By Ted Branson, Landmark Commercial Real Estate
There continues to be strong demand and a resulting shortage of industrial buildings in Wichita from 1,000 to 100,000 square feet for lease or for sale, not dissimilar from the fierce competition for housing, with prospects paying well above market rates just to keep from losing out “again” on an available property.
With that, Wichita is seeing vacancies continue near 5 to 6 percent, an increase in average lease rates from $4 to $6 per square foot, and average sales prices increasing from $35 to $50 per square foot. New construction prices carry that considerably higher. That demand for space, and the increasing prices that prospects will pay, often leads to land sales and new construction. Many of the supply chain issues that caused construction to take up to two years have been improved or resolved, and several projects are underway.
Developers have built several speculative warehouses, most notably in the new ICT21 Industrial Park, the former location of the Derby Oil refinery. Ron and Marty Cornejo did a masterful job of clearing the site of structural obstacles and rendering pollution issues innocuous, with Conco erecting three first-class, tilt-up concrete, high-bay warehouses, with more in the works.
JTM Foods, a national snack food manufacturing company, has leased 195,000 square feet, while CNH Industrial has leased 180,000 square feet. The development has several lots available for sale or lease. Grant Glasgow of NAI Martens Cos. is handling sales and leasing.
On a smaller scale, developers have built more tilt-up warehouses ranging from 25,000 to 130,000 square feet in Northeast Wichita on North Webb and North Greenwich roads.
On an even smaller scale, several developers are building popular flex, office/warehouse complexes with units ranging from 1,250 to 3,000 square feet, meeting the needs of the entrepreneurial spirit of many Wichitans, along with national companies needing a local but small presence here.
Among existing facilities, Golf Warehouse has relocated and its former 90,000-square-foot warehouse on K-96 has been fully re-leased in a matter of months to a few new tenants.
Airxcel is building 125,000 square feet to expand its consumer and business equipment lines in Wichita. A national steel manufacturer has purchased a 40,000-square-foot building just outside of Wichita because nothing in the city was available.
Sublease inventory in the national industrial market grew more than 50 percent in the first quarter of 2023 from the first quarter of 2022, presenting a newer source for supply enhancement. One example: Mattress Firm just subleased its local 15,000-square-foot warehouse.
Much of the industrial business in Wichita has weathered the COVID crisis well, and though for some businesses things never slowed down, many of those hit hard are returning to 2019 pre-COVID levels. This proves once more that Wichita business is resilient, having a seemingly boundless wealth of talent, creativity, resourcefulness and resources, in many fields from aerospace, electronics, technology, medicine, manufacturing and education.
Behind that, the positive industrial growth stimulators in Wichita continue to flourish, causing businesses to grow or start up, and increasing the need for more warehousing, manufacturing and flex space.
One such prominent development is the hugely successful Innovation Campus at Wichita State University (WSU). It has spurred exciting projects like Deloitte’s The Smart Factory, a 60,000-square-foot creative concept where companies can be introduced to new technologies and students and employees can be trained in new technologies and manufacturing practices.
NIAR, NetApp, Spirit Aerospace, Airbus Americas Engineering, Textron and others have built partnering buildings, with classrooms, labs and research facilities on this exciting expansion of the WSU campus where there used to be an 18-hole golf course.
We all remember the chips shortage and supply chain issues that came at us without warning and seemingly without solutions, bringing construction and auto sales to a crawl. In direct response to that unfortunate over-dependence on foreign supplies, a site in Wichita has been selected for application for a $1.8 billion semi-conductor testing and manufacturing project by Wichita’s own Integra that would bring 2,000 jobs with it.
About that, Greater Wichita Partnership President Jeff Fluhr says, “It continues to strengthen and build depth in Wichita’s leadership in advanced manufacturing, including in semiconductors, while providing training and development opportunities for the vast expertise our talent has in this area.”
Many local aerospace-related companies are being tagged for military contracts, such as Textron’s Bell division by the U.S. Army for the Future Long-Range Assault Aircraft Bell’s V-280 Valor, potentially one of the largest wins for Wichita. Drone specialist AgEagle Aerial Systems Inc. saw improved sales in 2022. Clemens Aviation continues its expansion in Wichita, having purchased one of Wichita’s longtime aviation successes, Midwest Corporate Aviation, at Col. James Jabara Airport on North Webb Road.
Boeing Co. has a good outlook for 2023. Spirit Aerospace has work on all Boeing commercial aircraft programs. This and many other aerospace company wins should lead to abundant work for local machine shops and auxiliary businesses, leading to continued leasing, buying and construction of new facilities.
With all these challenges and continued progress, the Wichita industrial real estate market is looking good.
Ted Branson is a commercial-industrial specialist with Landmark Commercial Real Estate Inc. This article originally appeared in the May 2023 issue of Heartland Real Estate Business magazine.