2022 MARKET OVERVIEW
Wichita Submarkets
2022 MARKET
OVERVIEW
OVERALL MARKET
2022 HIGHLIGHTS While the U.S. and global economies deal with recession and inflation fears, the Wichita economy is slightly more optimistic. Current and expected growth in manufacturing has led to increased employment and wages. As of November 2022, manufacturing added 2,600 jobs. This growth spilled over into the services sector, particularly leisure and hospitality.* The Wichita area recovery is expected to moderate in 2023, as monetary policy and labor conditions create headwinds, however the Wichita metropolitan area is expected to have one of the most robust growths within the state, adding 2,900 jobs at an annualized increase of 1.0%. This growth should continue to stabilize and grow certain sectors of of the commercial real estate market. *
2022 MARKET
OVERVIEW
Wichita's office market continues to face challenges as the necessity and use of office space continues to evolve. We are seeing two stories playing out in the office market. Older properties without significant capital improvements are losing tenants. Landlords are having to get creative to reinvigorate these older properties to remain relevant in the market. However, newer or recently remodeled buildings in well-located areas are seeing healthy leasing activity as part of a "flight-to-quality" trend. Some tenants will end up taking less space, but the space they do take is higher quality.
2022 was also a solid year for retail in Wichita, as several national companies entered the market with highlights being the opening of Topgolf on North Greenwich and construction beginning on the 230,000 SF SCHEELS in Towne East Mall. Keeping up with demand continues to be an issue in the industrial market, but several major projects were announced. The Webb Industrial Park announced plans to build its largest speculative building yet, the 159,000 SF building is planned for the lot to the East of the Amazon warehouse, across from WSU Tech. In August, it was announced that JTM Foods would expand into the ICT 21 Industrial District, using the largest of three speculative buildings 195,000 SF.
In early 2022, NAI Martens officially cut the ribbon on it's new headquarters located at 1330 E. Douglas, Wichita, KS
*Source WSU CEDBR Wichita Employment Forecast
OVERALL MARKET
2022 NEW CONSTRUCTION PERMIT VALUE
CONSTRUCTION ACTIVITY After a slowdown in 2021, likely due to rising material costs and supply chain issues, the volume of projects grew significantly in 2022 (255 permits issued vs 184 in 2021). Interestingly, the value of permits issued in 2022 was slightly less than in 2021, but nearly $200,000,000 higher than the value of permits in 2020. Notable projects announced and permits issued included:
2022 MARKET
OVERVIEW
Construction on the 230,000 SF SCHEELS in Towne East Mall should be completed in 2023. $14.5 million spec warehouse in the Webb Industrial Park is under construction and should be completed in 2023. Nearly 500,000 SF of spec warehouse is currently under construction in ICT 21. $15.6 million permit pulled on improvements to 150 N. Main. The planned conversion to apartments includes up to 152 units and apartment renovations including, a rooftop pool and patio, dog park, fitness center as well as new plumbing, HVAC and electrical systems. $50 Million permit pulled for The Avante Apartments at 37th St. and Ridge. Former Legacy Antique Mall at 105 S. Emporia and 425 E. Douglas conversation to office should be completed in 2023. Textron Aviation announced plans to add 180,000 SF to it's parts distribution center.
Retail
2021: $15,695,138 2022: $18,267,822
Office
2021: $35,355,286 2022: $34,582,625
Industrial
2021: $334,295,801 2022: $205,107,040
NEW CONSTRUCTION PERMIT VOLUME 2020
2021
2022
50
40
30
20
10
0 Retail
Office
Industrial
OFFICE
2022 . HIGHLIGHTS 2022 was a year of adjustment when it came to the Wichita office market as companies began to figure out what a return to the office would look like. While things will never be the same, by the end of the year things had mostly settled into a new normal as companies got a handle on how much space they actually needed and employees adjusted to either being back in the office full time, or a hybrid schedule of some sort. As office users settled in, one thing that was clear is that they were looking for new ways to use and design space. Offices include more open spaces, glass walls to give a more open feel and a general effort to make spaces "cooler" and more attractive to employees. Another key to keeping occupancy stable (or increasing it) has been amenities. The Garvey Center, Wichita's 3rd largest office space, has remained at 95% occupancy, with management crediting amenities such as a 24-hour mini market and wellness center. The Farm Credit Bank building and The Thorne building have also invested heavily in amenities to attract and retain tenants.
2022 MARKET
OVERVIEW
One national trend that we are seeing in Wichita is the idea that there is Class A office space and then everything else. Class A space, regardless of location remains in high demand, but class B and C space is staying vacant longer as owners and brokers have to work harder to fill it.
OFFICE FUNDAMENTALS Vacancy
2021: 20.75% 2022: 20.50%
Net Absorption
2021: (92,637) 2022: (9,715)
Average Asking Rate
2021: $11.38 2022: $13.71
The Kansas College of Osteopathic Medicine in Downtown Wichita began classes for the first time in August.
OFFICE
2022
8200 E Thorn Drive, Wichita, KS 67226 Ascension Via Christi's announced departure will open up 100,000 SF in this Northeast Wichita office building. However recent building improvements, added amenities and it's proximity to retail and restaurants have the owners optimistic about the leasing potential.
2022 MARKET
OVERVIEW
NOTABLE TRANSACTIONS SALES
125 N. Market 150 N. Main 12021 E. 13th Street* LEASES
1617 N. Waterfront* 100 N. Broadway 8621 E. 21st Street
105 S. Emporia Wichita, KS 67220 A rendering of improvements planned for the former Legacy Antique Mall building by summer 2023. IT provider Keycentrix plans to relocate around 80 employees into the space.
165 S. Rock Island Wichita, KS 67202 Occidental Management redeveloped an Old Town warehouse into a Class A office building called the Ice House, and then relocated its office headquarters there in 2022 from northeast Wichita.
SIZE
PURPOSE
SUBMARKET
222,679 SF 185,018 SF 22,000 SF
Renovation/Remodel Apartment Conversion Company Expansion
CBD CBD Northeast
SIZE
TENANT
SUBMARKET
4,500 SF 43,877 SF 14,404 SF
Fee Insurance Sedgwick County Admin. Blue Cross Blue Shield of Kansas
Northeast CBD Northeast
*NAI Martens Transaction
RETAIL
2022 HIGHLIGHTS It was an active year for the retail market in Wichita. While the opening of TopGolf at 2976 N. Greenwich was one of the biggest stories, there were many national and regional brands that opened their doors in 2022.
Vacancy
2021: 11.9% 2022: 13.1%
North Greenwich continued to buzz with new openings as Under Armour, Chic-Fil-A, Smoothie King and Fatburger and Buffalo Express all opened up in Greenwich Place and the surrounding area.
Net Absorption
2021: 38,887 2022: (4,143)
Average Asking Rate
2021: $10.27 2022: $12.77
East side tea drinkers rejoiced as HTeaO opened at 12930 E. 21st Street N. It was also a big year for coffee lovers in Wichita with Mokas (143 N. McLean), 7 Brew (3031 E. Central), Crafted Coffee ( 9730 E. 21st St. N), Coffee Daze (3236 E. Douglas Ave.) all opening their doors. Towne East Mall began a $2.8 Million renovation project which should completed in time for the planned 2023 opening of the 230,000 SF Sheels that took over the Sears space on the west side of the mall.
2022 MARKET
OVERVIEW
RETAIL FUNDAMENTALS
The CBD also saw several new retail and restaurant options with Metro Grill opening up at 801 E. Douglas and GROW Giesen Plant Shop becoming the first tenant at Fidelity Bank's RISE Car Park at 320 S. Market St.
The Frenchthemed bakery café Paris Baguette opened it's first location in Wichita at 9780 E. 21st. St.
RETAIL
2022
1800 N. Rock Rd. Wichita, KS 67202 In July, Nordstrom Rack announced it was opening it's first Wichita location in the former Bed, Bath & Beyond space in Bradley Fair. The 28,000 SF store plans to open in Spring 2023.
2022 MARKET
OVERVIEW
NOTABLE TRANSACTIONS SALES
2120 N. Woodlawn* 6411 E. Central 4200 W. Kellogg* LEASES
320 S. Market St. 1441 N. Webb 353 S. Rock Road
SIZE
210,450 SF 76,453 SF 105,165 SF SIZE
3,200 SF 3,000 SF 7,196 SF
2141 N. Bradley Fair Pkwy Wichita, KS 67206 First Mile Kitchen, specializing in dishes made with locally sourced products opened in Bradley Fair. It's operators also opened First Mile Cantine in the RISE Car Park at 320 N. Market.
PURPOSE
Brittany Retail Center Normandie Retail Center Wichita Furniture & Mattress TENANT
GROW Giesen Plant Shop Grimaldi's Pizzeria Hook & Reel
2860 N. Maize Rd. Wichita, KS 67205 Dutch Bros Coffee opened it's first two Wichita locations with plans for a third location in Greenwich Place by end of the year.
SUBMARKET
Northeast Northeast Northwest SUBMARKET
CBD Northeast Northwest
*NAI Martens Transaction
INDUSTRIAL
2022 HIGHLIGHTS Despite national headwinds such as recession fears and signs that the national industrial market might be cooling, the success of the Wichita industrial market stood out in 2022 with more room to grow in 2023. Wichita remains well suited for projects like these because of our location and the investment into WSU Tech and Deloitte's The Smart Factory on Wichita State University's Innovation Campus which stand out to companies who are looking to place a facility in an area that can provide a high-quality skilled workforce. One area of concern that began to be addressed in 2022 was the lack of spec (a building that does not have a tenant lined up) warehouse in the market. National companies are often unwilling or unable to wait for a property to be built, so it is critical to have a supply on hand to meet the demand.
2022 MARKET
OVERVIEW
Using the City's spec building program to encourage construction of these types of property, we have seen multiple projects break ground including a 195,000 SF and two 180,000 SF buildings in ICT21, a 159,000 SF,143,000 SF and a 119,000 SF buildings in the Webb Industrial Park. In addition to this spec program, the City of Wichita launched a similar program in 2022 to encourage the construction of spec maintenance, repair and overhaul (MRO) facilities.
INDUSTRIAL FUNDAMENTALS
Vacancy
2021: 7.68% 2022: 6.65%
Net Absorption
2021: (372,686) 2022: (4,143)
Average Asking Rate
2021: $3.72 2022: $5.26
Pratt Industries opened a 1,000,000 SF manufacturing facility in Park City.
INDUSTRIAL
2022
2022 MARKET
2261 N. Cleveland Wichita, KS 67214
8835 E. 34th St. Wichita, KS 67226
4147 S. Oliver Wichita, KS 67210
In August of 2022, the ICT21 industrial district landed it's first tenant with Pennsylvania based JTM foods taking a 195,000 SF facility that should open in 2023*.
Fagron Sterile Services expanded Wichita footprint with a 44,000 SF expansion at 8835 E. 34th St., the move will create 150 new jobs, and represents a $20M investment in Wichita.
Air Capital Flight Line moved to take advance of a new spec program and building 75,000 SF facility for MRO work in southeast Wichita.
NOTABLE TRANSACTIONS SALES
SIZE
1400 E. 25th St. N 1020 E. 19th St. N* 2516 & 2520 S. Sheridan*
30.03 Acres 125,478 SF 72,304 SF
LEASES OVERVIEW Pella Windows
1955 Midfield Road
SIZE
56,500 SF 15,470 SF
PURPOSE
Unknown Redevelopment Manufacturing Manufacturing TENANT
Pella Windows Collins Aerospace
SUBMARKET
Northwest Northwest Southwest SUBMARKET
Northeast Southwest *NAI Martens Transaction
MULTIFAMILY
2022 HIGHLIGHTS Despite rising interest rates, 2022 was a strong year for multifamily transactions with nearly 4,000 units sold in the Wichita market, totaling over $300,000,000. Even though demand softened mid-2022, cap rates decreased approximately 50 basis points over the previous year with cap rates averaging approximately 5.5% on Class A property, 6.5% on Class B and 7.5% on Class C. Rental rates were virtually flat from 2019 through midyear 2020. Landlords were reluctant to push rents due to economic uncertainty during the initial stages of the pandemic. This changed dramatically from mid-2020 through mid-2021 when the average monthly rent increased 9.4%. However, this stabilized in 2022 with less than 2% overall rental increases. Even though the 2022 increase was well below the traditional 2.5% to 3.0% change for the market, this is just an offset for the strong increase in 2021. The overall annual average increase from 2020 through 2022 is over 5.5%.
2022 MARKET
OVERVIEW
The occupancy rate hovered in the 93% to 94% range from 2016 through 2020. It has steadily climbed since 2018 and peaked at 95.5% in 2021. This increase is tied to fewer than normal new units built in the market over the past few years, which is related to unknowns in the early stages of the pandemic and increased costs of materials. Occupancy remained stable in 2022 with only a slight drop to 95%.
New development in the Wichita market was steady from 2013 to 2019, adding approximately 650 units to the market each year. Development experienced a sharp decline from 2020 through 2022 with under 1,000 units completed during this three-year timeframe, due to delays caused by COVID-19 and sharp increase in construction material. The largest growth has been in the Northeast section of the market with over 1,500 units completed from 2016 to 2022 and that number expected to double over the next few years. Included in this Northeast quadrant is Wichita State University. Much of this new development has centered around WSU and providing modern housing for the student population.
MULTIFAMILY FUNDAMENTALS Occupancy
2021: 95.5% 2022: 95.0%
Year Over Year Rental Rate Increases
2021: 9.4% 2022: 1.8%
Average Cap Rate
2021: 7.0% 2022: 6.7%
MULTIFAMILY
2022
3252 E. Douglas Wichita, KS The second phase of the Uptown Landing development will be twice the size of the first, with no mixed-use on the first floor. The 126-unit complex will have one, two and three bedroom units.
2022 MARKET
OVERVIEW
NOTABLE TRANSACTIONS PROPERTY
Berkshire Apartments Cross Creek Apartments Lacrosse Apartments & Carriage Homes The Landing at Woodlawn Tower* Twin Lakes Apartments Westport Apartments*
7400 Blk. W 37th St. N Wichita, KS 67226 Located on the West side of Wichita, The Avante will feature private balconies and premium kitchens with quartz countertops. The 132-unit complex will have one, two and three bedroom units.
Dumont at Delano Wichita, KS This 96-unit complex will be located just west of Riverfront Stadium. it will offer studio, onebedroom, and twobedroom units with amenities including a pool, covered parking, and a grilling station.
TOTAL UNITS
ADDRESS
SUBMARKET
252 256 176 192 293 144
8820 W. Westlawn St. 7610 E. 32nd St. 3650 N. Woodlawn Blvd. 2029 N. Woodlawn Blvd. 2055 N. Porter Ave. 2526 W. 31st St. S
Northwest Northeast Northeast Southwest Northwest Southwest *NAI Martens Transaction
NAI Martens is the largest full-service commercial real estate firm in Kansas. Founded in 1948 and headquartered in Wichita, NAI Martens provides a vast array of commercial real estate services throughout south-central Kansas. President Grant Glasgow, SIOR leads a team of professionals with over 150 years of combined commercial real estate experience.
2022 MARKET
OVERVIEW
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1330 E. Douglas | Wichita, KS 67214| 316-262-0000 THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES DEEMED TO BE RELIABLE, BUT NO GUARANTEE OF ITS ACCOURANCY IS MADE BY NAI MARTENS