The Kansas City Business Journal / April 18, 2025
The Kansas City office market is a tale of two markets when looking at leasing velocity, vacancy, and rental rates. On the surface, the numbers might suggest stagnation, with vacancies remaining high and rental rates seemingly flat. But a deeper dive into the data reveals a more nuanced story. A significant portion of these vacancies and stagnant rental rates can be attributed to office suites that have been sitting vacant for over a decade. Many of these spaces are outdated by today’s standards or are in poor condition, making them less attractive to prospective tenants. When these spaces are excluded from the equation, the true vacancy rate and rental growth paint a much more optimistic picture—one that highlights a vibrant and evolving office market in Kansas City. As demand for modern, well-located, and upgraded spaces continues to grow, the city’s office market is poised for a brighter future.
A Robust Leasing Environment with Active Brokers
Despite concerns about vacancies, leasing activity remains strong. Local brokers are reporting an uptick in property tours, signaling continued tenant interest. Kansas City’s leasing market is anything but stagnant—businesses are actively searching for high-quality, move-in-ready spaces. This surge in tour activity is a clear indicator of optimism and momentum in the market.
‘If You Build It, They Will Come’: The Spec Suite Advantage
The saying “If you build it, they will come” holds especially true in Kansas City’s office sector. Speculative (spec) suites—fully built-out, move-in-ready office spaces—are in high demand. Landlords who invest in spec suites are leasing their spaces faster and securing higher rental rates compared to those waiting for traditional tenant build-outs. This trend highlights a key takeaway: tenants are looking for modern, functional office spaces that are ready to go.
The Demand for Class A Office Space
Class A office space continues to be the preferred choice for most tenants, maintaining a remarkably low vacancy rate compared to the rest of the market. With the lack of availability in quality office buildings, conversations have emerged about whether Kansas City can support new Class A office. The market has already proven its strength—look no further than the former Waddell & Reed headquarters, which was backfilled by Blue Cross Blue Shield before construction was even complete. The bigger question is whether the market can sustain new construction lease rates. My answer? Yes. Kansas City lacks modern office product, and when high-quality, state-of-the-art buildings are delivered—specifically in mixed-use, walkable environments—tenants are willing to pay premium rates.
Looking Ahead: Opportunity for Landlords
