Q2 2025 INDUSTRIAL
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
EXECUTIVE SUMMARY Wichita’s industrial real estate sector remained solid through the second quarter of 2025, though some cooling from the frenetic pace of recent years was evident. Overall vacancy edged up to 8.2% in Q2 (from historic lows around mid-6% in Q1) as a large block of space hit the market. Total industrial inventory expanded to 43.41 million sq. ft. with new space added. Net absorption was positive at 52,096 sq. ft. for the quarter. Despite this uptick in availability, leased space remains near all-time highs – over 39.5 million sq. ft. occupied – and demand for quality facilities continues to support rent growth. Average asking rents remained steady at $6.08 per sq. ft. (NNN) across the market, with modern distribution space commanding premium rates. The following sections provide a detailed look at key Q2 developments, leasing trends, construction updates, investment activity, submarket conditions, and the outlook for Wichita’s industrial market. It should be noted that the addition of the 531,000 SF Wichita Industrial Park (former Towne West Mall) to the industrial statistics has caused changes to the total inventory and vacancy.
Vacancy Rate This is below the US industrial average. Tight market continues.
8.2%
Net Absorption Turned positive, partial based on one major lease
New Deliverables No major
completions in the first quarter. Most current construction projects are slated for a late 2025 delivery. Asking Rates Modern spaces demanding higher rents.
$6.08 PSF
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
Industrial Submarkets
Total Vacant (SF)
YTD Net Absorption (SF)
Weighted Average Leasing Rate (PSF)
CBD
141,373
(6,297)
$8.00
Hyde Park
76,657
(28,373)
$6.94
Northeast
1,164,233
(6,723)
$6.50
Northwest
650,606
84,540
$10.34
Southeast
907,556
48,812
$4.94
Southwest
613,271
(57,837)
$6.12
Totals
3,553,696
10,322
$6.08
NORTHWEST
NORTHEAST
CBD/ HYDE PARK
KELLOGG
SOUTHWEST
SOUTHEAST
GENERAL INDUSTRIAL
RD/FLEX
Total Vacant (SF)
3,354,883
Total Vacant (SF)
98,813 (54,588) $12.19
YTD Total Net Absorption (SF) Weighted Average Lease Rate
64,910
YTD Total Net Absorption (SF) Weighted Average Lease Rate
$5.85
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
Construction Activity and Expansions
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Construction Activity and Expansions
New Spec Development Near Airport: Local aerospace subcontractor Capps Manufacturing announced plans for a 120,000 sq. ft. speculative industrial warehouse in southwest Wichita (near Eisenhower National Airport) The Wichita City Council approved an industrial revenue bond (IRB) package in April to support the project. Construction is expected to begin within the next couple of months, with delivery projected by spring 2026. This project taps into the City’s speculative industrial building program (in place since 2017), which has successfully delivered at least nine new warehouses – all of which secured tenants within the required lease- up period. The Capps facility will feature modern specs (30’ clear heights, multiple dock doors, etc.) to attract manufacturing or logistics users to the underserved Southwest submarket. WAM Capital Remodel: In May 2025, Wichita- based WAM Capital LLC secured approval from the Wichita City Council for $5 million in Industrial Revenue Bonds (IRBs) to support the redevelopment of more than 140,000 square feet of aging industrial space across three buildings in southwest Wichita. The project, aimed at converting underutilized structures into modern, leasable industrial facilities, represents a strategic reinvestment in the city’s core industrial inventory. With plans to upgrade roofs, mechanical systems, and loading infrastructure, WAM’s initiative is expected to deliver move-in- ready space suitable for manufacturing and logistics tenants by early 2026. The city’s backing reflects continued support for adaptive reuse and infill revitalization as a complement to new construction in meeting industrial demand. Construction crews are now upgrading the facilities with new roofs, dock doors, and sprinkler systems. This creative approach adds supply by “recycling” existing inventory and is expected to deliver move-in-ready units by early 2026.
Continuing Industrial Conversions: A trend of converting or repurposing older properties into new industrial uses is underway. Notably, the struggling Towne West Square mall is slated for transformation into a $35 million multi- building business/industrial park. After initial rezoning approvals in late Q1 2025, the new owners are marketing the site planning to deliver speculative light industrial space in phases. This ambitious project – replacing a defunct retail mall with over 500,000 sq. ft. of industrial-flex space – underscores the creative approaches developers are taking to add supply within the city’s core. The Towne West redevelopment reflects a broader push to meet industrial demand by reusing well-located but underperforming assets. GAF Groundbreaking (Newton): In early June 2025, roofing giant GAF broke ground on a major new shingle manufacturing plant in Newton’s Kansas Logistics Park, just north of Wichita—a project widely seen as one of the region’s most significant industrial investments this year. The greenfield facility, which could span up to 275,000 square feet depending on final buildout specifications, is slated to begin production in 2027 with full capacity expected by 2029. The groundbreaking underscores the Wichita metro’s expanding industrial footprint beyond traditional aerospace and logistics, reinforcing its long-term competitiveness as a diversified manufacturing hub.
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Construction Progress and Q2 Completions
Construction activity in Wichita’s industrial sector remains steady but more measured compared to the past two years. No major project completions occurred in Q2 2025, as several large developments are still in progress toward later 2025 delivery. However, incremental new supply did come onto the market. An estimated 200,000–250,000 sq. ft. of new industrial space was added this quarter, primarily through smaller build-to-suit expansions and the finalization of projects that began in 2024. For example, a regional manufacturer completed a 50,000 sq. ft. expansion to its plant in the Southeast submarket, and a few owner-occupied facilities (such as a food processing company’s new warehouse) also wrapped up construction. These types of additions kept overall inventory growing, although many were occupied upon delivery and thus had minimal immediate impact on vacancy. The construction pipeline has thus far avoided speculative oversupply – new buildings are either leasing up by completion or are bespoke facilities for end-users. Several previously announced projects hit milestones during Q2. In Bel Aire’s Sunflower Commerce Park, vertical construction advanced on Building A, the 215,000 sq. ft. speculative warehouse by Aspen Funds. By the end of June, the shell was substantially complete, and the project remains on track for a fall 2025 finish. This high-profile development (expandable to 800,000 sq. ft. in future phases) is one of the largest spec industrial buildings ever built in the Wichita area. Tenant interest is reportedly strong, though no lease had been signed as of Q2’s end – meaning the space will likely hit the market as vacant new supply next quarter.
Also in northeast Wichita, Amazon’s new 176,000 sq. ft. last-mile facility in Sunflower Commerce Park broke ground during Q2. Site work and utilities are underway, with steel erection slated for Q3. Amazon’s aggressive timeline targets completion and opening by late 2025, so construction crews are expediting work on this build-to-suit project. Overall, industrial construction in Wichita remains active, but at a moderated pace. About 0.8–1.0 million sq. ft. is currently under construction or in advanced planning stages across the metro, which is a manageable level relative to market size. Developers continue to initiate projects in strategic locations (particularly in the Northeast near highway corridors) while being mindful of not getting too far ahead of demand. Notably, most of the new developments are mid-sized (100–300K sq. ft.) warehouses, as opposed to the massive million-plus distribution centers seen in larger markets. This right-sized development approach, combined with supportive city programs, has so far prevented a glut of space – a positive sign for maintaining healthy market fundamentals as new buildings come online.
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Tenant Movements and Leasing Activity
Leasing activity in Q2 2025 was mixed, with healthy demand for newer space but also some give-back of older space. On the positive side, move-ins in modern facilities bolstered absorption in select submarkets. The most significant lease of the quarter occurred in Northeast Wichita, where a full-building tenant was secured for the recently constructed ICT21 Building 2 (approx. 180,000 sq. ft.). This speculative warehouse, which had been delivered vacant, is now fully occupied – a testament to pent-up demand for Class A industrial product. The lease was finalized in June and immediately bumped up occupied inventory in the Northeast submarket by 180,000 sq. ft., contributing greatly to the quarter’s largest positive absorption in that area. Brokers report that new distribution and manufacturing requirements are especially targeting state-of-the-art space with high clear heights, ample loading, and proximity to transportation nodes, which allowed the ICT21 building to lease up quickly. Conversely, several notable tenant move-outs put a drag on net absorption this quarter. In a prominent example, The Golf Warehouse (TGW) – an e-commerce sporting goods retailer – relocated its distribution operations out of Wichita, closing its large warehouse facility in April. This move impacted roughly 50 employees and added a substantial block of second-generation space to the market. The TGW building (located in an older industrial corridor) is now vacant and seeking new occupants, which contributed to the overall rise in vacancy. Other smaller tenants in legacy spaces also consolidated or shut down operations, reflecting a continued shakeout of older, less efficient properties as companies “flight to quality” into newer buildings or opt for build-to-suit solutions.
Despite these vacancies, broad market demand drivers remain intact. Third-party logistics providers, building products suppliers, and aerospace-related firms have been active in touring available space. Many tenants renewed in place during Q2 given the lack of immediately available alternatives, especially for mid-sized requirements under 50,000 sq. ft. Landlords have maintained bargaining power for quality space – for instance, lease rates on renewals in modern facilities are trending upward by a few percentage points due to limited new supply. Meanwhile, older Class B/C properties with functional challenges (low clear heights, inadequate sprinklering, etc.) are seeing longer downtime between tenants. Still, even some of those spaces are drawing interest for value-oriented uses or creative conversions (for example, an old manufacturing building being eyed for indoor storage). Overall leasing volume in Q2 was a bit slower than previous quarters, but transaction velocity is expected to pick up in the latter half of the year as new inventory comes online and tenants gain more options.
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Market Metrics: Vacancy, Lease
Rates, and Absorption
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Market Metrics: Vacancy, Lease Rates, and Absorption Overall Vacancy Rate: 8.2% (up from 6.5% in Q1). Vacancy rose quarter-over-quarter, but remains in a healthy range historically. Of the 3.55 million sq. ft. currently vacant, a significant portion came from one large availability in Northwest Wichita (Addition of Towne West) and the balance from scatterings of small spaces. By comparison, the vacancy rate was 6.5% in Q1 (near record lows), so while Q2’s jump is notable, the market is still comparatively tight – especially for quality space. Net Absorption: 52,096 sq. ft.. This metric turned positive his quarter and is now positive for the year. This change is a result of a large lease being signed in the ICT21 Industrial park, with 180,000 SF being absorbed. Asking Rental Rates: $6.08 per sq. ft. per year (NNN) on a weighted average basis. Rents continued to trend upward through Q2. The overall average of $6.08 represents all product types; modern Class A warehouses in prime submarkets often command $6.00–$7.00/SF, while older secondary space leases in the $4–$5/SF range. Flex/R&D space (typically smaller buildings with a higher office build-out) carries a much higher average rent – often $10–$12/SF or more. For example, new flex suites in Northeast Wichita are marketed around $12/SF NNN. Landlords have been able to push rents given low vacancy, though tenants are starting to resist increases on functionally outdated properties. Overall, asking rents are up roughly 3–5% year-over-year, and effective rents (taking into account any concessions) are likewise increasing as construction costs and demand keep upward pressure on rates.
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Investment Sales and Capital Activity Industrial investment sales activity in Wichita was relatively muted in Q2 2025, reflecting broader market headwinds from higher interest rates. No blockbuster industrial property sales (e.g. large portfolio or institutional trades) were recorded during the quarter. Would-be sellers and buyers remained in a bit of a stalemate over pricing: cap rates have moved upward given rising financing costs, but many owners are holding firm on values given strong rent growth and low vacancy in the market. As a result, deal volume has been limited to mostly smaller, single-tenant assets and owner-user acquisitions. The most noteworthy capital development in Q2 was the City Council’s approval of IRB financing for WAM Capital’s redevelopment project. Wichita-based WAM Capital LLC secured a package of $5 million in industrial revenue bonds to support its plan to transform a vacant industrial complex (approximately 140,111 sq. ft. of space) into new speculative lease space. This essentially is a public-private partnership to rejuvenate underutilized property and bolster inventory for growing companies. The IRB comes with property tax abatement on improvements, which helps the pro forma for updating older buildings. WAM’s strategy is a value-add play – purchasing aging industrial facilities at a discount and investing in capital improvements to attract tenants at market rents. The fact that the City backed this effort signals confidence that demand exists for the refurbished space once completed. Elsewhere, private capital remained active in development and expansion. As detailed earlier, Capps Manufacturing is moving forward with a spec build largely with private financing (aided by sales tax exemptions through IRBs). Several owner-occupiers also announced capital projects: for example, a Wichita-based food processor is investing in a new production line and 20,000 sq. ft. addition to its plant, and an aerospace tooling firm purchased land for a future facility expansion. Out-of-state investors are reportedly scouting the Wichita market as well – drawn by higher yields than coastal markets and Wichita’s stable industrial base (anchored by aerospace and distribution). However, many are taking a wait-and-see approach until interest rates stabilize. As lending costs potentially peak in late 2025, we may see an uptick in investment deals. For now, Q2’s investment story was one of strategic, targeted capital deployments (like the WAM project) rather than high volume. The underlying market fundamentals – strong occupancy and rising rents – continue to attract interest, suggesting that Wichita industrial assets should remain on investors’ radar even in a tighter capital environment.
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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NORTHWEST
CBD/ HYDE PARK
KE
SOUTHWEST
Submarket Highlights
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NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Key Submarkets and Development Clusters
CBD (Central Business District): The downtown/CBD industrial inventory is very limited – only about 0.44 million (mostly older warehouses). Vacancy in the CBD remains the highest of any submarket at 31.8%. This equates to roughly 141,000 sq. ft. vacant, nearly all of which is concentrated in a couple of functionally obsolete multi-story warehouse buildings that have struggled to find consistent tenants. There was no significant leasing or construction activity downtown in Q2. Given the unique challenges of these properties (age, layout, lack of dock doors or parking), the CBD industrial space is often considered for alternative uses or redevelopment. Until that happens, downtown’s industrial vacancy is expected to remain elevated, and many tenants that need industrial space prefer to be in outlying submarkets with better logistics. In sum, the CBD plays a minor role in Wichita’s industrial market, with high vacancy and static conditions this quarter.
Hyde Park: The Hyde Park submarket is an older industrial area in central/south- central Wichita (around the I-135 and Pawnee Avenue vicinity). Hyde Park’s vacancy rate stands at 6.2%, which is low and indicates most properties are occupied. Q2 saw a slight uptick in vacancy here as one small user (~6,600 SF) closed shop, pushing Hyde Park’s vacant space to about 76,600 SF total. However, no major move-ins or move-outs occurred beyond that. Leasing activity was quiet – essentially stable occupancy with modest churn. Hyde Park buildings are typically small to mid-sized (5,000–50,000 SF) and house local manufacturing, service, and distribution firms. With its central location, the submarket remains popular for companies needing proximity to city customers at affordable rents. Outlook: Hyde Park is expected to maintain steady occupancy. Given no new construction (space for expansion is limited) and decent demand for infill industrial, vacancies should stay near frictional levels.
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Key Submarkets and Development Clusters
Northeast Wichita : The Northeast submarket is one of the largest and most dynamic industrial areas in Wichita. It includes the Webb Road corridor, K-96 freeway area, and stretches into Bel Aire. Q2 was very active in Northeast. The submarket posted the highest net absorption of all areas at +82,140 sq. ft., thanks largely to the 180,000 SF ICT21 Building 2 lease mentioned earlier. Vacancy in Northeast ticked down to 7.4% (from roughly 8.0% prior) as that big space was filled. Construction is booming here: Sunflower Commerce Park’s projects (215K SF spec and Amazon’s 176K SF BTS) are in this submarket, and multiple smaller projects are planned or underway. Leasing demand remains high – Northeast is often the first choice for regional distribution hubs and higher-end industrial users, given its highway access (I-35, K-96), available land, and proximity to a strong labor pool in northeast Sedgwick County. With acrage available for future development in Bel Aire and Park City, Northeast will continue to be the growth engine of Wichita’s industrial market. Outlook is for vacancy to stay moderate as new supply is absorbed, and for continued new construction announcements in this corridor.
Northwest Northwest submarket is smaller in total footprint but experienced dramatic change in Q2. Vacancy spiked to 17.5% – by far the highest vacancy increase of any submarket – due to the accounced conversion of 531,000 SF from retail to flex/industrial at the Wichita Business Park. Prior to this, Northwest vacancy was in the single digits. Now, with roughly 650,600 sq. ft. vacant out of 3.7M, there is substantial inventory available. The bulk of that vacancy is one big block and a couple of mid-sized (50K SF) spaces – it’s not widespread small vacancies. This submarket includes areas like Maize, west of I-135 up to Valley Center – it’s somewhat dispersed. Outlook: We expect Northwest’s vacancy to gradually improve as that large block is marketed – there are active prospects considering it, including possibly an e-commerce fulfillment operation. The Northwest has land for expansion (e.g., around the Maize Industrial Park), but new development may pause until the existing big vacancy is absorbed. This submarket’s example this quarter highlights how one event can skew local stats in a smaller submarket. Wichita: The
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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Key Submarkets and Development Clusters
Southeast Wichita: The Southeast submarket (which includes areas around I-135 and 47th St S., the industrial corridors along K-15, etc.)Has a mix of older manufacturing facilities (some tied to aerospace supply chain) and distribution space. In Q2, Southeast actually saw improvement – net absorption was +52,710 sq. ft.. . Vacancy dipped to 14.7%, down slightly as those spaces filled. About 907,000 sq. ft. is vacant in SE, much of which is older large boxes awaiting repurposing or big users Rents in Southeast average in the mid-$4/SF range, as product is older and locations are a bit more remote from the metro center. The Southeast did not have any new construction deliveries in Q2, but notably this submarket is home to Spirit AeroSystems’ primary manufacturing campus (over 5 million sq. ft. by itself, not counted in the multi-tenant inventory). Spirit and its suppliers keep much of the area’s space occupied. Looking ahead, Southeast Wichita’s vacancy is expected to continue a slow decline as some large blocks get repurposed – there’s interest from a few out-of-town manufacturers in the big facilities. If even one lands, it could significantly tighten the submarket. For now, conditions are stable: older space is abundant but at bargain rates, and any quality space that does become available tends to lease relatively quickly.
Southwest Wichita: The Southwest submarket (encompassing the Airport area, West Wichita around Kellogg/US-54, and the Industrial District near West Street) remains one of the tightest submarkets. At the end of Q2, vacancy in Southwest was a scant 3.8%, effectively full occupancy. Only 613,000 sq. ft. was vacant market-wide in SW. The submarket did experience a slight negative absorption of -38,020 sq. ft., basically reflecting normal churn. Demand for Southwest is very high due to its proximity to Wichita Dwight D. Eisenhower National Airport, major rail lines, and highways like I-235. Big companies like UPS, FedEx, and aircraft manufacturers cluster here, and most new development in recent years (e.g., Ironhorse Manufacturing Park) leased quickly. Rents run $5–$6/SF NNN on average, but newer product near the airport can fetch closer to $6–$7. Notably, Southwest is getting a boost with the forthcoming Capps Manufacturing 120K SF project (the first new spec in years for this area). That will modestly increase inventory in 2026. Outlook: Southwest should remain extremely tight. With so little available, any new vacancy gets a lot of attention from tenants.
NAI MARTENS | Q2 INDUSTRIAL MARKET REPORT
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The information contained herein was obtained from sources believed reliable; however, NAI Martens makes no guarantees, warranties or represents as to the completeness or accuracy thereof.
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