Kansas City’s Industrial Market: What makes the city such a great location

It does not take long for anyone new to the construction and redevelopment sector to realize that they have stumbled upon gold in Kansas City. Here are 10 facts that help explain why Kansas City’s industrial market is booming, and what makes the city such a great location for development:

1. The city has experienced almost 10% growth since 2010. Kansas City expects to have a metro population of 2,273,074 within 2 years. Meanwhile, the employment growth rate between 2010–2019 was a staggering 15.4%, ensuring there will be lots of jobs to sustain development.

2. Kansas City invested heavily in redevelopment. In the last fifteen years, there have been more than $6 billion in improvements to the downtown area just on the Missouri side. It is always easier to follow than to lead city development.

3. From 2007 to 2017, the downtown residential population in Kansas City quadrupled. The area grew from approximately 4,000 residents in 2003 to nearly 35,000 as of 2019. This has, and is continuing to lead a push for more developments of all types as the supply of buildings cannot keep up with the demand for space, dwellings, and venues to support a burgeoning cultural hub for the Midwest.

4. Kansas City’s downtown ranks as the 6th fastest growing downtown in America. In fact, its downtown population is expected to reach 40 percent growth over the next two years, even as millennials (now closing in on 40 years old) continue the beginnings of their migration to the suburbs.

5. Many of the areas recently redeveloped in the Kansas City metropolitan area experience 95 - 98% residential occupancy within two years.

6. There were 2,325 residential building permits issued in Johnson County for October 2019 alone. In the months prior to the pandemic, there was a development boom that still could not meet the residential and commercial demand as more families from across the region moved to the city. 

7. The low cost of living makes it an attractive option for many who can raise a family and still have disposable income. While rising 46% since 2011, the average rent for a 2-bedroom unit in the Kansas City Metro area was still only $1,057 in 2019. This compares to a national average of $1,140 for a one-bedroom unit, and average rents of $1,694 in Denver, $1,270 in Detroit,  $1,918 in Chicago, and $1,307 in the neighboring city of Austin. This demonstrates the underdevelopment Kansas City still experiences when factoring that it still has not reached its price maturity.

8. Kansas City is the second-largest hub for automotive manufacturing in the country, while also boasting strong architecture, animal and pharmaceutical health, e-commerce, engineering, shipping, and third-party logistics sectors. This lends itself to a stable workforce and ever-expanding demand for high-quality talent from the broader region.

9. A 2040 Population Forecast projects significant increases to the population across all areas of the metro. While I will hold off on saying “if you build it, they will come” ...this is a strong indicator that much development is still needed to meet the demand of the next 20 years. 

10. Kansas City experiences a very moderate four seasons. Temperatures typically surpass 100 degrees only 5.6 days a year and fall to 0 degrees or below 2.5 nights a year. This increases time and activity in public spaces, and allows for more development longer. 

Kansas City’s office market is historically stable, bolstered by its affordable occupancy costs and central U.S. location. The city currently has 52.5 million sq. ft. of multi-tenant office space, 39% of which is high-quality Class A space. Meanwhile, asking lease rates increased 6.6% between 2018 to 2019 continuing a multi-year trend that has been showing signs of accelerating. The metro-wide office market experienced a very decent 12.9% vacancy rate, with 599,543 sf in 2019 net absorption. This is all in lieu of the 237,447 sf of 2019 M.T. completions, and 566,637 sf of multi-tenant construction already holding a 46% pre-leased tag.

Kansas City is in an ideal location for the evolving industrial climate, with a central location and exceptional transportation network featuring 30% more interstate miles per capita than any other city in the nation (lending itself to one of the mildest rush hours of any city). 

If you are thinking about doing development, or want to talk to someone about ways to make your project’s process as frictionless as possible, send me a message to chat!

*Sources: CBRE, Mid-America Regional Council, Kansas City Star, The Federal Workforce by the Numbers - Greater Kansas City Federal Executive Board, KCEconomy.org, KC Business Journal, U.S. Census Bureau, NPR Kansas City, The Washington Post, Kansas City Downtown Council, Kansas City Civic Council, KC Area Development Council, National Oceanic and Atmospheric Administration, Weather Atlas