KANSAS CITY—As reported in GlobeSt.com, 2014 was the best year for this region's industrial market since before the recession. And if the results from the first quarter are any indication, 2015 should also go down as a remarkable year.
According to a new report from DTZ, in the first three months of the year the market saw roughly 1.4 million square feet of positive absorption and the vacancy rate sank to 7.38%. Most impressively, at the same time developers added about 600,000 square feet of space to the region's inventory. “In the past twelve months the total existing inventory in the market has increased by 3.44 million square feet yet the vacancy rate, the amount of square feet vacant, and the amount of square feet available on the market have all dropped,” DTZ says.
The robust growth may help end an unhealthy competition between Kansas and Missouri officials to attract existing businesses to their side of the state line that splits the region. “It's called the border war,” Matt Nevinger, DTZ research manager, tells GlobeSt.com, “and unfortunately it turned into a battle between the two states which did not create any jobs.”
However, “now we have great opportunities on both sides of the state line.” For example, each of the submarkets in both states saw positive absorption in the first quarter. And while the Kansas side has the burgeoning Logistics Park Kansas City, a 1,500-acre master-planned distribution and warehouse development in suburban Edgerton, the Missouri side will soon have Three Trails Industrial Park at 71 Highway and 87th St. NorthPoint Development has set a goal of delivering 364,000 square feet of speculative space by the end of the year, and its long term plans call for the park to eventually contain 1.8 million square feet of space.
DTZ says that industrial developers have about 4.4 million square feet under construction in the region, nearly the same as last year at this time when 4.7 million square feet was underway. Although much of the space is officially speculative, Nevinger says that developers have largely made sure that demand existed for proposed buildings before any shovels went into the ground. “I don't see a huge glut of space hitting the market.”
He does not expect that users will continue to absorb space at the same pace seen in the first quarter. But when company's community of brokers looks at the market's fundamentals, “they feel pretty good about things; they're happy.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
