Q4 2020 Wichita Market Update
Office Market VACANCY RATE
NET ABSORPTION
ASKING RENT CLASS A
20.1%
-45,998 SF
$17.18
ASKING RENT CLASS B
$10.09
The office market saw increased vacancy and negative absorption during the last quarter of 2020. The market had 45,998 square feet of negative absorption, bringing the vacancy rate to 20.11%. Class B asking rents dropped slightly to $10.09/SF, but Class A asking rents actually increased to $17.18/SF due to a large amount of newly available square footage being in quality Class A buildings. This is the third straight quarter with negative absorption for the office market. Despite the large amount of newly vacant square feet, most submarkets saw small amounts of negative, or in some cases positive absorption. The northeast Class A market was the largest contributor to the increased vacancy. Multiple large spaces opened up at the Wilson Estates Office Park along East 21st Street. Multiple big office projects wrapped up towards the end of last year. TCG’s new office building at Douglas and Emporia finished For Sale construction and its major tenant, IMA Financial moved in. Additionally, in the downtown area, Hutton finished its new headquarters building in the Delano District. Office A couple renovation projects were announced during the fourth quarter. The building at Waterman and Emporia will be undergoing some improvements to create mixed-use spaces and update the exterior to mirror Intrust Bank Arena across the street. In the Delano District a warehouse on 2nd Street will be converted into a two-story office building, which will be occupied partially by accounting firm Criser, Gough, Parrish and Gough Financial Group.
NOTABLE CURRENT CONSTRUCTION* 1
Delano EPC Building
2
2nd Street Office Conversion
3
J.P. Weigand East *Planned and underway
Q4 2020 Wichita Market Update
Retail Market VACANCY RATE
NET ABSORPTION
ASKING RENT
11.64%
-77,500 SF
$10.17
The retail market also experienced increased vacancy during the fourth quarter. Wichita retail ended the year with about 77,000 square feet of negative absorption, increasing the vacancy rate to 11.64%. Asking rental rates decreased slightly averaging $10.17/SF. A few large vacancies contributed to the large amount of negative absorption for the quarter. The biggest factor was the former Gordman’s space near 21st and Rock becoming available – Gordman’s declared bankruptcy and closed its doors last year. Family Video also announced it was going out of business and recently shuttered all of its locations, including three in Wichita. Despite the increased vacancy, the market did see a couple larger leases take place. Most notably two tenants have been secured for a portion of the former Hobby Lobby space at Central and Ridge. Ollie’s Bargain Outlet – a discount chain coming to Wichita for the first time – and Dollar Tree will both open stores there in the coming months. In the Delano District, a new concept, Alzavino Wine Bar, has leased the space which Coney Island Weiners vacated last year. As for construction, work continues on the west side Torchy’s Tacos at 29th and Maize. Up the road, developers are constructing a new retail strip center at 37th and Maize. At 13th and Tyler work has begun on a second Tommy’s Express Car Wash, located between Hardee’s and QuikTrip. More construction has wrapped and is underway at Greenwich Place, with one of the latest announcements For Sale being that Old Navy will be moving to the growing shopping center.
Office
NOTABLE CURRENT CONSTRUCTION* 6
1
Torchy’s Tacos West
2
37th & Maize Strip Center
3
Waterfront Strip Center
4
Topgolf
5
BigShots
6
Old Navy at Greenwich Place *Planned and underway
Q4 2020 Wichita Market Update
Industrial Market VACANCY RATE
NET ABSORPTION
ASKING RENT R&D/FLEX
7.59%
-198,978 SF
$8.91
ASKING RENT GENERAL INDUSTRIAL
$3.42
Though the industrial market remains strong, the Wichita market did see some negative absorption during the fourth quarter. The vacancy rate rose to 7.59% and there was 198,978 square feet of negative absorption. Rents decreased slightly in both General Industrial and R&D/Flex, bringing the overall average to $3.79/SF. The negative absorption last quarter was due to a 200,000 square foot warehouse near Park City being vacated. The warehouse is part of the Air Capitol Delivery & Warehouse portfolio. The market continues to see new industrial construction taking place. The Amazon distribution center in Park City is underway and will be about one million square feet when finished. Also in Park City, Pratt Industries – a major packaging supplier for Amazon – is constructing a 925,000 square foot warehouse. For Sale
At Webb Industrial Park developers Office are working on a “sister” building to the one leased by Amazon, expected to be 113,000 square feet. A number of smaller, flexible warehouse spaces are under construction: a new 5,000 square foot warehouse is being built at 1410 E. 2nd St., at District 96 near Oliver and K-96 multiple 7,500 to 10,000 square foot warehouses are planned, and at Hoover Industrial Park two measuring 10,000 square foot each are under construction. New development announcements continue, proving industrial is still the strongest market – with both large and smaller spaces being sought after. This follows national trends that have seen industrial flourish the past couple of years and especially during the dramatic increase in online ordering and shipping that has taken place during the pandemic.
NOTABLE CURRENT CONSTRUCTION* 1
Advanced Catastrophe Technologies
2
Pratt Industries Warehouse
3
Amazon Fulfillment Center
4
Webb Road Spec Building *Planned and underway