With increased Demand for Space, Region’s Industrial Market seen as gaining Momentum
KANSAS CITY, MO – March 2, 2012 – (RealEstateRama) — Industrial sales and leasing activity in the Kansas City region is gaining momentum, and that demand is coming from both local and national prospects. That was the overview of the region’s industrial market provided by Jim Dieter, executive vice president and head of industrial brokerage for Cushman & Wakefield, Inc., addressing leading real estate, economic development and logistics groups.
Sponsored by the Kansas City Area Development Council, the event was attended by members of the Kansas City Economic Development Alliance, the Kansas City Real Estate Advisory Council, and Kansas City SmartPort. “This region plays an increasingly important role as a hub in the global supply chain network,” Dieter said.
Noting that the region’s unemployment rate stood at 7.4 percent at year-end 2011 after a positive trend over the course of the year, “that speaks to a reasonably healthy Kansas City economy,” he said. Positive momentum is leading to that increasing demand for space but, “this market continues to experience a lack of available class A distribution space. More companies look to integrate Kansas City into their distribution channels, but the struggling overall economy has kept developers from speculative construction.
“However, growing demand is expected to encourage new construction in the coming year, and several speculative projects are already nearing the beginning phases of construction,” Dieter said.
Among those projects: BNSF’s Logistics Park Kansas City, a 600-acre site that will have more than seven million square feet of warehouse space at build-out. “The first customer location is opening this year, and an intermodal facility will be fully operational by the end of 2013,” he noted.
Statistically, the region’s industrial vacancy rate stood at 7.6 percent at the end of 2011 compared to 7.5 percent a year earlier. In comparison, the current national vacancy rate is 10 percent, Dieter noted. Year-to-date leasing activity for 2011 fell by 14.3 percent to 3.2 million square feet, but asking rents rose by 5.5 percent to an average of $6.72 per square foot.
While the national industrial market remains “vulnerable to a variety of geopolitical factors that could stall growth and our optimism remains somewhat guarded, the market is positioned for continued progress in 2012,” he said. “Kansas City in particular is poised to take advantage of pent-up demand following the recession.
“With more prospects vying for fewer buildings in the Kansas City market, transactions are becoming more competitive, and the need for new development increases daily,” Dieter concluded. “The uncertainty of the November election may stall some of that potential, but there seems to be positive momentum nonetheless.”
Cushman & Wakefield, Inc.’s industrial brokerage platform provides global resources and local expertise for tenant and landlord representation, disposition and acquisition services, transaction management, and industrial consulting including labor and demographic analysis. In 2010, this group completed more than 4,800 industrial real estate transactions – totaling 141.6 million square feet in leases and 52.9 million square feet in sales – with an aggregate value of nearly $5 billion. This represented a year-over-year revenue increase of 26.7 percent.
Evelyn Weiss Francisco: , (201) 796-7788, www.twitter.com/carylcomm