The Kansas City warehouse/ distribution market posted a second quarter vacancy rate of 10.3% according to Reis’ data, down 40 basis points for the quarter and down 30 year-over-year. Net absorption was solid at 360,000 square feet for the quarter. The rate fell 30 basis points in July. Vacancy is forecast to remain around 10.0% through 2013, after which it will begin to decline. For Flex/R&D space, Reis reports second quarter vacancy at 16.0%, down 30 basis points from the prior quarter and down 50 over 12 months. This rate increased 10 basis points in July, Reis reports. No substantial decline in vacancy is forecast here for this market type for the next few years. Net absorption was positive in the second quarter at 38,000 square feet, making the year-to-date total of 89,000 square feet, nearly quadruple the amount recorded for all of 2011. A 350,000-square-foot warehouse/distribution center completed in February 2012, the year’s only industrial completion year so far.
Reis reports average asking and effective rents of $2.95 psf and $2.70 psf for warehouse/distribution space, both up 0.7% from the prior quarter. These rates are down 2.0% and 1.5%, respectively, over 12 months. After substantial losses in 2011, Reis forecast projects gains of 2.0% and 1.9%, asking and effective, in 2012. July data show no change. For Flex/R&D space, Reis reports asking and effective rents of $6.75 psf and $5.90 psf, down 1.0% and 0.8%, respectively, over 12 months. These rates are up 0.4% and 0.7%, respectively, in the second quarter. Gains of 2.4% and 2.7%, asking and effective, are forecast for 2012.
Cushman & Wakefield reports a second quarter vacancy rate of 7.2%, down 50 basis points over 12 months. The direct asking rent is reported at $6.75 psf, down 2.3% year-over-year. “Overall activity for the industrial sector is positive, but the biggest challenge is supplying the increasing demand in a market where financing for new construction and development is still lagging,” this source notes. “If the national economy can avoid dipping into another recessionary period, Kansas City should continue to experience positive absorption across its industrial submarkets.”