Small market fueled by leases.
While the Wichita industrial market may lack the size of its neighbor to the east — Kansas City — it still has a strong and relatively stable presence. Wichita is driven by the aviation industry, and several major aircraft manufacturers and suppliers call the city home. Overall, Wichita has traditionally been an owner-use market with some leasing from larger national companies. With the credit markets dried up and a construction pipeline that has never been that large to begin with, most activity in Wichita lately has been leasing.
“January through April, leasing activity was pretty slim, but we are starting to see a lot more inquiries; there are a lot more people in the market looking to relocate, mostly to keep their rents the same in a newer facility,” says Bradley Tidemann, an associate with locally based J.P. Weigand & Sons.
Some notable transactions include Weckworth Manufacturing’s purchase of a 100,000-square-foot facility south of the city in Haysville. The owner-user had previously been leasing. In addition, a 50,000-square-foot office and flex warehouse deal is expected to close this month to a local owner-user.
On the leasing side, Associated Materials has relocated from a 12,000-square-foot facility to a 35,000-square-foot facility. Additionally, a California-based metal finishing company involved in the aircraft industry established a new division in Wichita to be close to many of the manufacturers. There is also a group looking to lease 35,000 square feet in the market’s newly completed spec building, 3002 West Pawnee, which is a 143,000-square-foot building and one of the largest spec projects in the past 8 years. It is currently 75 percent leased with a letter of intent out for the remaining space. This project reflects an interesting trend in Wichita: every development is completed on a speculative basis. Tidemann explains that many companies wishing to relocate to the area do not have enough time to wait for a new building to be approved and built, so spec space accommodates their timetable better. Unlike other markets with a larger proportion of spec development, Wichita has no national developers.
“It is a small, entrepreneurial development community — no funds or anything like that driving spec development,” Tidemann says, adding that new projects are only built when there is a demand for them, due to the size of the market.
The Pawnee project notwithstanding, most activity in Wichita to date has been on the smaller side of the industrial scale. “We have been real active in the 5,000- to 2,000-square-foot range — buying and leasing stuff,” Tidemann says. “A lot of people do not consider that big market stuff, but that’s our bread and butter.”
For the rest of the year, Tidemann expects leasing activity to remain strong. Vacancy rates will remain low, but will increase as some of the major aircraft companies consolidate operations. The lack of companies will keep absorption slow as well.
“Our city is led by the aircraft sector; it always has been and, in my opinion, it will continue to be. Hopefully, that regains confidence and when they start selling planes, then it will trickle down,” Tidemann says.
— Coleman Wood