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It’s little surprise, but Marcus & Millichap predicts that Kansas City’s office market will continue to struggle in 2010. This puts the city in company with most other major metro areas, the vast majority of which are also experiencing sluggish office activity.

Fundamentals in the Kansas City office market will weaken further this year as space vacated in 2009 is met with mild demand, according to the 2010 National Office Report by Marcus & Millichap. Despite an expansion in office-using employment, the portions of dark space left by tenants such as the Department of Agriculture and Transamerica Corp. will not likely be absorbed until at least 2011.

“Transaction velocity picked up in the second half of 2009 as a result of elevated owner-user activity and an increase in the number of distressed listings,” said Gary Lucas, senior vice president, managing director and regional manager of Marcus & Millichap’s Kansas City office.

Following are some of the most significant findings in the Kansas City Office Research Report:

Metrowide payrolls will increase by 0.7 percent, or 7,000 jobs, this year. Office-using head counts will expand by 2,000 positions, or 0.8 percent.

Developers have 68,000 square feet slated for delivery in 2010, following the completion of 293,000 square feet last year.

Vacancy is forecast to rise 30 basis points to 16.8 percent this year. Vacancy also increased 30 basis points in 2009.

Asking rents are projected to end 2010 at $18.64 a square foot, while effective rents will reach $14.38 a square foot, annual declines of 0.9 percent and 2.4 percent, respectively.

Tags | Kansas City, Marcus & Millichap, Office

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