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Market Report

Kansas City Office Market Report

2019 Outlook

Consistent Absorption, High Returns Fuel Investor Interest in Kansas City Office Assets

Plummeting unemployment, limited construction fuel robust office market. Steady growth across the government, professional and business services, and healthcare technology industries has underpinned exceptional office demand. Unemployment has fallen to within reach of the lowest levels recorded in the past 20 years, spurred by gains at office-using firms that triggered leasing for larger floor plans. As a result, the office vacancy rate has undercut the previous cycle lows, aided by a limited pace of construction in core submarkets. The overall pipeline will shrink once more in 2019, with projects focused on locations in Johnson County, where over 80 percent of new supply will be brought online. One of the largest deliveries will be additional office space as part of the CityPlace mixed-use development in Overland Park, which accounts for nearly a fifth of incoming supply. A reduced pipeline will aid more robust appreciation in average asking rents, particularly in Southern Johnson County and Downtown Kansas City, where tighter conditions and limited supply will place a premium on existing spaces.

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