2019-07-12_DTZ戴德梁行_Industrial_Q2_2019_Kansas_City_4页_719kb

Kansas City Industrial Market Q2 2019 Summary

Core Content Overview

The Kansas City industrial real estate market showed continued strength in Q2 2019, driven by a combination of strong absorption, new job announcements, and ongoing build-to-suit projects. Despite some challenges, including rising interest rates and trade uncertainties, the overall market remained resilient and positive.

Key Economic Indicators

• The U.S. economy expanded steadily in 2019, with some concerns over interest rates and trade uncertainty.
• Kansas City's employment and unemployment rates remained stable, indicating a healthy labor market.
• The national unemployment rate also showed a slight decline, reflecting broader economic stability.

Market Indicators (Overall, All Classes)

• Vacancy decreased slightly from 6.8% to 6.5%, suggesting improved demand.
• Net Absorption increased significantly from 1.9M to 3.0M square feet, indicating strong tenant activity.
• Under Construction decreased from 3.8M to 3.3M, showing a shift from speculative to build-to-suit projects.
• Average Asking Rent rose slightly, reflecting market strength and demand.

Market Trends and Outlook

Economic Context

• The U.S. economy continued to expand, but signs of slowing job growth and trade uncertainty were noted.
• Companies remained resilient, but potential short-term shocks could affect the market.

Kansas City Industrial Market

• The market experienced significant growth in the first half of 2019, with 4.2 million square feet of absorption.
• Speculative construction slowed, while build-to-suit projects increased, indicating a shift in tenant preferences.
• Northland Park emerged as a major success, with all existing buildings fully leased and new developments underway.

Future Outlook

• Build-to-suit construction will continue to be a key driver in the Kansas City market.
• New projects such as Hostess's 765,000-sf facility in Edgerton and Niagara Bottling's 425,000-sf project in Jackson County are expected to boost absorption.
• There is a potential for downward price pressure in Johnson County as supply increases.

Bulk & Modern Distribution by Submarket

Despite development across the metro area, over half of the bulk distribution inventory remains in Johnson County.

• Johnson County remains the largest market for bulk distribution and warehouse space.
• Northland Park continues to perform well with a low vacancy rate and high absorption.
• Riverside and Jackson County show mixed performance, with some submarkets experiencing higher vacancy rates.

Industrial Submarkets Totals

• Bulk Distribution & Warehouse is the dominant submarket, with the highest inventory and absorption.
• Flex/R&D and Manufacturing show lower absorption, indicating potential challenges in these sectors.
• Underground has the highest vacancy rate, suggesting limited demand or supply issues.

Key Lease Transactions Q2 2019

• Build-to-suit (BTS) transactions were prominent, especially in Johnson County and Jackson County.
• Distributor Wire & Cable leased 82,854 sf in Northland Park, marking the final vacancy in the existing buildings.

Key Sales Transactions Q2 2019

• Several large-scale properties were sold, with Jackson County and Johnson County being the most active.
• User transactions in Johnson County indicate continued demand from existing tenants.

Conclusion

The Kansas City industrial market in Q2 2019 demonstrated resilience and growth, driven by strong absorption, new build-to-suit projects, and continued investment. While there are signs of slowing speculative construction and potential price pressures in certain submarkets, the overall outlook remains positive, with a focus on long-term, tailored developments. Cushman & Wakefield remains a key player in analyzing and reporting on these trends.