Midwest downtowns are a big attraction for the modern employee. Companies are moving their headquarters to downtown office towers and often times opening satellite offices. The attraction? Employees wanting to be able to walk to work, restaurants, grocery stores, entertainment and public transportation. “We are still very much in the middle of a growth cycle in downtown Kansas City. There are project cranes in just about every pocket of the urban core, and the skyline is changing as a result. Most of the construction activity today, whether ground-up or adaptive reuse, is being driven by multi-family and hotel development,” said AREA’s Sean Craven.
Apartment rates are the highest in the city, and the overall downtown population bump will end up being 30-35%. Downtown has become a preferred place to live for young professionals and empty nesters. The effect on the office market will be the second half of the renaissance story. Almost 2,000,000 SF of obsolete office space has been repurposed, which is one contributing factor in the vacancy rate dropping below 10% for the first time in decades. That’s a positive indicator, but the more important piece has been interest generated by companies seeking office environments that meet the expectations of the modern employee, enhancing their ability to recruit and retain top talent. Like most cities, we are experiencing a shift back to the walkable, 24-hour neighborhood. “A growing and concentrated labor pool downtown should only continue to increase pressure on the office market, resulting in rising lease rates and new construction,” said Craven.
AREA’s Tim Schaffer also believes the secret to Kansas City’s thriving downtown is people wanting to live in the city’s urban environment. See what else he has to say in the Midwest Real Estate News March 12th article.