KANSAS CITY—Last month, GlobeSt.com reported that Amazon had just agreed to occupy the 822,000 square foot Inland Port XIV, this region's largest speculative industrial building, a strong indication that the market was ready to take off. And now that the first quarter numbers are in, it is apparent the metro area will need a few more deals of similar size.

Cushman & Wakefield has just issued a market report on Kansas City, and found that new industrial construction is continuing at a rapid rate throughout the metro area. In the first quarter of 2016, 2.4 million square feet of newly delivered space caused the vacancy rate to jump from 7.37% to 8.10%, despite 783,000 square feet of absorption.

“The current belief is construction will continue at this pace until there is a clear slowdown,” Michael Mayer, C&W's market leader. “There are more buildings planned for Executive Park, LPKC, Lenexa Logistics Park, Northland Park, and other parts of the city. Until there is a significant bump in the road, the general sense is this pace of construction will continue. By “bump in the road” I mean buildings sitting there empty in multiple parts of the market for nine to twelve months.”

“With the Inland Port XIV deal, attention will be paid to how quickly new space is absorbed,” the report notes. “Another major speculative project will soon be underway, with work scheduled to begin on a new 250,000-square-foot building near I- 435 and Frontage Rd.”

Asking rates for modern bulk space remain strong, but the competition amongst developers to secure high-quality tenants on long-term leases could lead to a favorable climate for tenants. And with additional space nearing completion, the lease at Inland Port XIV may not have a dramatic impact on the vacancy rate as the year progresses.

Instant Insights /

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