Kansas City Industrial Development Pipeline Balloons

The Kansas City industrial market has a robust and adaptable character, benefitting from its central location and extensive infrastructure. The metro’s under-construction pipeline nearly doubled year-over-year through September, Kansas City being one of the most active markets for industrial development.

As of September, the metro demonstrated its strength by leading the Midwest for pipeline size, with 10.7 million square feet of industrial space underway across 14 properties. Additionally, it posted some of the lowest sale prices among U.S. industrial markets, highlighting its competitive edge.

Below, we’ve compiled CommercialEdge data for an overview of the metro’s industrial performance.

Kansas City industrial development forges ahead

At the end of September, Kansas City had 10.7 million square feet in its industrial supply pipeline across 14 properties. By comparison, at that same point last year nearly 6 million square feet of industrial space were underway in the market.

Among peer markets, the Inland Empire (10.3 million) and Atlanta (9.4 million) recorded fairly similar numbers, while Phoenix (32.6 million) and Dallas (17.0 million) took the lead. Kansas City’s September 2024 pipeline accounted for 3.7 percent of existing stock—above the national average of 1.8 percent and leading the Midwest for development on a percentage-of-stock basis.

Year-to-date through September, approximately 2.7 million square feet of industrial space broke ground in Kansas City across eight properties, representing 0.9 percent of the total stock. The index was slightly higher than the national average of 0.8 percent.

Notable projects currently underway include Heartland Coca-Cola Bottling Co.’s first phase of a 1.2 million-square-foot industrial development in Olathe, Kan. The initial 600,000-square-foot stage will encompass roughly 312,000 square feet of production, equipment and recycling space, 287,000 square feet of warehousing accommodations and 14,000 square feet of office space, as well as other accessory structures.

Another project that recently broke ground is a 291,000-square-foot cold storage facility in New Century, Kan. BGO and Yukon Real Estate Partners are developing the warehouse to be solar-ready and target LEED certification. As part of its sustainability commitments, it will include clean and efficient energy usage. 

Deliveries reduced by half year-over-year

Year-to-date through September, 3.9 million square feet of industrial space came online in Kansas City. Deliveries accounted for 1.3 percent of the market’s total stock, slightly higher than the 1.1 percent national average. The metro’s industrial delivery volume fell to almost half its year-ago size, when 8.1 million square feet entered the market.

Indianapolis (6.1 million square feet), Atlanta (7 million square feet) and New Jersey (7.1 million square feet) recorded better deliveries, but still lagged behind Dallas (25.3 million square feet) and Phoenix (23.5 million square feet).

In June, VanTrust Real Estate completed construction on Building B2, a 330,000-square-foot industrial facility within New Century Commerce Center, a 535-acre campus in New Century, Kan.

Flint Development recently completed Building C at Flint Commerce Center, a 370-acre industrial park in De Soto, Kan. The 1 million-square-foot facility represents the project’s first phase.

The $390 million Flint Commerce Center is being developed in multiple phases and will encompass six buildings, ranging from 300,000 to 1.3 million square feet.

Kansas City industrial sale prices low

Industrial sales totaled $54.3 million year-to-date through September in the metro, with properties trading at an average of $36.18 per square foot, according to CommercialEdge data. Almost 2 million square feet spread across 21 properties changed hands.

Kansas City posted one of the lowest average sale prices among the top U.S. industrial markets. Prices in the Inland Empire ($266 per square foot) and New Jersey ($227 per square foot) were much higher than the $131 national average.

Vacancy lower than the national average

Kansas City’s industrial vacancy rate at the end of September clocked in at 5.2 percent, below the national average of 7 percent and above the 3.7 percent registered at that same point in 2023, as CommercialEdge data shows.

Other markets with vacancy rates higher than the national average were New Jersey (8.6 percent), Indianapolis (8.3 percent), Dallas (7.5 percent) and the Inland Empire (7.3 percent).

Despite new deliveries, Detroit led the Midwest markets with the lowest vacancy rate at 4.6 percent, outperforming Kansas City for the first time in months, according to CommercialEdge.

One of the more significant leases was CJ Logistics America’s commitment to the upcoming 291,000-square-foot cold storage facility in New Century mentioned above, with most of the space dedicated to global food company Flora Food Group. Completion is expected by the third quarter of 2025.