Net Absorption: -129,831 SF
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Kansas City Retail Market – 4Q23

In the fourth quarter of 2023, Kansas City continued to see average asking rents climb as total vacancy rate remained low with small shop space averaging 2.5% and big box averaging 4.4% vacancy. Small shop space continues to see a wide variety of interest from service-based retailers (salon, nail, massage, etc.), boutique fitness, and fast casual food type users. Fitness, entertainment, and grocery have been the most active players in backfilling big box space. Drive-thru space, whether freestanding or end-cap, continues to be highly sought after by brands. In addition, QSR concepts are continuing to look for opportunities to convert or relocate spaces to a drive-thru concept.

  • Average Asking Rent: $15.09/SF 
  • Vacancy Rate: 4.1% 
  • Net Absorption: 285,900 SF 
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Kansas City Capital Markets – 4Q23

The pace of investment activity in the Kansas City market slowed during the past four quarters, with sales volume totaling $1.8 billion, a decrease of 51.6% compared to the prior five-year average. As a leading second-tier market, the Kansas City Metropolitan area ranked seventh out of the largest 13 Midwest markets in total sales volume during the past 12 months, with multifamily and office assets combining for 68.0% of the Metro’s activity.

  • Class A Capitalization Rates: 6.3%
  • 12-Month Total Sales Volume: $1.8 Billion 
  • 12-Month Total Transactions Volume: 147 Transactions
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State of Space Report – Kansas City Office Market

The State of Space Report is a snapshot of the current Kansas City office market and provides detailed information that is useful for both owners and occupiers of office space throughout the Kansas City metropolitan area.

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Big Box Report – Kansas City Industrial Market

The Big Box Report is a summary of all existing, under construction and announced Class-A vacancy in the Kansas City Metropolitan market. Inquire with the Industrial & Logistics Heartland Team to receive the report.

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