Several industries are driving the demand for warehouse space in Kansas City, leveraging its central location, robust infrastructure, and growing economy:
1. E-Commerce
The rapid expansion of online retail has created a need for large-scale warehouses to manage inventory and facilitate fast delivery. Kansas City’s industrial real estate market has experienced significant growth, largely driven by the e-commerce sector. In the second quarter of 2022, the demand for bulk warehouse and distribution space remained high among e-commerce retailers, contributing to a positive market outlook. Amazon, Walmart, and other online retailers have established significant distribution centers in the region.
2. Manufacturing
Kansas City’s strong manufacturing base, particularly in automotive, aerospace, and electronics, requires extensive warehousing for raw materials, components, and finished goods. In the third quarter of 2024, the manufacturing industry experienced a 7.6% year-over-year employment growth, marking it as one of the fastest-growing sectors in the region. Ford Motor Company and General Motors have significant operations in the area.
3. Food and Beverage
Food production and distribution, including grocery and restaurant supply chains, drive demand for cold storage and temperature-controlled warehouses. Kansas City’s food and beverage industry has significantly contributed the demand for warehouse space. Notably, in 2022, food and beverage occupiers accounted for 17.6% of local big-box warehouse leasing activity, highlighting the sector’s substantial role in the region’s industrial real estate market. Companies like Hostess Brands and other food producers utilize warehouse facilities in the area.
Additionally, the Kansas City area boasts a workforce of nearly 28,000 individuals employed in food and beverage manufacturing, warehousing, and distribution as of the first quarter of 2024, underscoring the industry’s prominence in the local economy.
4. Pharmaceuticals and Healthcare
The need for storage of medical supplies, pharmaceuticals, and healthcare equipment has grown, particularly with the rise in e-commerce for healthcare products. The pharmaceutical industry has increased demand for warehouse space in Kansas City. Notably, SubTropolis, the world’s largest underground business complex, offers 92,000 square feet of climate-controlled space specifically designed for pharmaceutical warehousing and distribution operations. This facility provides energy-efficient storage solutions with features such as 24-hour security, GSA Level III secured access, and proximity to major highways, catering to the specialized needs of the pharmaceutical sector.
5. Third-Party Logistics (3PL)
Outsourced logistics providers require warehouse space to manage supply chains for multiple clients, including e-commerce, retail, and industrial sectors.The 3PL industry has significantly driven the demand for warehouse space in Kansas City. In 2022, 3PL providers led the way in the city’s big-box warehouse leasing activity, accounting for a substantial portion of the market.
6. Retail and Consumer Goods
Traditional and big-box retailers are increasing their warehousing needs to support omni-channel strategies and regional distribution. In the past two to three years, the retail industry has significantly driven the demand for warehouse space in Kansas City. In the second quarter of 2024, the Kansas City retail market experienced a vacancy rate of just above 3.8%, indicating a strong demand for retail space. Target, Home Depot, and other major retailers have distribution centers in Kansas City.
7. Automotive
The automotive industry, fueled by local manufacturing and the growth of electric vehicles (EVs), requires warehouses for parts and finished vehicles. Demand for warehouse space in Kansas City has grown to support the industry’s supply chain operations, including parts storage, assembly, and distribution. In 2023, the region was expected to deliver over 10 million square feet of new industrial space, including speculative and build-to-suit facilities, to accommodate the growing needs of various industries, including automotive manufacturing. Panasonic’s EV battery facility under development in De Soto is a significant driver of growth in this category.
8. Technology and Electronics
Companies in tech and electronics require specialized warehousing for high-value and sensitive equipment. This sector has significantly influenced the demand for warehouse space in Kansas City. In 2024, OpenStore, an innovative platform focused on e-commerce and technology products, announced the opening of its first fulfillment center in Kansas City. The 113,000-square-foot facility, located at Executive Park Logistics Center, represents a $5 million capital investment and is expected to create 46 new jobs, highlighting the region’s growing role in the technology and electronics sector.
Kansas City is also growing as a hub for data centers and cloud infrastructure, which, although not traditional warehouses, indirectly increases demand for related warehouse space. For example, these tech facilities require physical storage for hardware, spare parts, and network equipment, adding pressure to the local warehousing market.
9. Agriculture and Agri-Business
With its location in the agricultural heartland, Kansas City supports warehousing for grain, livestock feed, equipment, and other agricultural products. A study supported by the Kansas City Agribusiness Council analyzed 66 agriculture, food, and food processing sectors, revealing an estimated total economic impact of approximately $24.445 billion and the support of 98,655 jobs in the Greater Kansas City area.
10. Energy and Renewable Resources
The push for renewable energy solutions, such as solar panels and wind turbines, drives demand for large-scale storage spaces. In the past two to three years, the energy and renewables industry has notably influenced the demand for warehouse space in Kansas City. A significant development is the planned construction of a massive solar farm at Kansas City International Airport, envisioned to be a 500-megawatt facility spanning 3,100 acres. Such large-scale renewable energy projects necessitate substantial warehousing for the storage of solar panels, equipment, and materials, thereby driving up the demand for warehouse space in the region.
