During the second quarter of 2020 activity in the commercial real estate market slowed, but there was still movement seen in all submarkets. Office, retail and industrial all saw an increase in vacancy, but none were dramatic increases that suggest any future trends. As the pandemic continues all industries are finding ways to adapt, some even making changes that will remain in place long-term. CRE professionals continue to debate the real impact that COVID-19 will have on the market. The coming months will likely reveal more of the effects on the national and local markets.
The Wichita office market in the second quarter remained steady as business pushed pause on many major decisions to see how the pandemic would play out. The market ended the quarter with 7,225 SF of negative absorption. The third quarter in the office market could prove to be a dramatic change, as a number of businesses, such as King of Freight and Signal Theory, have already announced plans to move or downsize.
Construction continues on a few different office projects. The IMA Financial building at Douglas & Emporia is in progress, as well as Hutton’s new headquarters building in the Delano District. J.P. Weigand just started work on their new building near Ridge & K-96. Air Capital Insurance’s new building near 21st & Webb is nearly complete.
The new Delano office building being developed by EPC as part of the Delano Catalyst site is starting to look for tenants, though construction on the building has not begun. The building will be up to 45,000 SF across from the Advanced Learning Library.
Jack DeBeor has canceled plans for his The 415: WaterWalk, the “class AA” office building which was announced late last year. Given the changes that have occurred so far this year, developers believed there will not be enough demand for the office building.
The Wichita retail market had a small increase in vacancy and asking rental rates during the second quarter. The quarter ended with 30,510 SF of negative absorption. The increased vacancy came from a few different contributing factors. A majority came from increased vacancies in small to mid-size strip centers, largely in the northwest and southeast quadrants.
One significant retail project was announced early in the second quarter. Developers are planning two new strip centers for the southwest corner of 13th and Greenwich. The two strip centers will be 10,500 SF and 12,600 SF. The start of construction has not yet been announced.
A few projects have been put on hold or slowed, including the Riverfront Village mix-use development planned for the west bank of the river and the Topgolf location expected in east Wichita. No cancellation announcements have been made for any of the major retail projects in the pipeline, but developers seem to be taking some time before beginning construction.
In current construction, the new QuikTrip at 29th & Maize is progressing quickly and will likely open in the coming months. The west-side Meddys location near Ridge & Kellogg next to Golden Corral is nearly complete and is expected to open for to-go orders by the end of the summer.
The Wichita industrial market took a bit of a dip in the second quarter, ending with 116,738 SF of negative absorption. Asking rental rates slightly increased, though, likely anticipating an increased demand for quality warehouse space. The negative absorption came from a number of few different vacancies in spaces between 10,000 and 20,000 SF. The former McCormick-Armstrong facility in the Douglas Design District is the largest space to be new to the market, with 25,495 SF available.
The biggest recent news in the industrial market is the announcement that Amazon will be entering the Wichita market. The retail giant is reportedly moving into the the recently completed warehouse at 4044 N. Toben, which was built as part of the city’s speculative industrial building program. Amazon will be occupying at least 140,000 SF, though rumors have been swirling their future plans for the Wichita market may be larger.
Ludeman Insulation & Supply announced an expansion to its warehouse space in Delano. The company has already started initial work to add about 15,000 SF of warehouse space to their current facility.
A couple company’s expansions appear to be complete in the southwest quadrant, including B&B Airparts and Paragon Services. Profillment is still working on its nearly 80,000 SF expansion.
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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.