BRR’s Robert Ciston Leads Kansas City Industrial Discussion

Key themes which emerged in the discussion

• Institutional capital has found Kansas City. Large-scale trades from national investors landed in the metro this year as a signal that Kansas City is earning recognition with institutional players nationally, not just logistics users. Morgan Stanley's purchase of the Ace Hardware distribution center at KCI 29 Logistics Park, reportedly its largest industrial real estate investment in the nation this year, was cited as a clear example of that shift.
• Spec development is back, after a year of caution. A year ago, the sentiment was to stay away from speculative development amid economic uncertainty. This year, Kansas City has historically low vacancy and consistent absorption, even as other markets have slowed, renewing confidence across the metro.
• Building sizes are trending larger. Developers are largely underwriting new buildings in the 400,000 to 600,000 square foot range, where rents and construction costs currently align best. It's this same big box segment that's seeing renewed tenant demand, since only a handful of large cross dock buildings are currently available in the Kansas City metro after a wave of vacancies weighed on the market last year. There is also renewed national interest in million square foot buildings, a size many considered too risky here just last year.
• The airport submarket continues to draw outsized attention. The Kansas City International Airport creates an ease of access for executives flying into town as a driver of investment decisions, alongside strong labor availability in the area. Several panelists credited KC SmartPort, the region's industrial business attraction organization, for helping raise the market's profile with outside capital and users.