HEARTLAND SNAPSHOT, FEBRUARY 2006

Wichita, Kansas Office Market

In Wichita, office development is picking up in the northern suburbs. There is a lot of growth in the area, with the northeast quadrant seeing the most activity. A large number of companies have relocated to the northeast quadrant from Wichita's central business district (CBD), allowing for easier access to shopping and restaurants. Companies seeking to hire young talent believe that a suburban location will be more appealing to potential employees.

The northwest quadrant has seen activity along Ridge Road, which has become a major medical corridor due to the wealth of new housing in the area and excellent access to K-96. The northeast market experienced this same trend during the past few years. “[The northern suburbs] are continuing to grow,” says Marty Gilchrist, an associate with Wichita-based J.P. Weigand & Sons. “K-96 has made travel around the city very convenient. Plans to extend K-96 to West Kellogg in the Goddard, Kansas, area will spur additional development in western Wichita.”

“The Waterfront [development] located at 13th and Webb has been extremely popular,” Gilchrist adds. Several firms are developing projects along the waterfront as part of the revitalization. Commerce Bank, the law firm Foulston Siefkin, and accounting and consulting firm BKD are three major tenants that have relocated to the area, and Delta Dental is building a new Wichita headquarters location in the district. According to Gilchrist, three new multi-tenant buildings are currently under development and there is a lot of interest from prospective tenants.

While no major tenant is absorbing a majority of space, the smaller tenants are driving activity. “We expect most of the development this year to be for users or multi-tenant properties of 20,000 square feet or less in the suburbs,” Gilchrist says. The downtown market is experiencing less activity than the suburbs and several buildings are set for redevelopment. Real Development has purchased a number of buildings in downtown Wichita with the intent to convert them to residential use. As more residents populate the downtown area, interest in the CBD from the office sector may pick up.

Average asking rates for Class A space range from $13.50 for typical deals to $23 for full-service leases. The overall vacancy rate for suburban and downtown Class A space is 11.8 percent. The vacancy rate stands at approximately 11.3 percent in the central business district and approximately 10 percent in the suburbs.

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