Wichita's CRE Market Promising for 2024

Substantial investments in downtown, new industrial campuses, medical offices, and higher education institutions are spurring strong momentum in Wichita’s commercial real estate. Downtown Wichita has become a thriving hub of social, professional, and cultural experiences with 350 new residential units under development with over 120 unique retailers, and 4.1 million SF of occupied office space. Add in the solid job growth, and Wichita has become a vibrant Midwestern city.

Downtown and surrounding districts continue to see strong investment. In the Delano district, the Riverfront Stadium marked over $100 million in new mixed-use development, driving increased demand for additional dining, lodging, multifamily living spaces, and office spaces nearby. A primary focus has been around the Arkansas River, which acts as a natural dividing line between downtown and the Delano district. The city approved the $40 million dollar Sycamore 225 apartments and Hotel next to the stadium in downtown. Occidental Management, Inc. is bringing new businesses to Union Station with the Koch-funded non-profit Learning Lab of Wichita. At the Ice House building, BHC Engineering will open a satellite office.

We’re seeing strong lease-ups from both local and national office users, and medical and educational uses are driving new investment. The recently completed $75M Kansas College of Osteopathic Medicine renovated five buildings to include housing, an AC by Marriott Hotel, and the medical school on its campus. It’s the first osteopathic school in Wichita and will create a hub of healthcare education and training programs. Wichita State University and the University of Kansas announced a partnership to establish a $300M biomedical campus in the transit hub downtown that will bring more than 3,000 students and staff into the area. In addition, a new 24-bed geriatric psychiatric hospital has been approved with a $10M budget. The hospital will provide long- and short-term inpatient care, as well as outpatient services, and aims to act as a resource for the region’s nursing homes and assisted living facilities.

Like other cities, the local industrial market has experienced sharp increases in demand coupled with a lack of existing inventory, driving lease rates and new speculative development. ICT21, a master-planned industrial development along the I-135 corridor, finished its first speculative building and recently announced a 180,000 SF lease with JTM Foods, a new-to-market food manufacturer. Bel Aire (a Wichita suburb) hosts numerous planned and under-development industrial projects in the Sunflower Commerce Park, including an industrial campus owned by Occidental Management, capable of hosting 1M SF of space. Existing companies are driving industrial growth through expansions and additions within their own campuses. Textron Aviation recently announced plans for a 180,000 SF expansion with other aerospace manufacturers seek to on-shore parts suppliers to shorten completion times and logistics challenges outside of the U.S.

Chad Stafford, President of Occidental Management added, “I am cautiously optimistic for 2024 as we see turbulent market conditions on the rise, interest rates up, and decreases in lending capital available.”

Integra Technologies, the largest outsourced semiconductor assembly and test operation in the U.S.  expects to bring 1 million SF of industrial space, 2,000 jobs to Northeast Wichita, and another 3,000 to the metro. The announcement was the second largest economic deal in Kansas history, totaling $1.8 billion dollars and is the largest expansion in the semiconductor industry in the United States.

Employment and income growth are both expected to remain more competitive than it has over the previous decade. The Wichita area is projected to be stable, and unemployment is projected to be around 3.6% in 2024. This stability in the labor market and the expected growth in various sectors underscores Wichita’s resilience and adaptability.

According to the Center for Economic Development and Business Research at Wichita State University, the relative strength of the aerospace manufacturing, semiconductor, and food processing manufacturing industries are expected to make the Wichita area an outlier for job growth in Kansas in 2024.

Publication: Heartland Real Estate Business