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

For those of you that are contemplating purchasing a building for your business, now is the time to get it done. Pricing on existing buildings is starting to trend upward, I know that many of you have seen in the press the "distressed property" hype, but you can forget about finding a distressed piece of property, the real question is what exactly qualifies a property as being distressed.

The bank regulators favor owner-occupied commercial real estate, the bankers are not raked over the coals for making a loan on owner-occupied real estate. I have noticed that the banks are starting to get competitive to get these loans. You can expect to see rates ranging from the 4% range up to 6% depending on the project and your financial strength.

i expect to see sale prices move upward for the remainder of the year. While there are buildings available out there for sale, the inventory is limited to a great extent compared to normal market conditions.