The first quarter of 2020 ended with a series of events unlike anything that has been seen – the economy was essentially shuttered as the world combatted a global pandemic. The effects of these past few months will likely be felt for years to come. As for local markets, the impacts will be more apparent in the second quarter and beyond. As for Q1 2020, Wichita commercial real estate did not see changes that were out of the ordinary. The office and retail markets had some increased vacancy, but the changes are in-line with trends seen well before stay-at-home orders began to take effect. During the end of March deals that were near closing found a way to do so for the most part. Trends over the next few months will be more telling as to the long-term effects of COVID-19.
The Wichita office market remained steady through the first quarter. There was a fair amount of leasing activity in the CBD, with the Epic Center and the Farm Credit Bank each showing over 10,000 square feet of positive absorption.
A number of new office projects are in both the planning and construction phases. The Icehouse project by Union Station is nearing completion, with some tenants already beginning to move in. Construction is still underway on a few other notable buildings, including Hutton Construction’s new Delano headquarters, the IMA Financial building and Fidelity Bank’s new headquarters project.
Developers released plans for The 415: WaterWalk, the new “class AA” office building planned for the corner of Waterman and Main. The project will feature top-quality finishes and numerous amenities for office tenants, including a game room with ping-pong, shuffleboard and televisions, a lawn space featuring a putting green and a health and wellness center. The 91,000-square-foot building will also have a rooftop lounge with an outdoor patio which will be available to rent for events. Construction is expected to begin this summer and be completed either late 2021 or early 2022.
Notable sales in the office market included Reflection Ridge Office Park, Creekside Executive Center and West River Plaza. New leases which took place during the first quarter were relatively small.
The Wichita retail market had a small increase in vacancy and asking rental rates during the first quarter. Both were largely impacted by various events in the northwest quadrant, which had a significant effect on the first quarter figures. A large amount of increased vacancy came from Westgate Center along Kellogg, where Best Buy recently vacated its more than 45,000 SF space. The increase in asking rent was also greater in the northwest, mostly due to the increased availability in higher quality strip center spaces along the Maize road corridor.
One of the biggest retail news items of the first quarter was the announcement that Wichita would be getting two driving range restaurant concepts within miles of each other. BigShots first announced its plans to build at Greenwich Place, and weeks later Top Golf said it was planning a location in Wichita – county records indicate at the northeast corner of 13th and Greenwich.
In construction news, no major projects were completed during the first quarter. A majority of the core area office projects that are under construction include ground-floor retail space. A few restaurant spaces have continued construction, including the new Meddys location near Ridge and Kellogg.
A couple notable retail investment sales took place during the first quarter, including Saltgrass Steakhouse and a strip center at Greenwich Place. The currently vacant 96,000-square-foot building at 350 S. Tracy across from Towne West Mall also sold.
The Wichita industrial market remained steady during the first quarter. Despite the small change overall, the market saw some activity. A new 102,000 SF spec industrial building at 9180 E. 35th Street began leasing in the northeast quadrant and the southwest quadrant saw a number of smaller spaces leased up. With quality new space coming to the market, asking rent increased slightly.
A couple projects remain under construction as part of the spec industrial building program in the Ironhorse Industrial Park and Webb Business Park. Other planned projects include Profillment’s new 79,000 SF facility to be built at 1948 S. Hoover.
Evans Building Company finished its 50,000 SF new headquarters at Maize Industrial Park, and Metal Pros finished its 48,000 SF building at 3900 S. Norman.
The industrial market saw decent leasing activity, mostly on smaller spaces. In notable sales, the Chance Rides manufacturing facility sold during the first quarter.
NAI Martens Research
For every submarket across the primary properties, we offer overviews of trends; describing current conditions, asking rents, notable construction projects announced and completed, and sales and lease activity. Metrics analyzed include market composition, submarket distribution, asking rents, vacancy absorption, inventory levels and new construction.