The Wichita, Kansas industrial real estate market remains one of the tightest commercial real estate sectors in Kansas, with limited inventory, rising demand, and new speculative developments shaping opportunities for buyers, tenants, and investors.
When considering Wichita’s industrial real estate market, few people are more familiar with it than Grant Tidemann, SIOR. For more than 40 years, Grant’s name has been synonymous with industrial real estate, witnessing—and contributing to—some of the area’s most significant developments along the way.
We sat down with Grant to discuss the current state of the market, some of the common pitfalls and opportunities buyers and investors face, and how Wichita’s industrial market has evolved over the past four decades.
Wichita’s Current Real Estate Market Trends
The current industrial market in Wichita is a tight one, particularly for buildings available for sale. Many industrial owners and investors are holding onto their properties.
On the leasing side, the market faces a similar challenge: a limited supply of available space. Much of the speculative industrial development completed in recent years has focused on buildings larger than 50,000 square feet.
Rather than subdividing those facilities to accommodate smaller users, many owners are holding out for a single large tenant.
As Grant Tidemann put it: “We still have a few buildings for lease, but some of those buildings that have been built to spec, they won’t reduce the size down to less than fifty-thousand feet. There’s not that many fifty thousand square feet plus tenants out there right now.”
The Cost of Construction
The issue is not necessarily that developers are unwilling to construct larger speculative buildings — those buildings can be more economical to build on a per-square-foot basis.
The rise in construction costs over the last 5 years nationwide in addition to significant property tax and insurance hikes has made building new product for smaller spaces less appealing to many developers as the cost far outpaced rent rates according to Ben Gartner, SIOR, CCIM. “Product that would have been very challenging to lease several years ago has been snapped up, but despite this it will still remain difficult to make the numbers work on new small-bay development until rental rates rise further.”
Ben has become a prolific deal-maker in the industrial real estate space, and has achieved both the SIOR and CCIM designations after nearly a decade in commercial real estate.
As construction costs have leveled out to a certain degree and rent rates are slowly catching up, Ben emphasized that speculative projects will still need to be carefully executed in regard to location, site layout, building layout and specifications in order to maximize demand and rates in the current market.
Opportunity in the Risk
One challenge that developers in the Wichita market face when building for small-bay developments is the speculative nature of it. “On the larger spaces, you build the shell and wait for the tenant to tell you what additional buildout is required,” Ben explained. “On smaller spaces, timelines are usually tighter and many tenants can’t or won’t coordinate for a full buildout — you have to have it ready for them. If you don’t know what the market wants, you’ll likely waste money building out too much, or lose money in vacancy because you didn’t build it out right.”
Knowing what types of businesses often look in the area is valuable market knowledge that can’t be conveyed through statistics and can only be gathered through personal discussions and connections. Connections that Ben and Grant have both been building for years to help keep their clients informed on current market trends.
“Knowing what buildout will create the most demand, not overbuilding, and maintaining flexibility is key.” Ben elaborated. “One of the most common problems I see is overbuilding the site— too much building on a small site. It looks great in theory on a spreadsheet, but can create demand-killing issues, including constrained parking, poor loading access, lack of outdoor storage… I’ve even seen so bad that there’s nowhere to put a dumpster. With these types of problems, you’ll quickly discover that the vacancy rate you projected was far too low.”
The incentives driving development
With larger developments, owners often seek tenants capable of leasing a substantial portion of the property, helping support the cost of construction and limiting the expense of dividing and finishing the building for multiple smaller users.
This has created a disconnect between the size of the space being delivered and the needs of many tenants currently searching the market. That mismatch adds financial risk for developers, who may carry a large, partially vacant building longer than anticipated while waiting for the right tenant.
To help offset that risk and encourage development, Wichita as well as many smaller municipalities such as Park City and Bel Aire have begun offering property tax abatements, allowing developers to forgo a portion of their property taxes for five to ten years.
These incentives can significantly reduce upfront holding costs, making speculative construction a more viable investment. One timely example is Lange Real Estate’s newly announced speculative industrial development.
The project includes a proposed 95% property tax abatement for the first five years, followed by a 50% abatement for the next five years.
As reported by the Wichita Business Journal, Tim Johnson, president of Triple Crown Realty, explained: “We are trying to thread the needle between the widening gap of construction costs and market rents.”
What to Consider Before Leasing or Buying Industrial Space
Today’s buyers have access to more information than ever before and, as a result, are generally much more sophisticated when it comes to understanding their operational needs.
That said, startups and companies needing industrial real estate to launch new products can still overlook requirements that don’t surface until move-in.
When asked about unique solutions to unusual situations, Grant offered an example: “For instance, I’m working with an airplane manufacturer right now that needs quite a bit of heavy equipment. So they’re going to end up having to pour some additional concrete where they put those machines.”
Not every challenge happens at ground level, either. “I’ve also seen places where the machine they are using may be too tall for the ceiling, they’ll actually make a bubble in the top of the roof to make sure it can fit,” Grant continued.
understanding the business
Other common mismatches include insufficient power capacity or incorrect electrical specifications, inadequate parking, a lack of office space, or having dock-high loading doors when the user needs to drive trucks directly into the building.
“In a lease negotiation, understanding the demand for fully climate controlled warehouse space is important when negotiating who will pay for that improvement,” Ben added. “The landlord wants to know how valuable that improvement will be for an unknown future tenant, and the tenant will want to know if they can expect to get the landlord to contribute towards the cost.”
The broker’s role is crucial in helping clients identify these needs early by asking the right questions and applying market knowledge to uncover potential issues before they become costly surprises.
While creative solutions can often solve these problems for tenants, Grant emphasized the long-term value of designing for adaptability. Features like higher ceilings may increase the initial construction cost, but they can significantly improve a property’s future resale value and appeal to a broader range of users.
How has the Wichita Market Evolved?
Many of the city’s original industrial corridors were shaped by the railroad, which runs from northeast to southwest. Areas such as Bel Aire to the northeast and the Pawnee and Meridian corridor to the southwest became established industrial hubs because of their rail access.
Zoning near these rail lines was designated for industrial use, which reinforced and accelerated development in those corridors.
Today, however, rail is no longer the primary driver for many industrial users. Instead, convenient access to major highways, particularly I-35 and K-96, has become one of the most important factors in site selection for industrial users.
Grant pointed to one specific example: “When I first came into the business, Comotara area, being Webb Road, Rock Road, 21st Street to about 37th Street, was really struggling. They really couldn’t get anything off the ground. But when they finally got K-96 through there the place just filled up.”
The transformation of the Comotara area is a clear example of how infrastructure has reshaped Wichita’s industrial real estate market. As Wichita continues to invest in its transportation network, accessibility will likely remain a driving factor in where future industrial development occurs.
Is the Wichita Market Ideal for Industrial Users?
From a logistics standpoint, Wichita’s central location continues to be one of its greatest advantages, providing efficient access to markets across much of the country.
While ideal for companies that benefit from national accessibility, Grant recalled one memorable conversation that stuck with him. “We did have one guy that was looking in the area ask, how far are you from the ocean? That was a legitimate question one time, what’s the closest port?” Being landlocked, it was a great reminder that one size does not fit all in this industry.
While infrastructure has helped shape the market, Grant believes another significant shift has been the way companies think about their employees.
Where industrial users once focused almost exclusively on finding the least expensive land, today’s developers are placing greater emphasis on creating buildings and locations that help attract and retain a quality workforce.
“The people building industrial buildings realize that they need a better place for people to work,” Grant explained. “So, they build a better building, they find a better location where they will have outside services available to them. They’re not stuck somewhere where there’s no restaurants or other places for people to eat and that type of thing. It seems to be a lot more oriented towards their employees.”
Over four decades, Grant has watched Wichita’s industrial market evolve from one driven primarily by cost and transportation to one increasingly shaped by workforce needs, accessibility, and long-term flexibility.
THE PATH FORWARD
Looking ahead, Wichita’s industrial market appears to have room for continued growth. Municipal incentives are encouraging new speculative development, while increased interest from regional and national developers has the potential to bring much-needed inventory to the market.
While Wichita’s industrial landscape has changed dramatically over the past four decades, Grant believes the underlying principles of good real estate advice remain the same: understanding a user’s operational needs, recognizing the value of strategic infrastructure, and thinking beyond today’s requirements to tomorrow’s opportunities. As the market continues to evolve, those principles will remain just as important as ever.
After more than forty years in the business, Grant says he still enjoys industrial real estate just as much as when he first started. More than anything, he appreciates the industry itself and the relationships he’s built with the people he’s worked alongside throughout his career.
Looking for industrial property in Wichita? Whether you’re buying, leasing, or investing, the Weigand Commercial Industrial team can help you identify opportunities throughout the Wichita market. Contact us today to discuss your industrial real estate needs.
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> About Ben Gartner, SIOR, CCIM
