2012 Industrial Real Estate Market

Closing out 2011, the industrial real estate market in KC continued to improve. Overall vacancies trended down with an overall market vacancy rate of 7.2% which was down compared to 2010. The KC market has performed much better compared to the U.S. as a whole; nationally, the industrial vacancy rate is 9.8% so the KC market is really out performing as compared to the national as a whole.

What can we expect for 2012, more steady growth. However, that growth will be at a slow pace, but nonetheless there will be growth. Lease rates will trend upward slightly, lease incentives will continue to become less plentiful. Most you can expect will be 30-60 days of free rent but there will be TI money that Landlord's will make available but those improvements will be limited to improvements that are building centered and nothing of a speciality nature.

There will continue to be a lack of new product constructed, the capital markets continue to be restrictive for commercial non-owner occupied real estate so that will continue to put stress on the current inventory of available space. This will have a significant impact on vacancy rates, we should see a continued down trend in overall vacancy rates during the year. Likely we could see 6% or below vacancy rates by year end. This will certainly have an impact on lease rates, as vacancy rates continue to reduce, lease rates will continue to increase on a relative basis. Typically, the KC market does not experience large swings in lease rates, rather smaller swings is much more typical which is a testiment to the stability of the market.

If you are considering moving to either a larger or smaller building or perhaps taking on additional off-site space, now is the time to move forward on this. Don't believe what you hear in the media, things are getting better and you will be paying a higher lease rate the 2nd half of the year.

If you have questions or comments please feel free to contact me at 913-681-5888 or via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it