KC's office vacancy rate stays below national average
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Despite a slight uptick in 2024, the Kansas City metro continues to have fewer office vacancies than the national average, per Moody's latest tally.
Why it matters: Though the return to office push picked up momentum last year, plenty of workers are in hybrid or remote setups, and office space has become less valuable for buyers.
Zoom in: Only 16.7% of Kansas City's office space was reportedly empty in 2024, a continuation of significant deviation from the national average since 2020.
- KC has typically been higher than or about equal to the national average since 2000, according to Moody's numbers.
Zoom out: Office vacancies reached a record-high 20.4% in the country's top 50 metro areas last year, Moody's reported.
What they're saying: "The KC region is experiencing increased success attracting and growing office-related projects," Tim Cowden, president of the Kansas City Area Development Council, tells Axios.
- "Our region's commute times and affordable housing market make office work more attractive and sustainable than in many of our peer metros," he added.
Some recent local office investments:
- Fiserv, a fintech company, announced in April that it would spend $175 million to create a strategic hub in Overland Park, Kansas.
- The 1400 KC building, which was finished in 2023, has attracted health insurance company Blue KC and local architecture firm Populous.
The big picture: Moody's suggests two adjustments could reduce vacancies nationwide:
- Converting offices into residential properties. That's something we are seeing more often, though it's often tricky to pull off.
- Knocking down office buildings. The idea is to get rid of older, cubicle-era offices that firms aren't interested in. That's happening more, too.
Office demolitions have been ticking up since 2022, per CoStar data.
State of play: Newer buildings near transport hubs with more co-working space and fitness centers — designed for a Zoom era — are in high demand, as the Wall Street Journal recently wrote.
The intrigue: Some companies have called workers back without having enough space for them.
- AT&T workers told Business Insider that there weren't enough desks and parking was hard to find now that everyone is required to be in the office five days a week. Amazon reportedly had similar problems.
What we're watching: Construction activity is below pre-pandemic levels, and the vacancy rate could peak over the next nine to 15 months, Moody's economist Thomas LaSalvia tells Axios.
Go deeper: These major companies want workers back in the office
Axios' Emily Peck contributed to this story.