The 43.2-million-square-foot Kansas City general purpose, multi-tenant office market posted a second quarter vacancy rate of 17.1%, up 20 basis points over the quarter but down 50 year-over-year. The July rate is up 10 basis points. Class A vacancy is reported at 13.5%, up 10 basis points over the quarter but down 80 year-over-year. The Class B/C rate of 19.4% is up 30 basis points from the prior quarter and down 20 year-over-year. Double-digit vacancy rates are fixture here. And unfortunately for this market, negative net absorption shows no sign of ceasing here either. The totals for the first and second quarter were negative 23,000 and 98,000 square feet, respectively. These totals register at a time of no new general purpose, multi-tenant office construction; the only projects completing so far in 2012 are two medical office buildings. Less than 500,000 square feet completed, on average, from 2002 to 2011, while the annual average demand total for that time span was actually negative 5,800 square feet. This is not an active office market. Reis’ latest construction data construction data show only 45,000 square feet on tap to finish in 2012, but with demand estimated at only 18,000, no occupancy improvements are forecast soon.
Reis reports average asking and effective rents of $18.99 psf and $14.74 psf in the second quarter, up 0.2% and 0.3% for the quarter, and 1.0% and 1.4% over 12 months. July data showed no change. The Class A asking rent is $21.70 psf, up 1.4% over 12 months; the Class B asking rent is $17.27 psf, up 0.6%. Reis forecasts minimal asking and effective increases of 1.1% and 1.6% in 2012, with no substantial annual gains until 2014.
Cushman & Wakefield reports a second quarter overall vacancy rate of 18.9% for Kansas City office space, up 100 basis points from one year earlier, and a direct asking rent of $17.02 psf, down 3.1%.