Weigand forecast sees growth in office, retail sectors in 2015

J.P. Weigand & Sons offered an upbeat forecast for commercial real estate activity in the area in 2015.

The area’s largest real estate firm delivered its forecast at its annual real estate forum Thursday evening at the Hyatt Regency Wichita.

“It certainly looks like our city is off to a great start this year,” said Leisa Lowry, a commercial broker with Weigand who delivered the forecast.

This is the 25th year that Weigand has produced its real estate forecast.

The forecast said the office market will be strongest in the suburban areas, particularly the northeast, “where more new construction is expected.”

The forecast said downtown office space will face continued difficult conditions, and lease rates will have to remain low to compete – and attract new and retain existing tenants.

The forecast noted that last year, the area’s overall office market vacancy rate dropped to 16.8 percent. That was down from 17.9 percent in 2013, Lowry said.

Office vacancy rates were highest downtown, at 20 percent, and ranged from 12 to 18 percent in the southeast, northeast and northwest. Delano and the southwest had the lowest vacancy rates, 6.3 percent and 9.6 percent respectively, but the figures were calculated on a very small supply of office buildings compared to other areas.

Unlike office vacancies, retail vacancies in the area were up 1 percent to 13.3 percent in 2014. They ranged from 4.6 percent downtown to 14.7 percent in the northeast in 2014, though downtown has 30 retail buildings compared with 112 in the northeast.

But Lowry said retail real estate should also see more activity, including among discount retailers and quick-service restaurants, throughout the area. And overall retail growth will continue in the northwest and northeast areas in 2015. That would include Academy Sports and Outdoors store near K-96 and Webb, which a spokesman said earlier this week is set to open this spring. Wholesale club retailer Costco also plans to open its first Wichita store, at the northeast corner of Kellogg and Webb, in early summer.

“Our retail division is very busy, and I am very tired,” said Lowry, who specializes in retail real estate.

The industrial real estate sector is expected to be flat this year, with the market continuing to absorb vacant space in 2015, and little, if any, new construction is expected. That’s after that sector saw a 1.6 percent decrease in 2014 to a 17 percent vacancy rate.

As for other sectors, the forecast predicted:

▪ 1,000 new apartment units expected to come online in 2015 will be absorbed by the market with little impact expected to the overall vacancy rate, which was 7.9 percent in 2014, up slightly from 7.2 percent in 2013.

▪ Investors will continue to flock to commercial real estate, with more money chasing few commercial properties.

▪ The inventory of existing homes in the area will continue to decline, and new-home construction will pick up across all price ranges.

This story was originally published February 19, 2015 at 6:45 PM with the headline "Weigand forecast sees growth in office, retail sectors in 2015."