Madelyn Montague joined CenterPoint’s industrial team in 2010 to redevelop the former NNSA Campus in Kansas City. We sat down with her to discuss what she’s learned in the business so far and what she’s looking forward to in the next year.
How were you drawn to real estate?
I grew up knowing I liked to build things. I saw my dad, Don Montague, build his agency (MMGY Global) from the ground up from his basement, so I’ve always aspired to do the same. So whether it’s building industrial buildings or relationships with brokers, or even gaining the experience and building up knowledge, I really find interesting and engaging.
Going into industrial real estate was probably more an influence of the relationships I had growing up that drove me to industrial side more than any other sector. I grew up in Kansas City, but came back during my undergrad and interned Jones Development Company and with Block Real Estate Services.
That was my first introduction to the industrial real estate community here. Moving forward and going into real estate finance at Ole Miss, I got hired full-time right out of school by CenterPoint, where I was on the team to develop the national security campus. It was a bit of drinking out of a fire hose at first. I didn’t know anything about the NNSA initially, so I learned a lot from that experience within my first three years at CenterPoint.
Who has been your biggest mentor?
Jim Cross (CenterPoint SVP) really took me under his wing initially and I’m still under it today. He’s highly motivating and encouraging and he’s the smartest, busiest guy I know but he still takes the time to teach me what industrial development is, whether it’s learning different sprinkler systems to navigating the politics or the community outreach. So he’s been a great mentor.
Montague and a CenterPoint team is working on a new facility for a national retailer. Photo courtesy of CenterPoint.
What projects are you working on now?
SVP Brian McKiernan and his Kansas City team just brought in a new national retailer and are building them a 55,950 SF truck terminal facility with 100 dock doors, 400 trailer parking, and a 5,000 SF maintenance facility. I’m helping the team managing the construction of the project, and we’re led by CenterPoint’s VP Lance Skala.
I also am helping lease up the rest of our spec: 194,000 square feet that we’re delivering to the market at the end of December. We’re pretty confident we’re close to getting a lease signed for an additional 130,000 square feet. We’ve gotten got more prospects within the last four months than the first four months of constructing the building, so we’re excited.
CenterPoint is close to a 130,000-square-foot lease on the rest of this spec building.
What changes, trends have you seen in Kansas City’s industrial market lately?
Obviously Kansas City is a pretty exciting place to be – not only because of the Royals – but the momentum in the industrial real estate sector. Specifically, we’ve seen a surge in spec development. There’s a lot going up and vacancy rates continue to go down. We’re continuing to see buildings delivered, tenants relocating to new Class a space, and new businesses entering the market. Over the past year, we’ve seen these projects bring in 4,000 new jobs.
CenterPoint is continuing to become more opportunistic in the market, and potentially looking at joint ventures. We’ll definitely continue to have a long-term stance in Kansas City. We fall in love with the city more and more every year we’ve been here, and we’ve been here for 7 now. I don’t see us going anywhere anytime soon.
What challenges do you face in today’s market?
The more difficult parts are assessing risk in the market. We continually have to re-assess risk – and real estate is not exactly the most stable of industries. We always need to keep our ears perked up and look ahead and see where we’re going, not to forecast where we’re going to be, but more in line to find a way to stay competitively advantaged. We find the market is moving extremely fast and continuing to do so and so this re-assessment is not just happening annually, but on a month-to-month basis. We want to see where all of our chips are placed.
Montague’s favorite past time: travel.
What are your passions outside of work?
Hands-down travel. My dad’s company (MMGY Global) specializes in only travel and hospitality. I’ve been lucky and have been given the opportunity to travel lots of places with my family. Any chance I get I like to do so with friends and family. I’m an avid skier. My family spends every Christmas in the mountains in our condo in Vail Village, Colorado, which is nice because you can walk to the slopes, and to go get food and drinks.
My favorite place is I’ve traveled is probably Corsica et Sardinia. It’s got amazingly blue water and these caves that you can jet ski through and private beaches you can snorkel to. It’s a beautiful place with beautiful sunsets.
How Kansas City’s real estate sectors are shaping up for 2015
Each of the real estate sectors in Kansas City are evolving to a rapidly changing market. That was evident over the course of 2014, as illustrated by four key experts who spoke to new trends and their 2015 predictions at the KCRAR Commercial Forecast, hosted on Wednesday.
By far, the most promising sector in 2014 was industrial. Even as skeptics voiced concerns that Kansas City was overbuilding spec space, the market ignored that caution and developers are working on building their second round of spec. Nathaniel Hagedorn of NorthPoint Development said spec is increasingly important because industrial users’ decision making process today is roughly 90 days.
“They don’t have time to wait around to get a building constructed,” Hagedorn said. “We at NorthPoint have certainly been aggressively building spec and I think that’s helped to free up the market and attract new users.”
- Last year, Kansas City absorbed 3 million square feet of spec construction.
- In 2014 year to date, Kansas City has built 2.3 million square feet of spec and absorbed 2.8 million square feet.
- Hagedorn’s prediction: Kansas City will absorb 4 million square feet by year’s end.
Kansas City is thriving thanks to a key $300 million investment by BNSF in its new intermodal facility – a move that Hagedorn believes will drive 70 million square feet of demand locally over the next 10 to 20 years. “From Kansas City’s perspective as a market made of 250 million square feet, one investment decision by BNSF will expand our market by 25 to 30 percent.”
Nathaniel’s prediction? “I believe we’ll do north of 4 million square feet this year, which is a terrific absorption,” he said.
And that’s only one of many logistics parks taking off around the metro area. Considering Kansas City is the second large rail center in the country outside of Chicago, the industry is being pushed forward by manufacturers who realize that one gallon of gas can get a ton of freight 18 miles by truck, or 400 miles by rail.
Shameless plug: Hear more about new industrial trends from key experts at MetroWire’s 2014 Industrial Summit. More info here.
Owen Buckley of LANE4 Property Group speaks at the KCRAR 2014 Commercial Forecast. Photo credit: Mia Katz/KCRAR
Retailers are struggling to adapt to a market that’s relying heavier than ever on e-commerce. Technology and its effects, coupled with a slump in suburban housing growth and a poor consumer outlook, is changing the landscape of retail across the country, evident in the hordes of massive retail space that now sit barren.
“The amount of retail space we built in this country was almost obscene,” LANE4 Property Group President Owen Buckley said. “If you’re a tenant rep broker representing Radio Shack, Payless, or Walmart, your life has changed. Instead of them wanting 8 or 9 stores a year, you’re lucky if they want 2.”
So how are retailers adapt to a changing market? Much like developers are: Looking back to properties in infill areas that have been overlooked, resizing and remodeling their stores, adding value, taking care of them, and not growing as fast.
The big trends now: pedestrian-friendly, walkable mixed-use spaces. Brick-and-mortar retailers must create the “experience,” Buckley says, or be pushed out by competition.
“A lot of them are sitting on their hands, waiting to see what their competition will do, and everyone is looking at one another,” Buckkley said. “With technology and the ability to deliver goods within a days’ notice, maybe a stock room doesn’t need to be as big as it used to be.”
Pinnacle Corporate Centre V. Rendering courtesy of Block Real Estate Services.
Larry Glaze of Jones Lang LaSalle says the recession is in the rearview mirror, and now Kansas City’s office market is seeing something it hasn’t seen in years: spec development. He outlined a few significant projects developers are looking to launch within the next year:
Johnson County leads the way in office space, Glaze said. Block Real Estate Services is embarking on the 68,000-square-foot Pinnacle Corporate Centre V at 4001 W. 114th Street in Leawood – the last remaining office development along the Tomahawk Creek Parkway Corridor. Block recently signed a 17,000-square-foot pre-lease for the building.
Looking to the moves of a few key players in the market, Ken Block is also looking to launch another 145,000 square foot office development southwest of Teva Pharmaceutical’s headquarters. Once the building is 30 to 40 percent lease, Block wants to begin construction.
Larry Glaze, Jones Lang LaSalle
VanTrust is also looking to build up to 145,000 square feet of office or medical space at its newly acquired site at 666 W. 110th Street facing I-435. The firm also recently purchased a complex at 49th and Main St. across from the new Board of Trade building. There, VanTrust would like to construct up to 150,000 square feet.
Other developments gaining momentum: The site next to Blue Cross Blue Shield fronting Washington Square Park is slated for either office or multifamily. Another 100,000 square foot site by JE Dunn’s east village.
But with rising rental rates, developers need to get creative as it comes to office space, Glaze said. “There’s a real attempt to convert traditional office buildings to create fun, collaborative space where firms can get all the benefits of a traditional building but the collaborative spirit they’re looking for.”
A recently completed development is setting a high watermark for office product in Kansas City, according to Glaze. He says Plaza Vista, the newly opened site which houses Hotel Sorella and Polsinelli PC’s headquarters, is under contract for north of $400 a square foot.
Plaza Vista is up for sale at a listing price of more than $400 a square foot, according to Larry Glaze.
The American Dream of owning a home isn’t the dream for everyone anymore, says Michael McKeen of EPC Real Estate Group. “Apartments aren’t just apartments anymore; It’s a way of living,” he said. Young professionals and empty-nesters are driving huge demand for more dense multifamily projects closer to the urban core of the city. That demand is driving a huge number of new units announced across the city.
New multifamily development in Kansas City, 2014-2016:
- Lenexa: 1,300 units
- South Overland Park: 4,500 units
- Downtown: 2,800 units
- Kansas City overall: 15,000+ units
Looking toward the future, McKeen said he thinks the industry is in its last phase of expansion before going into hypersupply and subsequently, recession.
“I’m not urging anyone to stay away from the products, but invest wisely,” he said.
Deal of the Week
204 West Linwood Blvd., Kansas City, Mo.
Copaken Brooks takes home the Deal of the Week with the recent sale of the historic Linwood Law Building at 204 W. Linwood Blvd. in Kansas City, Mo. The 104-year-old, 9,214-square-foot office building with a 4,607-square-foot basement sits on a highly visible corner in midtown Kansas City and has unique original features and fixtures.
“Finding the right buyer that valued the historical aspects of the building was important,” said Copaken Brooks’ Molly Crawford, who represented the seller.
Ichabod Enterprises LLC purchased the building for an undisclosed amount, and has plans for future redevelopment/expansion on the north wing of the building for a Tapas restaurant.