Q1 2025 OFFICE
NAI MARTENS | Q1 OFFICE MARKET REPORT
EXECUTIVE SUMMARY Market Recovery: Wichita’s office market continued its post-pandemic recovery in the first quarter of 2025. Vacancy rates have trended downward, reaching roughly 17.2% by the end of Q1 – an improvement from a year ago. Net absorption was modest but negative at approximately (14,497) square feet for the quarter f Leasing activity began the year quietly but is expected to pick up as 2025 progresses with several large tenants reportedly in the market searching for space. Average asking rents remain stable around the high-$16 per square foot range, offering affordable costs to tenants – the citywide average was $16.47/SF in Q1 (downtown averag Wichita’s rent growth has historically been steady rather than volatile, a trend that continues to make it an attractive, value-oriented market for occupiers. Investor Takeaways: Investors are cautiously optimistic. Office vacancy in Wichita has fallen sharply from pandemic highs above 20% and is now near what local experts consider a “healthy” level. Asset values have remained relatively stable thanks to consistent rent levels and improving occupancy. Cap rates for office assets are in line with national rates reflecting higher interest rates and cautious underwriting. No blockbuster office building sales closed in Q1, but local investment groups continue to seek opportunities in Wichita’s office sector, especially for well-leased properties and medical office assets. Notably, medical office has been a bright spot driving demand, both in Wichita and nationally which bodes well for investors targeting healthcare-tenanted buildings. Overall, value-add strategies are in favor – landlords and investors are focusing on renovating and repurposing older buildings to meet modern tenant expectations, rather than pursuing expensive speculative developments. This flight- to-quality approach is paying off in occupancy gains and should support property values going forward.
Vacancy Rate This continues to decline from covid heights above 20%
17.2%
-
New Deliverables New construction of speculative office space remains scare in Wichita. Net Absorption Slightly Negative. Q1 is often slower and Q1 2025 was no exception
Asking Rates Rates in Wichita’s office market remain competitive and steady.
$16.90 PSF
NAI MARTENS | Q1 OFFICE MARKET REPORT
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Office Submarkets
Total Vacant (SF)
YTD Net Absorption (SF)
Weighted Average Leasing Rate (PSF)
CBD
981,822
(21,285)
$16.49
Northeast
612,433
(7,311)
$19.30
Northwest
125,847
5,029
$15.25
Southeast
62,033
9,070
$10.20
Southwest
8,573
0
$8.66
Totals
1,790,708
(14,497)
$16.90
NORTHWEST
NORTHEAST
CBD/ HYDE PARK
KELLOGG
SOUTHWEST
SOUTHEAST
CLASS A
CLASS B
Total Vacant (SF)
760,159 (21,164) $20.55
Total Vacant (SF)
1,790,708
YTD Total Net Absorption (SF) Weighted Average Lease Rate
YTD Total Net Absorption (SF) Weighted Average Lease Rate
6,667
$19.22
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Construction Activity and Expansions
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New Office Projects and Developments
New construction of speculative office space remains scarce in Wichita, and that trend held true in the first quarter. Instead of large new office towers, the market is seeing activity in smaller developments and build-to-suit projects, as well as significant reinvestment in existing properties. Redevelopment and mixed-use are the buzzwords: experts predict Wichita will continue to favor office redevelopments/renovations over ground-up speculative buildings in the near term.
Zero Point Development- Webb Road Office
A boutique Class A office project by Zero Point Development LLC made construction progress. This 7,700 sq. ft. office building at the highly visible corner of Central & Webb Road (east Wichita) broke ground in late 2024 and moved toward shell completion by March 2025. In January, a city permit for ~$1.1 million was issued to advance construction. The developers are targeting modern professional tenants and have designed the building for either a single user or multiple small tenants. This project is significant because it’s one of the few non-owner-occupied new office constructions in Wichita in recent years. If this lease-up momentum continues, it could encourage similarly sized projects by other local developers.
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Poet Biofuels Office Expansion
POET Biofuels completed a large office expansion in late 2024 – a new 39,000 sq. ft. headquarters building on N. Webb Road that now houses about 200 employees. In Q1 2025, that facility was fully operational, representing a successful example of a company-led expansion. While POET’s building was finished prior to this quarter, its impact reverberates: it added high-quality office inventory to the east side and demonstrated the viability of investment when tied to a specific user’s needs.
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Wichita Biomedical Campus
While primarily an educational and research facility, the first phase of this $300 million downtown project will deliver an eight-story, 350,000 sq. ft. building by 2027. Construction ramped up in Q1 2025, reaching a milestone with a tower crane installed on site in early April. The building will feature labs, classrooms, and also offices and meeting spaces for Wichita State University, University of Kansas School of Medicine, and WSU Tech program. The project is not traditional private-sector office space, but it is expected to be a major driver of downtown activity, bringing 3,000 students and 200 faculty/staff into the city center when open. Ancillary development is already occurring around it (such as a new building for Sedgwick County’s COMCARE and a possible dental school in phase two). The Biomedical Campus illustrates how large-scale developments with office-like components (in this case, faculty offices, administrative offices, etc.) are contributing to Wichita’s urban revitalization.
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Construction Activity and Expansions
Aerospace/Manufacturing Offices: Wichita’s strong aviation manufacturing sector (e.g. Spirit AeroSystems, Textron Aviation) often entails office expansions within industrial campuses. In early 2025, firms like C.E. Machine and Globe Engineering pulled permits for building additions in Wichita, which include office components to support growing operations. These are industrial-adjacent expansions rather than pure office developments, but they contribute additional office-style workspace for engineers and managers. Public Sector & Institutional: Sedgwick County continued deliberations on a long-term headquarters solution. The County occupies 51,000 sq. ft. in a downtown office (the Ruffin Building) and in 2024 extended its lease through 2026 while exploring options for a new administrative building. Any decision on a new county office building (whether renovating an existing property or constructing anew) would be a significant addition to the office market, though none was finalized in Q1 2025. Meanwhile, education and health institutions moved forward with major projects (see the Biomedical campus below) that, while not traditional office space, will bring more knowledge workers downtown. Renovations and Tenant Improvements: Many office “projects” in Q1 were not new buildings but significant renovations. Property owners continued to modernize interiors to attract tenants. For instance, some downtown high- rises have been updating common areas and vacant suites build-outs to appeal to prospects. These renovations don’t increase square footage, but they effectively act as new supply of upgraded space in a market with little new construction.
Downtown Mixed-Use & Office Components: Wichita’s downtown is seeing a wave of mixed-use redevelopment that includes office elements. A prime example is The National project at 1st and Main – a historic bank building transformed into luxury apartments and the Commerce Club coworking space (discussed later). This opened in 2024, adding unique high-end office/co-working space downtown. In Q1 2025, city officials and developers advanced plans for other mixed-use developments. Notably, nearly 80 acres in southeast Wichita were annexed with plans for a large mixed-use community that will include commercial and office space alongside new housing. Although a long- term project (envisioned build-out over 10 years), the plan outlines 118,000+ sq. ft. of future commercial/office space as part of the development. This indicates that as Wichita grows, suburban nodes may see new office supply integrated with residential growth. The theme of Q1 2025 is that new office development is cautious and often tied to specific demand. With the exception of small speculative projects like the Webb Road building, most new space is coming from either build-to-suit offices or as a piece of mixed-use endeavors. Developers are wary of building large offices on spec, given only moderate absorption and national headwinds in office usage. Instead, Wichita is leveraging growth in other sectors (education, healthcare, residential) to incrementally grow its office inventory. This prudent approach has kept the market largely in balance.
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Coworking & Flex Office Trends:
The coworking and flexible office segment in Wichita saw notable developments and continues to evolve as a small but growing part of the office ecosystem. As of Q1 2025, Wichita is home to a handful of coworking spaces ranging from national providers to local startups, and demand for flexible workspace has shown steady growth coming out of the pandemic. In fact, the Wichita metro is one of the most affordable coworking markets in the nation – offering some of the lowest price points for shared workspace. A recent national study highlighted Wichita (along with Greensboro, NC) as offering the *“most budget-friendly” coworking subscriptions at just $99 per month for an open workspace. This low cost is attractive to freelancers, remote workers, and small firms, and it lowers the barrier for companies to experiment with flexible offices in Wichita. New Coworking Spaces: The marquee opening in Wichita’s flex office scene has been The National’s Commerce Club downtown. Debuting in January 2024, the Commerce Club is a high-end, two-level coworking and private office facility carved out of the historic Union National Bank building (as part of The National mixed-use redevelopment). It features 44 private offices, multiple conference rooms, a podcast studio, and 8,000 sq. ft. of lounge/common area within a stylish, hospitality-driven environment. By Q1 2025, the Commerce Club had begun to fulfill its goal of becoming a “hub of downtown Wichita”. Several new and relocating businesses chose this space for their offices. companies are rethinking how much space they need and are drawn to flexible solutions that can adapt with their business.
Occupancy and Demand: While specific occupancy rates for coworking centers are closely held, anecdotal evidence suggests rising utilization. As more professionals embrace hybrid work, companies in Wichita have been using coworking memberships to complement their main offices – for instance, to allow remote employees a touchdown space or to establish a small satellite presence. Wichita’s coworking market is still relatively small (a dozen or so spaces), but it is in “growth mode,” mirroring national trends. Nationally, the number of coworking locations grew by over 23% in 2024, and Wichita is likely contributing to that growth on a smaller scale. Many coworking operators report expanding membership and are exploring additional sites. The flexible office sector has proven adaptable coming out of the pandemic, often faring better than traditional office landlords. This is because coworking can accommodate companies looking to reduce fixed lease commitments or individuals who left conventional offices. Corporate Flex Usage: Another development is the interest from larger corporations in flex office solutions. Wichita’s major employers (in aerospace, finance, and healthcare) are traditionally more anchored to owned or long-leased offices. However, even they are showing some openness to flex space for special projects or short-term needs. For example, if a company has a temporary team in Wichita for a contract, renting a few coworking offices for a six-month stint is a convenient option. The presence of coworking options makes Wichita more attractive for project-based work and startups that may not want to commit to multi-year leases.
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Market Metrics: Vacancy, Lease
Rates, and Absorption
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Market Metrics: Vacancy, Lease Rates, and Absorption Vacancy Rates: Wichita’s office sector showed encouraging fundamentals in Q1 2025. The overall vacancy rate declined on a year-over-year basis, falling to an estimated 17.2%. This marks a significant improvement from the height of the pandemic when office vacancies in Wichita peaked above 20%. Local experts note that vacancy around 15% is considered healthy for Wichita’s office market, so current levels indicate a return to stability. Occupancy gains have been driven in part by companies bringing workers back to the office; mid-sized markets like Wichita benefit from shorter commutes and easier returns than some larger cities, which has helped trend in the right direction on filling space.
Lease Rates:
Rental rates in Wichita’s office market remain competitive and steady. The average asking rent across all submarkets was about $16.90 per square foot in Q1 2025. Notably, this is only a slight increase from the average three years ago, underscoring the market’s stability in pricing. Downtown class A asking rents currently average $20.04/SF, reflecting the desirability of the CBD’s upgraded buildings and amenities. By national standards, Wichita’s rents are very affordable – a factor that has attracted some companies to relocate or expand in the region for cost savings. Landlords have only modestly raised rents in recent years, and while there is some upward pressure from rising construction and operating costs, any rent growth is expected to be gradual. Market participants say Wichita historically doesn’t see the sharp rent spikes or drops that coastal markets experience, and this pattern continues in 2025 Absorption: Net absorption for Q1 was -14,497 sq. ft., a much slower pace than late 2024. The first quarter is often slower, and indeed leasing activity was quiet at the beginning of the year. Even so, Wichita managed to be only slightly negative on the heels of an exceptional 2024, which saw over 250,000 sq. ft. of office space absorbed. Most of the recent absorption has been concentrated in Downtown Wichita, which has accounted for the bulk of new leases in the past year. Downtown’s appeal – bolstered by amenities and renovated spaces – continues to draw tenants and drive down the urban core’s availability. Suburban submarkets have been more mixed, with some stable occupancies but fewer large transactions.
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Leasing Activity:
In terms of leasing activity, Q1 was characterized by smaller deals and renewals, with no single blockbuster lease transaction reported. Many companies are rightsizing or renewing in place as they evaluate space needs in a hybrid work era. However, brokers report a pipeline of larger requirements in the market – in fact, multiple national companies are scouting Wichita for a combined 150,000– 200,000 sq. ft. of office space across various industries. These potential deals, if finalized in Q2 or Q3, could substantially boost absorption and further tighten vacancy. Sectors driving office leasing include professional services, healthcare, and engineering/aerospace, in line with Wichita’s economic base. Medical office use in particular has helped prop up demand; healthcare providers and related companies have expanded footprints, offsetting some weakness from traditional office users. Many employers in Wichita have now implemented more regular return-to-office schedules, which has stabilized occupancy. However, the work from home trend, at least a few days a week continues for Wichita branches of national companies. return-to-office mandates are easier to manage in Wichita’s mid-sized market where commuting is convenient, supporting the recent occupancy gains
Flight to Quality: A key trend in Wichita’s office market is the “flight to quality” phenomenon. Rather than new speculative construction, activity has centered on upgrading existing buildings to attract and retain tenants. Landlords of older Class B and C properties are investing in renovations – modernizing lobbies and common areas, adding tenant amenities (fitness centers, conference facilities, on-site dining), and improving technology and HVAC systems. This strategy has been rewarded by higher occupancy. For example, the Farm Credit Bank Building at 245 N. Waco underwent significant upgrades (refreshing common areas, adding a gym and restaurant), and its occupancy jumped from around 60– 70% to nearly 100% after the improvements. Indeed, Class A/B space that offers amenities and quality build-outs is capturing most of the leasing. Many tenants coming out of the pandemic are willing to “trade up” to better space – often without a huge rent premium in a market like Wichita – to give employees an appealing office environment. This has put some pressure on outdated buildings with few amenities, which may struggle unless repositioned. As a result, office redevelopment projects are expected to continue, and we may even see older office buildings considered for conversions to alternative uses if they cannot compete in the leasing market.
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Investment Insights: Sales, Cap Rates & Investor Demand
Office investment activity in Wichita during Q1 2025 was measured, reflecting broader cautious sentiment toward the office sector. There were no major office building sales reported in the first quarter, a contrast to some past years that saw large downtown towers trade hands. Higher interest rates and uncertainty in the office leasing outlook have cooled investment volumes nationwide, and Wichita is no exception. Many would-be sellers are holding assets longer, and buyers are underwriting conservatively, focusing on secure income streams. That said, the absence of big deals does not imply a lack of investor interest – rather, it indicates a gap in buyer-seller expectations and a selective approach to office acquisitions in the current climate. Cap Rates & Values: Office cap rates in Wichita are generally in the high single-digits, consistent with trends in secondary markets. Recent data put the average office cap rate around 9.0%, which is aligned with the national average and up from pre-pandemic lows due to the increased cost of capital. Local market experts note that Class A properties in Wichita can trade at cap rates in the mid-8% range, while Class B/C buildings or those with vacancy issues may see cap rates north of 9%. These higher yields reflect the perceived risk in the office sector today, but they also signal potential upside for investors who can improve leasing in underperforming properties. Wichita’s office values per square foot remain substantially lower than national averages, which can be attractive for investors seeking affordable, income-producing assets. For example, a well- leased suburban office building in Wichita might trade for a fraction of the price of a similar building in coastal markets, yet offer a comparable cap rate and stable tenant base. This value proposition continues to draw mainly regional investors and some local investment groups.
In Q1, no blockbuster transactions occurred, but there were whispers of private investors evaluating office offerings, especially those with strong tenants (e.g. government or medical tenants) or properties that could be bought at a discount and upgraded. Notable Trends: Investors are particularly interested in niches like medical office and owner-occupied developments. As noted earlier, medical office has helped drive the sector forward. Healthcare-oriented properties (for example, clinics, surgery centers, or medical office buildings near hospitals) typically boast high occupancy and credit-worthy tenants, making them relatively safe bets. A recent example outside Q1’s timeframe was the sale of a specialty hospital and adjacent medical office in Wichita in late 2022, which garnered significant investor attention due to the strength of the healthcare tenancy. This trend continued into 2025 – any healthcare or essential-service office asset coming to market tends to see healthy demand. Additionally, owner-users (companies buying or building their own offices) have played a role in Wichita. In 2024, POET Biofuels completed a 39,000 sq. ft. build-to-suit office for its own operations on North Webb Road. Such projects, while not investment sales, indicate confidence and long-term commitment to the market. They also occasionally lead to sale-leaseback opportunities that investors could capitalize on (though POET has not indicated such plans).
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Investment Insights: Sales, Cap Rates & Investor Demand
An important theme is the focus on redevelopment and value-add. Investors with an appetite for some risk are looking at older office buildings that can be renovated or repositioned. With little new construction, the path to creating “like-new” office product is often through heavy investment in existing buildings. For instance, several historic and mid-century buildings downtown have been targets for conversion to mixed-use or upgraded office space. These projects require capital and vision, but when executed well, they have proven successful (as seen with the Farm Credit Bank Building’s turnaround and The National redevelopment, discussed earlier). Renovations as opposed to new speculative space will likely define Wichita’s office growth. Investors aligned with this strategy – essentially breathing new life into older assets – can tap into solid tenant demand without facing the full costs of ground-up development. Investor Sentiment: For much of Q1 2025, investor sentiment toward office properties was cautious but not pessimistic. The national narrative around office real estate is challenging (with high vacancies in many cities), yet Wichita’s relative stability offers a counterpoint. Local investors understand the market’s nuances: the tenant base is largely local/regional businesses, the pace of change is slower, and speculative overbuilding is rare, which together have prevented the extreme oversupply seen elsewhere. This breeds a sense of conservative confidence – investors aren’t expecting explosive growth, but they also see limited downside given improving occupancies and reasonable rents. New entrants to Wichita’s investment scene include some out-of-town buyers looking for higher yields in secondary markets.
In summary, Q1 2025 saw few investment sales, but the groundwork is being laid for future transactions as the office recovery solidifies. Cap rates remain higher than in recent years, providing better cash-on- cash returns for those willing to invest. With Wichita’s office market trending in the right direction on fundamentals, investors with a long-term outlook are staying engaged. Look for potential sales in the coming quarters, possibly including smaller Class B office buildings trading to local buyers, or opportunistic acquisitions of any distressed assets (though distress in Wichita’s office market has been limited so far). The investor demand is selective – focused on quality tenants, medical uses, and value-add plays – but it is very much present, anticipating that Wichita’s steady economy and improving office metrics will yield solid returns over time.
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NORTHWEST
CBD/ HYDE PARK
KE
SOUTHWEST
Submarket Highlights
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Key Submarkets and Development Clusters
Downtown Wichita (CBD): Occupancy & Vacancy: Downtown office vacancy is higher than other submarkets, but poised to improve. More companies returning to in-person work should vacancy down (a positive trend for the CBD. Leasing Activity: Steady leasing activity with a focus on smaller professional tenants. Notably, Simmons Bank moved its Wichita headquarters from the east side to a new 15,000 sq. ft. downtown office in early 2024, citing confidence in downtown’s growth. New-to-market tech firms are taking downtown space as well – for example, U.K.- based Bloc Digital leased 3,400 sq. ft. in the Epic Center (Wichita’s tallest office building) to establish a Wichita office in Q1. This influx of users helped boost absorption and reduce downtown’s available space. Rents: Asking rents downtown average around $16.49 per sq. ft. for all classes. The market-wide average asking rent in Q1 2025 was about $16.47/sf, and downtown rates are stable to slightly rising as premium space fills. Landlords are cautiously optimistic that sustained demand could put upward pressure on downtown rents after years of stagnation. Notable Moves & Developments: Several older downtown buildings are being renovated or repurposed rather than new speculative towers being built. Meanwhile, construction is underway on the new Wichita Biomedical Campus ,a major project expected to bring hundreds of students and staff and indirectly spur nearby office demand. A recent study forecasts 658,000–825,000 sq. ft. of additional office space demand in Downtown Wichita over the next decade, signaling confidence in the CBD’s growth projects.
Northeast Wichita: Occupancy & Vacancy: The Northeast Corridor – Wichita’s prime suburban office market (roughly along Webb Rd, N. Rock Rd, and K-96) – boasts one of the tightest vacancies in the metro. with many buildings near fully leased. High occupancy levels are driven by strong tenant preference for this area’s Class A product and amenities. Tenant Demand & Leasing: Demand remains robust from professional services, healthcare, and financial firms seeking modern space and parking. In contrast to the downtown influx, some companies have relocated to the Northeast submarket for newer space. Generally, leasing in this corridor is healthy – most availabilities are smaller suites, and any larger blocks that hit the market tend to get attention from expanding local companies. Rents: Northeast Wichita commands the highest rents in the metro, reflecting its Class A inventory. Asking rates average about $21 per sq. ft. for this submarket, and top-tier buildings can achieve over $20. Landlords have maintained rents given solid occupancy, and rent growth is modest but positive. New Development: Notably, new construction has cautiously resumed here. At the Crestpoint Office Development near 127th & Central, a second office building (approximately 36,000 sq. ft., two-story) is under construction in Q1 2025 after the successful lease-up of the first buildingbizjournals.com. This project offers condos/ownership opportunities for businesses, a unique model in Wichita. Overall, however, speculative development remains rare – developers are requiring significant pre-leasing or sale commitments. Most “new” supply in this corridor is coming from build-to-suit projects or expansions of existing office parks.
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Key Submarkets and Development Clusters
Northwest Wichita: Occupancy & Vacancy: NW Wichita’s office market is smaller in scale but highly occupied. Vacancy is currently of of the lowest of any Wichita submarket – roughly -10% vacant. This tight vacancy is due to limited office inventory on the west side and steady demand from local businesses. Leasing Activity: Tenant activity on the NWt side is primarily driven by regional service firms, medical practitioners, and back-office operations that prefer to be close to the NWt Wichita residential base. While there were no blockbuster new leases in Q1, numerous small and mid-sized deals kept the submarket active. Overall, tenant demand is stable – not as frenzied as the east side, but consistent enough that landlords enjoy high occupancy. Rents: Average asking rents in NW Wichita run about $15.25 per sq. ft. rents have inched up due to lack of supply; however, they are ultimately capped by the class of product (mostly Class B/B+ offices and medical-office buildings). Landlords are achieving near asking rates given the low vacancy. Concessions are minimal for quality space, although older buildings without upgrades must remain competitively priced. Development & Notable Buildings: New office development in NW Wichita remains scarce. No major multi-tenant office projects were delivered in Q1 2025, and none are under construction, as developers are hesitant to build speculatively in this submarket. Instead, the focus has been on mixed-use developments and small professional buildings. A notable recent project was a build-to-suit federal office completed in late 2024 (a secure facility for a government agency), illustrating that only users with specific needs are driving new construction.
Southwest/Southeast (South) Wichita: Occupancy & Vacancy: The South Wichita submarket (including the older industrial-office corridor around the Air Capital/Airport and Spirit Aerosystems campus) is the weakest segment of the office market. There is very low vacancy, but also not much product. Much of this vacancy is concentrated in large, obsolete complexes once used by aerospace or call-center operations. Leasing Activity: Tenant demand in South Wichita is limited. There is very little new leasing beyond government agencies or industrial companies taking ancillary office space. No significant office leases were reported in Q1 2025 for this submarket. Instead, we continue to see consolidation – tenants relocating to more modern spaces in other parts of the city – leaving behind older buildings. Given the high vacancies, landlords in this area are willing to do short-term or low-cost deals to fill space, but even at bargain rates activity is slow. Coworking and flex office trends have largely bypassed this submarket. Rents: Wichita averagebetween $8-$10 per sq. ft. – the cheapest in the region – and effective rents can be even lower after free rent or big improvement allowances. The rent gap reflects the older, mostly Class C nature of the inventory. In many cases, buildings are functionally obsolete or need significant upgrades, which puts downward pressure on lease rates. Asking rents in South Outlook & Development: No new office developments are planned in South Wichita, which is not surprising. Instead, the emphasis is on redevelopment and adaptive reuse of existing structures. For example, some vacant office buildings are being considered for conversion to educational or industrial uses, and landlords are upgrading a few properties to attract niche tenants (such as aviation suppliers requiring adjacent office space). The expectation among market experts is that no new speculative office will be built in this submarket in the near term.
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2025 Outlook
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Gradual Improvement in 2025
Short-Term Expectations (Q2 2025): The Wichita office market is poised for a continuation of gradual improvement heading into the second quarter of 2025. Market sentiment is largely optimistic that leasing momentum will build. Several factors support this outlook: Increased Leasing Activity: After a quiet start to the year, brokers anticipate a pickup in deal volume in Q2. Companies that began space searches earlier in the year may finalize leases in the coming months. The active requirements totaling ~150k sq. ft. in the could translate into signed leases by mid-year. If even a portion of this materializes, Q2 absorption will outpace Q1. Look for announcements of new tenants, especially in downtown and northeast submarkets, as well as potential expansions by existing firms. Continued Decline in Vacancy: With no new speculative supply hitting the market in Q2 and steady demand, the vacancy rate is expected to inch down further. Even a single large lease signing can have an outsized impact on Wichita’s relatively small office inventory. Property owners express confidence that the worst of the pandemic-era vacancy spike is over. It wouldn’t be surprising if overall vacancy pushes closer to the low-14% or even high- 13% range by mid-year, barring any major move-outs.
Stable to Slightly Rising Rents: Rents should remain stable in Q2. Landlords are likely to hold face rents around the current averages, but we may see a bit more landlord leverage in negotiations if vacancy tightens. Already, there are hints that rents “could creep up” to offset inflation and construction cost increases, though Wichita’s increases will be modest and market-specific. Tenants seeking top-tier space might find less generous concessions than a year ago, as the best buildings approach full occupancy. However, overall leasing costs in Wichita will continue to be a bargain compared to larger cities, which is an advantage in attracting outside firms. Construction and Development: No new speculative projects are expected to break ground in Q2, but progress will continue on projects underway (like the Webb Road office and the Biomedical Campus). The development pipeline for purely speculative offices remains thin – any new announcements would likely involve a significant pre-lease or be part of a mixed- use concept. Nonetheless, watch for rumors: if leasing markedly improves, developers could start quietly planning for the future. Q2 might also bring news on the Sedgwick County headquarters search or other civic projects, which could add to future office inventory if they move forward.
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Key Factors to Monitor in 2025
Economic Climate: Wichita’s office demand is linked to its regional economy, which is influenced by manufacturing (especially aerospace), healthcare, and professional services. The outlook for those sectors in 2025 is generally positive, but factors like interest rates, tariff policy, supply chain issues, or labor shortages could indirectly affect office space decisions. As of early Q2, the Federal Reserve has paused rate hikes and economic growth is modest, which provides a relatively stable backdrop for real estate. If the economy stays on track, companies will be more apt to expand staff and offices. Additionally, any wins on the economic development front – e.g. a new employer entering the Wichita market – would directly boost office demand. Investor Activity: While users drive the fundamentals, keep an eye on the investment side in Q2. If financing conditions improve (even slightly lower interest rates or simply more lender confidence in office), we might see some office property sales in Wichita. An investor purchase of a prominent building or a portfolio trade would signal confidence and could precede capital improvements. Moreover, if outside investors make moves in Wichita, it could introduce new perspectives, potentially even considering adaptive reuse projects (for instance, converting underused offices to residential, which is a national trend in some markets, though not yet seen widely in Wichita). Any such developments would shape the future supply and competitive landscape.
Construction and Development: No new speculative projects are expected to break ground in Q2, but progress will continue on projects underway (like the Webb Road office and the Biomedical Campus). The development pipeline for purely speculative offices remains thin – any new announcements would likely involve a significant pre-lease or be part of a mixed- use concept. Nonetheless, watch for rumors: if leasing markedly improves, developers could start quietly planning for the future. Q2 might also bring news on the Sedgwick County headquarters search or other civic projects, which could add to future office inventory if they move forward.
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Overall Outlook
Overall Outlook: In the near term, Wichita’s office market is expected to maintain its steady course of recovery. The phrase “cautiously optimistic” truly encapsulates the mood. The market isn’t surging – and indeed faces the same headwinds of hybrid work and higher costs as elsewhere – but it’s also not in retreat. Instead, Wichita is likely to see incremental gains: a few more leases, a point or two off the vacancy rate, perhaps a slight uptick in rents by year’s end, and continued robust performance of upgraded and niche properties (like medical offices and flex spaces). By the end of Q2 2025, we anticipate reporting a stronger quarter of leasing, potentially one or two significant office deals (either a large tenant move or a building sale), and more clarity on any new developments in the pipeline for 2025–2026. Landlords will continue to differentiate through improvements and amenities, and tenants will benefit from the competitive, tenant- friendly rates that persist. Wichita’s stability and affordability remain its core strengths – qualities that should help it weather any broader volatility in the office sector. In a national context where many office markets are facing uncertainty, Wichita stands out for its resilience and gradual growth, making it a market to watch for both investors and occupiers seeking long-term value.
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NAI MARTENS | Q1 OFFICE MARKET REPORT
www.naimartens.com
1330 E. Douglas Wichita, KS 67214 316-262-0000 naimartens.com
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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