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2019 Industry Recap | Kansas City Continues to Build

by Mary Rooney | Jan 07, 2020

In 2019, the Kansas City region saw close to five million-sq.-ft. in net absorption by the end of Q3 with an expected Q4 number of more than two million-sq.-ft., exceeding absorption numbers for 2018. KC SmartPort was involved in over four million-sq.-ft. of these deals and continues to see the pipeline of new deals increasing year over year. New distribution tenants like Hostess (750,000-sq.-ft.), Amazon (80,000 sq.-ft.), Tool Source Warehouse (153,000-sq.-ft.), Regal Art & Gifts (118,000-sq.-ft.), PAE (500,000-sq.-ft.), Are You Game (109,000-sq.-ft.) and Walmart (1.8 million sq.-ft.) all selected the KC region, as well as Niagara Water (400,000-sq.-ft.) which located a food manufacturing facility and ITRenew’s new assembly operation (315,000-sq.-ft.).     

With 2019 warehouse vacancy rates in the U.S. at four percent, including cold storage at 4.3 percent, the supply is not keeping up with the demand nationally. Looking at growth projections for a few key sectors proves the demand will continue to challenge the supply of modern industrial space. For example, food sales are up 24 percent in the last few years and consumer preferences toward online grocery and direct to consumer food delivery are expected to be more common. The eCommerce industry represents 10.2 percent of total retail sales today with projections for that number to be 17 percent in 2022. In the automotive sector, 2019 projections were for total sales to be down from the 17 million mark in 2018, but sales hit the 17 million mark again in 2019 and expectations are for that to continue in 2020.

Kansas City is in a unique position with continued speculative development throughout the region and new entrants to the development market looking at the cold storage space and building designs ready to accommodate the increased spend for automation systems. Active projects on the books today equal close to six million-sq.-ft. of new space. 2020 looks promising and the KC region will be on top of the industrial real estate market.

 

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