Steady recovery is showing in all sectors.
The commercial real estate market in Wichita stabilized in the second half of 2010 and has started seeing slow, but steady, improvement during the first four months of 2011. The majority of the activity has been on the leasing side of the business, with limited sales activity. Market conditions still favor tenants but are starting to move back to a more balanced position, giving landlords more leverage in their negotiations. Development activity has been minimal the past two years, but the strengthening economy is starting to generate interest in bringing new projects into the market.
Laham Development Company continues to be very active in the local market, particularly in the popular northeast area. Laham’s showcase Bradley Fair lifestyle center is at 98 percent occupancy after the opening of Sephora’s in April. The developer’s Regency Park project at 21st North and Greenwich got a major boost earlier in the year when Cabela’s announced plans to construct a new store there. This is Cabela’s first location in the area; it will be anchoring the center with Super Target and World Market. In addition to Cabela’s, other national retailers expanding into the market include Sephora’s, Five Guys Burgers & Fries and Menards. These retailers, along with numerous smaller national and regional concepts, have interjected renewed optimism that the retail sector has turned for the better.
Other new projects that have been announced include the conversion of a movie theater into a 94,000-square-foot office building by Occidental Management. This will be the second conversion of this type for Occidental near its 29th North and Rock Road offices. Slawson Development’s New Market Square at 21st North and Maize Road on the west side of the city continues to have strong occupancy. The developer recently announced plans for a new office park near the successful retail development. Loveland Properties has acquired the former Echo Hills golf course in northern Sedgwick County and has announced plans to develop an 84-acre retail project anchored by a big-box tenant. Reel Development has announced plans to convert a long-vacant office building in the Central Business District into a multifamily and retail complex. While there haven’t been any new multifamily projects announced, developers are closely monitoring the strong occupancy rates for existing projects and waiting for rents to escalate to a point where new construction can be profitable.
The Wichita industrial market is experiencing positive absorption of vacant space for the first time in three years. The major industrial lease so far in 2011 was the commitment by Golf Warehouse to lease 130,000 square feet for the relocation of its Indianapolis distribution center. However, the city’s industrial market is very dependent on the local aviation manufacturers, and little new development is expected until that sector of the economy starts to improve. The office market has also started to see some positive absorption. The GSA recently signed a lease to expand into a 31,500-square-foot space that had been on the market for several years. The office sector has seen some new construction but it has primarily been for specialty medical services.
Downtown Wichita is experiencing a heightened level of development activity. New construction has included a Cargill research and development facility, a Fairfield Inn at the Waterwalk Development and a major renovation at the Drury Broadview Hotel. Ground is also being cleared for the construction of a YMCA facility. The City of Wichita has adopted a new master plan for downtown, which will serve as a road map for future development.
— Jerry Gray is the vice president/general manager of Wichita-based J.P. Weigand & Sons, Inc.