Q2 2012 Wichita, Kansas Commercial Real Estate Economy

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Q2 2012 Wichita, Kansas Commercial Real Estate Economy

The metro Wichita economy is riding on improvement in U.S. Manufacturing, and a surge of back office activity. According to Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics (BLS), total non-farm payroll employment increased by 5,000 jobs (1.8%) from July 2011 to July 2012, moving into the black after a year-over-year loss earlier in 2012. Private-sector jobs increased by 7,000 (2.9%), overcoming an ongoing fiscal crisis. Government sector employment was down by 2,000 jobs (5.7%) year-over-year in July, with substantial losses at the federal, state, and local level. Household-based data from the BLS shows a much smaller increase in the number of employed residents of metro Wichita during the latest July-to-July period, with an increase of just 1,240 (0.4%). This measure includes the self-employed. Earlier, when CES data showed an employment decline, household-based data also showed a small increase.

Aside from Government sector job losses, Manufacturing sector job gains are a big story in the Wichita economy. CES data show an increase of 1,200 jobs (2.3%) here during the most recent July-to-July period, including an increase of 1,200 (4.1%) in the Aerospace Product and Parts Manufacturing industry. That industry accounts for nearly 60.0% of Manufacturing sector employment in metro Wichita, and more than 10.0% of total employment. Trends in other industrial sectors are uneven. Construction and related sectors gained 700 jobs (4.6%) year-over-year as of July, with Transportation and Utilities down 300 (3.8%) and Wholesale Trade breaking even. Industrial real estate brokers cited by the Wichita Business Journal in August noted both national and local companies looking for land, and larger buildings. Prospects “include a pair of international and national companies looking for 15 to 20 acres of heavy industrial ground for a project, and another company, national in scope, that’s expanding operations here and looking for a building approaching 100,000 square feet to be built and leased long-term. Another prospect is looking for a 30,000-square-foot building.”

There has also been employment growth in the metro area’s relatively small office-based sectors. During the latest July-to-July period, the Professional and Business Services sector gained 5,700 jobs (19.3%), due primarily to an increase of 4,200 (23.9%) in its included back-office Administrative and Support Services component. Within that component, growth was concentrated in the Employment Services industry, which includes temporary workers. It added 1,100 jobs (26.2%).

Positive economic news, however, has yet to affect the consumer-driven sectors. In the year to July, according to CES data, both Retail Trade and Leisure and Hospitality lost 200 jobs, for decreases of 0.6% and 0.7%, respectively. Within Retail Trade the hit was taken by the big-box General Merchandise Store industry, which lost 300 jobs (4.5%). Despite consumer weakness, both population and income gains are solid here, particularly in a Midwestern context. Moody’s Economy.com predicts the population will grow by 4,230 (0.7%) in 2012, with similar increases in each of the following four years. Household average income, according to this source, was up 2.9% from a year earlier as of the second quarter.