by Dan Rafter
Steady progress. That’s how researchers with Cassidy Turley describe what is happening today in the Kansas City commercial real estate market.
Cassidy Turley recently released its 2014 Annual Market Report for the Kansas City market. And researchers found that the area’s recovery is continuing. That recovery might not be taking place at a blistering pace, but it is, as the report says, a steady one.
And, in better news, Cassidy Turley researchers say that 2014 should be an even better year.
“The Kansas City commercial real estate market continues to rebound from the economic recession,” said Michael Mayer, managing principal with Cassidy Turley, in a written statement. “Significant growth from several companies contributes to the growing momentum, so much so that we expect to see notable improvements in 2014 over 2013.”
Kansas City’s industrial market saw a solid year in 2013, with gross absorption hitting 8.80 million square feet. That’s up from a low of 6.18 million square feet in 2010. Net absorption for the market stood at 3.10 million square feet. Cassidy Turley researchers predict that 2014 should be a “blockbuster year” for gross absorption in this market.
The office market, though, was more sluggish, with vacancy increasing to 19.6 percent in the fourth quarter from 19.2 percent. The average Class-A leasing rate stood at $20.14. This was an improvement: For five quarters, this rate fluctuated from $19.63 to $19.79. Cassidy Turley researchers predict that Class-A office rents should continue to increase in 2014, especially in the South Johnson County submarket, where vacancy rates are lower.
The Kansas City market did see improvement last year in the retail sector, where vacancy fell at the end of the year to 9.2 percent, down from 9.8 percent a year earlier. The metro-wide average triple-net rent was $13.52 at the end of 2013. That’s an increase of 2 percent over the rate of $13.24 at the end of 2012.
To little surprise, Kansas City’s multi-family sector remained strong last year, showing improvements in each of the key measures of market strength. Occupancy increased by one point to 94 percent. The average Class-A rent hit $1.02 a square foot. And the area saw 2,879 apartment permits issued in 2013, the highest that number has stood in the last eight years. As Cassidy Turley researchers say, apartment construction is rising, but there are no indications that it is growing faster than demand.