Q3 2020 Wichita Market Update

The third quarter in the Wichita commercial real estate market saw trends in line with national predictions. Office and retail saw increased vacancy as businesses continue to operate differently due to the pandemic. Many have reopened but are not able to conduct business as usual. The industrial market, however, continues to remain the strongest sector – especially in Wichita due to the announcement that Amazon would be coming to the market in a major way. It is yet to be seen whether these trends will continue during the last quarter of the year, or if second and third quarter had the biggest impact and changes will slow.  

Office

The Wichita office market started to the see the foreshadowed effects of the pandemic during the third quarter. Spaces started to hit the market that were vacated by company’s downsizing their footprint, such as Signal Theory’s space in Old Town. The office market had 57,373 SF of negative absorption during the third quarter. The increased vacancy is concentrated in the CBD, with the High Touch Building seeing some increased vacancy and the Signal Theory space. Apart from a couple core area buildings, including the proposed office building at the Delano Catalyst Site and the 430 Redevelopment with IMA Financial as the anchor tenant, many of the remaining office projects underway are company-specific buildings such as JP Weigand’s new west headquarters and Hutton’s new Delano headquarters. During the second quarter plans for a “Class AA” office building next to the WaterWalk Condos were scrapped. No other major projects have been cancelled, however it is expected that there will be very few new office projects announced as companies re-evaluate their needs and wait to see what new trends emerge in office after the pandemic.  

Retail

Though retail activity has slowed due to the pandemic, Wichita has fared well overall. Despite some increased vacancy, Wichita stores have managed to survive many of the big box store closings that have taken place around the country. Brick-and-mortar retail faced some of the greatest challenges from the pandemic, but most local stores and restaurants have reopened and are continuing to find ways to adapt to the current situation. Wichita retail did see around 68,000 SF of negative absorption during the third quarter. More than half of that figure came from the listing of the former Furniture Factory Outlet space on South Oliver and Mattress Firm’s former space in Westgate Market. Otherwise, Wichita’s major shopping centers have seen average vacancy changes. A few new construction and redevelopment projects are still planned or underway. Torchy’s Tacos on Rock Road opened during the third quarter and work began on a west-side location near 29^th and Maize. Also in the northwest, a new 7,000 SF retail strip center is expected to begin construction in December at 37^th and Maize. Developers have big plans to transform 125 N. Market, to be known as Vickers Tower, into apartments with about 25,000 SF of retail space on the lower levels. Construction continues on more retail space at the Waterfront next to Accent Lighting’s new building.  

Industrial

Industrial continues to be the strongest sector in the country and Wichita is no exception. The City of Wichita’s speculative industrial building program has been successful in driving development and has already brought numerous 100,000+ SF warehouses to the market. One of these buildings was leased by Amazon, which was the major contributor to the 100,495 SF of positive absorption seen during the third quarter. In addition to Amazon’s distribution center at 39^th and Toben, the e-commerce giant has confirmed it is building a one-million square foot fulfillment center in Park City. The facility will bring hundreds of jobs to the area – as many of 500 or more during the holiday season. In new spec projects, next to the Amazon warehouse at the Webb Industrial Park the same developers are planning another 113,000 SF building and at the Ironhorse Manufacturing Park another 100,000 SF warehouse is nearly finished. Developers and investors are working to encourage more industrial development. The Hoover Industrial Park, at which Advanced Catastrophe Technologies is working on its new headquarters, is growing. Additionally, up to 120 acres are for sale at 21^st and I-35 featuring quick highway access as well as Union Pacific and BNSF rail line access.

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.