HOME, OFFICE, WAREHOUSE: NAME THE PLACE, AND YOU’LL FIND THAT THE COSTS OF SETTLING IN ARE CONSIDERABLY MORE ATTRACTIVE IN KANSAS CITY.
There are many ways to measure a community’s attractiveness as a place to live, work and do business. Not many of those metrics are as telling as real-estate values, whether its for the price of a home or the site of engaging in commerce.
But pick your measurement, and you’re sure to find the Kansas City region comfortably away from the high-rent markets on the coasts. This area’s housing prices are the plot of a story often-told with regard to livability here. The other side of real-estate values, however, provides some powerful insights into what makes the regional economy tick.
On the commercial side, a thriving market has shown up in recent years with higher costs for industrial and office property listings. No surprise there; the roaring national economy has prices up most anywhere you look. The real surprises that favor Kansas City require some
digging, and comparisons.
Start with Newmark Grubb Zimmer’s first-quarter market report, which showed that office vacancy rates overall had tightened from 8.8 percent in early 2018 to 8.4 percent. The added demand pushed rental rates from $20.22 per square foot up to $20.69. Within that, Class A office space was fetching a premium of more than $2.50 a square foot: $23.24.
Among the nine distinct subsectors for office space in this market, Johnson County posted the strongest numbers. The northern half of the Kansas suburban county, closer to the core of Kansas City, saw overall rents averaging $28.96 per square foot. That was well ahead of southeast Jackson County in Missouri, where rents in the Lee’s Summit area averaged $24.50. The comparative bargain in that space was
Wyandotte County, at an even $20.
The industrial side of things also showed a 0.4 percent decrease in the vacancy rate, helping drive asking rents up a dime from the $4.85 standard in early 2018. With the national industrial average at $5.79 per square foot, according to JLL’s first-quarter statistics, the Kansas City region stands as a significant bargain for companies operating here—a savings of better than 16 percent off the U.S. average.
Strong demand Downtown produced average rents of $9.44 psf, more than twice the rate found in some of the market subsectors, and well above the next-closest subsector, $8.38 psf in the nearby Midtown area. Wyandotte County, one of the region’s strongest industrial nodes, again provided the most affordable spaces at an average of just $3.67 per square foot.
As for the housing component, prices here have long been secret weapon for business executives trying to pull in talent from pricier enclaves: Median home prices in this region are just a third—in some cases, even less—of what you’d expect to pay in major markets like New York, San Francisco and Boston, and between 30 and 50 percent lower than you find in many other large cities.
The run-up in housing prices nationwide has played out here as well, but relative to national averages, homeowners in Kansas City are still at a significant comparative advantage. The median home price here, according to realty-data firm Zillow, is just $148,900. Nationally, that average is more than 52 percent higher, at $226,800.
Affordability has contributed to demand, just one reason why California-based Norada Real Estate Investments is calling Kansas City one of America’s hottest markets for investors. Real-estate appreciation rates are so strong in here, Norada said, “that despite a nationwide downturn in the housing market, Kansas City real estate has continued to appreciate in value faster than most communities. In the last 12 months, Kansas City real-estate appreciation rates continue to be some of the highest in America.”