LANE4 Property Group has released their 2021 Kansas City retail “Orange Report,” an annual report focusing on the progress of retail and mixed-use developments, lease and vacancy rates and retailer expansions and closures throughout the KC metropolitan area.
Overall, the Kansas City retail market prevailed, despite the COVID-19 crisis and effects on the retail market nationwide. While some types of retail centers struggled, others adapted and endured.
This year’s report highlights a few trends seen in the Kansas City area, including strategic use of retail space spurred by changing consumer habits and a continued increase in redevelopment of obsolete centers, often into community-centric, non-retail focused uses.
Power centers and lifestyle centers, historically occupied by soft good retailers and sit-down dining, were subject to more delinquent rents; whereas neighborhood centers, often anchored by grocers and convenience-oriented users, seemed to fair relatively well.
Occupancy rates at the end of 2020 were within 1.2% of year-end 2019 and average lease rates remained stable from 2019 in all shopping center types expect regional centers. Aggregate lease rates across the metro increased from an average of $13.47 PSF at year-end 2019, to $14.21 PSF in 2020.
Although many developments were slowed or halted throughout the metro due to COVID-19 precautions, progress prevailed in several submarkets.
In south Kansas City, Cerner Innovations Campus delivered two new office buildings in 2020, totaling 755,000 SF during Phases 3 and 4 of the 16-phase project. Ranch Mart Shopping Center, located in Leawood, Kan., continues to make progress on their long-awaited redevelopment of the 217,000 SF center; a two-story mixed-use building with office space is under construction at the center with an expected delivery date of summer 2021.
In south Overland Park, the mixed-use development, Bluhawk, is anticipating a 2021 groundbreaking of its 309,000-SF indoor sports complex and 120,000-SF sports arena with a completion date of fall 2022.
The COVID-19 crisis accelerated many trends in the commercial real estate industry that were already impacting how retailers and consumers used physical space – the Kansas City market was no different. An increase in e-commerce, contactless pickup and delivery services, open-air shopping and dining options and strategically designed stores that accommodate drive-thru and curbside-to-go are all trends expected to stay. As retailers emerge into a post-COVID-19 world, the challenges these properties faced will compel their re-birth.
Looking forward to 2021, LANE4 Property Group is already seeing increased leasing activity in retail markets; however, more vacancy is projected in certain property types where demand remains limited. Steady growth is anticipated in residential real estate transactions, population and median household incomes. These underlying fundamentals should continue to underpin stability in the Kansas City retail market as retailers and business owners confront the challenges of 2020 and beyond.
For more information and to read the full report, please visit www.lane4group.com/ournews