HEARTLAND SNAPSHOT, APRIL 2010

Wichita, Kansas

Wichita, also known as the aviation capital of the world, has felt the effects of the global recession.  The industrial vacancy rate rose in 2009 and is expected to rise again in 2010, opening the door for companies looking to relocate or expand.

Last year was marred by the cancellation of the Cessna Columbus business jet project. More than 1 million square feet of planned construction, including space to be built by Cessna Columbus subcontractors, was stopped. The global financial crisis was the culprit, sending the Wichita aviation industry into a tailspin, forcing the termination of business jet orders and causing production cuts, furloughs and layoffs at manufacturing firms.

In 2010, the overall vacancy rate will increase and absorption will be negative. Among other companies downsizing, the Coleman Company vacated two warehouses in Wichita and moved the distribution of its imported products to a new warehouse in Gardner, near Kansas City.

Asking rents have decreased from 2008 levels, but rates in general have remained flat during the last decade. Rents in 2010 will decrease slightly.

Developers have been slow to start new projects, as the handful of speculative buildings finished during 2009 are still vacant or mostly vacant. Tenants currently looking at Wichita will have a lot of options, including these recently constructed buildings with high ceilings.

Buildings built in 2010 will be owner-occupied or build-to-suit projects. Numerous owner-occupied expansions will take place in 2010, including LDF Properties’ addition at 10610 E. 26th Circle North; House of Schwan’s project at 3636 N. Comotara St.; and Cox Machine’s expansion at 5338 W. 21st St. North.

Construction of the $49 million National Center for Aviation Training is almost finished and classes are expected to begin in August. Sponsored by local government entities, the center will train aviation workers on advanced materials, avionics and aero structures. It is the goal of the center to supply highly skilled workers to the local workforce, which will help retain aviation manufacturers in Wichita.

During the next few years, Wichita’s industrial market will benefit from a new medical composite industry. Recently, the Center of Innovation for Biomaterials on Orthopaedic Research (CIBOR) was awarded a $20 million grant from the Kansas Bioscience Authority. Affiliated with Via Christi Health and Wichita State University, CIBOR will leverage Wichita’s aviation composite technology to create medical implants and other medical tools out of advanced composite materials. The center will initially create stretchers, braces, surgical tables and gurneys, but will eventually create new knee and hip joints. Within the next 10 years, the center expects to add 2,600 jobs to the Wichita economy.

— Curtis Gibson is the director of research with Grubb & Ellis|Martens Commercial Group in Wichita, Kansas.

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