#FLEXKC Panel: Cold storage is next frontier for "on fire" Kansas City industrial market

Kansas City's industrial market remains strong, with more than 3 million square feet of speculative space currently under construction and 1.3 million SF completed in the first quarter.

But in order to succeed in the rapidly changing, omni-channel marketplace, communities and companies need to remain flexible on all fronts, ranging from operations to incentives to workforce development. That's the consensus of panelists at KC SmartPort's 2019 Industry Briefing, FLEXKC.

"While the economy and most indicators point to continued growth, the need for companies to increase flexibility in operations and hiring practices has never been greater. That is true of how companies build, use and occupy space as well,” said KC SmartPort President Chris Gutierrez.

One of the next waves in industrial development will be "Food on Demand" as consumers seek convenience and freedom from the kitchen. That means cold storage facilities are landing at the top of the shopping list for those scouting industrial locations.

"We are seeing an uptick in that sector," said Colby Tanner, BNSF Railway assistant vice president. "Over the last 18 months we have started to get a lot of inquiries from the cold storage sector asking how can we locate along the rail line or have rail access."

Although they come with significant investment and a subsequent boon to local coffers, cold storage facilities can present a challenge when it comes to incentives.

"These are really high-dollar projects, but they require a non-traditional workforce. So from an incentives perspective, you have a project with a huge investment but the challenge will always be workforce,” said Ann Petersen, Cushman & Wakefield managing director. 

Other barriers to entry include higher insurance costs, environmental impacts, and margins squeezed by waste.

"Food on demand is a challenging business, " observed longtime Amazon Site Selector and Keynote Speaker Mike Grella. "I think there’s room for growth there, but we are still in a period of experimentation and iteration." 

For a full event recap, click here.

Leawood mixed-use expected to kickstart activity along 135th Street corridor

Leawood leaders say a just-approved $135 million mixed-used project along 135th Street near State Line Road may be exactly what the city needs to energize development activity on the east end of the well-traveled corridor.

Lashbrook Cos. on Monday received city approval for its development south of 135th Street between Kenneth Road and Chadwick, which includes 117 high-end villas, 182 luxury apartments, and retail space. The project also includes plans for an 81-unit assisted living facility developed by Johnson County Management.

“I’ve said for a long time that this is a great corridor, but it just needs a kickstart. It needs something to happen to bring the momentum,” said Bob Regnier, president of Bank of Blue Valley and whose family owns the land. “Rick (Lashbrook) has great product and the timing is right.”

The development strays from 135th Street Corridor development guidelines adopted by the Leawood City Council in 2013, so securing approval required some give-and-take.

“This is a good compromise and allows for forward movement. Just since the announcement, I have received a couple phone calls from people interested in that area,” Regnier said. “A nice project like this is announced, and all the sudden people are talking about it. People see the possibility.”

In addition to filling strong demand for attached villa-type property in Leawood, the project will allow the City to connect 137th Street from Kenneth Road to Metcalf Avenue.

“That route, like 133rd on the north side of 135th, will become a major east-west connector for not only vehicles, but for pedestrian and bicycle traffic as well,” said Kevin Jeffries, president and CEO of the Leawood Chamber & Economic Development Council. “The office, retail, multifamily, and senior living components proposed for later phases will also be a welcome addition to the 135th Street Corridor.”

Construction on the unnamed project is set to begin in late 2019 with completion expected 2-3 years later.

Rosin Preservation savors winning streak despite tax credit uncertainty

Rosin Preservation will close out 2018 with a string of high-profile projects despite uncertainty surrounding Missouri’s historic tax credit program. In October alone, four of the firm’s Downtown Kansas City historic preservation projects will open, beginning with Foutch Brothers LLC’s $39 million redevelopment of Kemper Arena into HyVee Arena, a youth and amateur sports hub.

With $1.6 billion in completed projects over the past 20 years, CEO Elizabeth Rosin said that securing a historic designation for the 1970’s-era venue was among the most challenging projects the firm has undertaken. Although construction took about a year, it took over three years to secure the arena's place on the National Registry of Historic Places.

“The building is less than 50 years old, so we had to figure out why it was historically significant other than its architecture and engineering,” Rosin said. “We ended up talking about its importance as a cultural and social icon for Kansas City because of the wide range of events held there for an entire generation. Everybody has a memory of Kemper Arena, whether it’s Big 12 Basketball, the American Royal, a concert, circus, convention or some other sporting event.”

The redevelopment of the iconic and beloved Savoy Hotel into the 21c Museum Hotel, replete with curated gallery spaced and art installations, was equally challenging. Rosin said the Savoy, which reopened in July, was in much rougher shape than most people realized.

“There are always surprises when you get into a building, and this one-- because of its age-- had a few more surprises so there were plenty of questions to deal with on the fly,” Rosin said. “A big part of our job was making sure that the elements that contributed to the Savoy’s sense of history and the character of the building were preserved.”

The hotel was constructed in five stages between the 1880’s and 1917, which meant it had several types of molding and doors that needed attention and preservation.

“The challenge was helping people understand what all those elements were and what needed to be protected and why-- and then figuring out how to meld that into the building,” Rosin said.

Additional Rosin Preservation projects completed this month include the renovation of the former Brookfield Building into Hotel Indigo, the former Pabst and Pendergast Buildings redeveloped into the Crossroads Hotel, and the old Jensen Salsbery Lab transformed into the new headquarters of Centric Projects and Superior Bowen.

This fall, the old Downtown Lee’s Summit Post Office reopened as the Bridge Space co-working facility, and Rosin also is working on renovating and restoring the Longview Mansion and barns. 

The good news for Rosin and those in the business of preserving historic buildings is that although lawmakers have scaled back funding for Missouri’s historic tax credit program from $140 million to $120 million a year, it remains intact for now. However, it’s unclear how new guidelines will affect the program.

“The bill also included a requirement that DED (Missouri Department of Economic Development) evaluate the ‘net fiscal benefit of applications,’ and we are still waiting to find out what that means,” Rosin said.

Rosin Preservation has completed over $1.6 billion in historic tax credit construction nationwide. Additional noteworthy projects include the Oklahoma State Capitol and the Empire State Building in New York City.

Photo Credit: Brad Finch, f-stop Photography

Overstock.com leases 517,000 SF in KCK, plans to hire 200

Overstock.com has leased 517,000 square feet for a new distribution center at 5300 Kansas Ave. in Kansas City, Kan. 

Luke Burbank and Kyle Roberts with Newmark Grubb Acres in Salt Lake City led the national site search for Overstock.com. Mark Long and John Hassler with Newmark Grubb Zimmer teamed with Newmark Grubb Acres to provide assistance with lease negotiations in the Kansas City region.  The building is owned by BH Properties based in Los Angeles, California. 

“Selecting Kansas City as the home of Overstock’s newest fulfillment center allows us to offer over 99 percent of our US customers two-day shipping options, improving shopping experiences by getting orders into the customer’s hands as soon as possible,” said Carroll Morale, Overstock.com vice president of supply chain. “We’re extremely thankful for all of the support and collaboration we’ve received from state and local officials and the Kansas City Area Development Council during this expansion process.”

Check out the official news release from KC SmartPort!

Chris Gutierrez, president of KC SmartPort, led economic development incentive efforts with regional partners including the State of Kansas Department of Commerce and the Wyandotte Economic Development Council. Overstock.com will begin to move in immediately and will employ up to 200 people.

“Kansas offers a great central location and the best workers in the country for any company looking to relocate here. We are thrilled that a successful company such as Overstock has selected Kansas City for its latest distribution center,” said Kansas Gov. Jeff Colyer, M.D. “Opening for business in Kansas will provide Overstock.com with an excellent strategic location and creates hundreds of well-paying job opportunities for Kansans.”