2012 Global Market report - NAI Global

Wichita, Kansas
Lexington, Kentucky
Contact
NAI John T. Arnold
Associates
+1 316 263 7242
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
635,018
682,557
332,077
$64,545
$49,973
34
The major components of the local economy continue to be
aerospace, energy, healthcare and agriculture. While the
unemployment rate fell modestly to 7.9% as the aerospace
manufacturing sector began to rebound, the recovery is
slow. Most of the growth has occurred in the service sectors.
Local manufacturing, dominated by the aerospace industry,
is experiencing marked improvement in certain sectors.
Although the production of business and private aircraft has
been generally contracting, the sales of military and
commercial planes are vastly improved. In 2011, Boeing
set a sales record for the 777 aircraft, including an
unprecedented $18 billion order from United Arab Emirates.
In addition, Boeing was awarded the $35 billion Air Force
Refueling Tanker contract which is expected to add 7,500
jobs in Kansas. This growth has led to increased demand
for aerospace-related engineering services.
With the increasing growth of the wind energy industry, BP
announced plans to construct an $800 million, 419
megawatt (MW) wind farm spread across 66,000 acres in
central Kansas. Servicing this growing wind industry,
Siemens Energy opened a 74,000 SF wind power distribution
facility in Wichita.
The improvement in manufacturing and distribution has
lowered the vacancy of bulk warehouse, exceeding 50,000
SF, to 8%. Office occupancy and rental rates have remained
stable, with little new space coming on the market. In the
downtown area, Cargill Inc. opened its $15 million, 75,000
SF Innovation Center devoted to research, development and
marketing Cargill meat products.
Retail rates and occupancy remained stagnant with new
construction limited primarily to two new Menards Home
Improvement stores, seven Walmart neighborhood centers
and a new Cabellas Sporting Goods store. Sales of
development land remain sluggish, consisting primarily of
healthcare related uses.
In 2012, Wichita State University’s business research
department predicts the local economy will slowly start
moving again, with job growth of about 1.3%, or 3,800 jobs.
New commercial construction is expected to be centered
predominantly on the remainder of the $370 million school
bond issue for new schools, elder care facilities and
industrial expansion.
Contact
NAI Isaac
+1 859 224 2000
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
582,155
614,851
312,621
62,446
48,836
36
The Lexington market is attractive to a variety of industries.
The broad based economy, interstate system access and
quality of life are significant market draws. Lexington
received the #1 ranking by FORBES magazine in “The Best
Cities for Finding a Job.” Absorption increased in most
market segments and speculative construction halted which
led Lexington office and retail markets to achieve stabilization
in 2011.
Leasing activity in both the CBD and suburban office market
has increased. The activity level has been partially
camouflaged by some larger blocks of space hitting the
sublease market. Lack of speculative new construction and
continued economic improvement has helped reduce the
vacancy rate and stabilize rents.
Leasing and sales activity in Lexington’s industrial market
gradually increased over the course of 2011. Smaller
facilities, flex and R&D lead the activity. Properties
near Lexington’s core present attractive redevelopment
opportunities. Stability is anticipated for the industrial market
in 2012 with absorption increasing.
Retail rents have increased modestly in well located centers
and occupancy has stabilized in Class B and Class C
centers. There hasn’t been any substantial development in
2011 however there are a few projects in the early planning
phases. Value oriented retailers and restaurants are active
in the market.
There are +/-6,700 acres available for development and
+/-6,000 acres suitable for redevelopment. 13 of the 17
commercial land sales over the past year were less than
two acres. The most recent land activity has been in student
housing, medical/assisted living centers and small retail
sites.
The Lexington area commercial real estate investment
market is segmented. The high quality properties are achieving
pre-recession cap rates. Well priced distressed properties
are also selling. The liquid investor with a good track record
has a variety of financing options available from Lexington’s
banks.
Student housing is the most active area of the multifamily
market with several projects completed and several more
submitted for planning review. Market rate housing has little
activity outside of the projects started in pre-recession years.
Hospitality experienced an uptick in activity from previous
years with several new projects.
Wichita At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
N/A
15.00
8.00
23.00
18.00
12.00
$
$
$
$
$
N/A
18.00
12.00
25.00
23.50
13.00
N/A
$ 16.00
$ 10.50
$ 24.00
$ 20.75
$ 12.50
N/A
7.00%
15.00%
4.50%
8.50%
15.00%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
$
$
$
3.50
3.50
5.00
N/A
$
$
$
4.50
5.00
8.00
N/A
$
$
$
4.00
4.25
6.50
N/A
8.00%
10.00%
5.60%
12.60%
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
10.00
12.00
N/A
$
$
12.00
20.00
N/A
$ 11.50
$ 16.00
N/A
9.00%
6.00%
N/A
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
N/A
$ 130,680.00
$ 435,600.00
$ 174,240.00
Land in Industrial Parks
$ 65,340.00 $ 130,680.00
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$ 130,680.00
$ 348,480.00
N/A
$ 217,800.00
$ 435,600.00
N/A
Lexington At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
$
$
$
$
N/A
17.00
13.50
N/A
16.00
14.00
2.50
3.75
7.00
$
$
$
$
$
$
$
N/A
20.00
16.00
N/A
19.00
16.00
4.50
5.00
18.00
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
19.90%
13.90%
N/A
14.20%
14.20%
18.00%
11.50%
8.20%
Downtown
$ 10.00 $ 20.00 N/A 28.90%
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
11.00
15.00
30.00
$
$
$
20.00
25.00
65.00
N/A
N/A
N/A
12.00%
6.10%
0.20%
deVeloPment land Low/Acre High/Acre
Office in CBD
$ 1,000,000.00 $ 3,000,000.00
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
$
$
$
300,000.00
80,000.00
120,000.00
$
$
$
520,000.00
210,000.00
500,000.00
Retail/Commercial Land
$ 450,000.00 $ 1,155,000.00
Residential
$ 25,000.00 $ 350,000.00
2012 Global Market Report n www.naiglobal.com 101