KCADC highlights impressive 2020 scorecard at annual meeting

The Kansas City Area Development Council (KCADC) shined light on some impressive numbers this week during its annual meeting; including attracting 13 manufacturing, eCommerce and professional services companies in the last 12 months that will invest more than $1 billion and create 3,789 jobs in the Kansas City region.

The event was streamed digitally and broadcast on TV with over 2,000 business leaders, civic partners, national site location consultants, corporate executives and individuals across the country who have an affinity to KC.

“KC placed a strategic investment several years ago in our market’s inherent strengths for manufacturing, logistics and e-commerce. This investment led to the creation of KC SmartPort, which elevates KC’s competitive advantage through consistent messaging to companies in these industries, and is paying dividends today,” said Tim Cowden, president and CEO of KCADC.

“With more than 231 million square feet of existing industrial space, ample land for new buildings, a skilled logistics workforce and robust power and fiber infrastructure, Kansas City is primed for additional growth in the industrial sector,” Cowden said.

In 2020, KCADC helped attract prominent companies, including an 880,000-square-foot distribution center for Urban Outfitters, Inc., a 1,200-person e-commerce center for Chewy, Inc., and manufacturing facilities for Dot’s Pretzels and Tuthill Corporation, among others.

“Our priorities in identifying the home for our new omni-channel distribution center focused on people, and it was the quality of the local workforce that convinced us this is the right place to be,” said Dave Ziel, chief development officer of Urban Outfitters, which plans to open its $350 million facility in 2022.

The Kansas City region ranks No. 3 in the U.S. for industrial construction activity in cities with populations between one and four million, outpacing larger markets including Denver and Seattle. KC has seen 14.8 million square feet of industrial construction in 2020.

With a stronghold for financial, shared services and tech operations, KCADC also celebrated national recognition for Kansas City for professionals and future investment, including its ranking by Business Insider as the nation’s best “work from home” city, and its status as a Top Mid-Size City for Future Projects by the Site Selectors Guild.

“With a lower cost of living, free Wi-Fi downtown, access to diverse housing options and an abundance of lifestyle amenities, Kansas City is an ideal spot for remote workers leaving larger urban areas due to the pandemic,” said Jill McCarthy, senior executive of corporate attraction, KCADC.

“And there are plenty of new jobs for skilled professionals that relocate here, McCarthy said.

There are currently 49,000 open jobs in KC, and more than 15,000 jobs are created each year. Tech and highly-skilled jobs are growing faster in KC than in Seattle, Austin, Chicago and NYC, according to the Bureau of Labor Statistics.

“During such an uncertain time, KCADC’s success this year speaks to the highest level of professionalism, customer service and emphasis on regional collaboration that continues to move KC forward,” said Lisa Ginter, CEO of CommunityAmerica Credit Union and senior co-chair of the 2021 KCADC Board of Directors.

“This community has tremendous heart, and I look forward to continuing to make a positive impact on the KC region by supporting and amplifying the ongoing efforts of KCADC,” Ginter said.

In 2021, Lisa Ginter succeeds Dave Hall, executive vice chairman at Hallmark Cards, Inc., as senior-co chair of the KCADC Board of Directors. Brett Gordon, chairman of the board at McCownGordon Construction, will join KCADC’s volunteer leadership team serving as incoming co-chair, and Brian Roberts, chief diversity officer at Lockton Companies, will serve as treasurer.

“I’m looking forward to working alongside Lisa Ginter and Brett Gordon as KCADC actively positions the KC region as a top destination for business and talent in the year ahead,” said Roberts. “I can’t wait to see what 2021 brings for KCADC and the KC region.”

Industrial market flying smoothly through 2020 turbulence

Despite the economic turbulence COVID-19 has unleashed on 2020, the industrial real estate market seems to have buckled in for a relatively smooth ride, according to a recent CCIM KC panel.

Brent Miles, chief marketing officer and founding partner of NorthPoint Development and Joe Orscheim, SIOR, CCIM, senior vice president of CBRE, joined moderator Ben Boyd, CCIM Kansas City director of programs and vice president of Colliers International, for a webinar discussion last Friday about the state of the industrial market.

Both Miles and Orschein agreed that e-commerce is the major driver strengthening the industrial market as online shopping has exploded during the pandemic. Miles noted that increased demand for industrial space for companies like Amazon and Chewy is COVID-related, but he thinks the expansion represents a permanent change. 

“They are the infrastructure and the plumbing of how we’re getting goods,” Miles said.

According to Miles, NorthPoint Development, which owns approximately 75 million square feet of industrial properties across the United States, saw only about 5 percent of its clients request and receive rent relief.  

Orschein said he anticipated more requests from tenants for rent abatement than actually were made. Landlords, he said, used the requests as an opportunity to obtain updated financials, and in some instances, to extend the lease term by the number of months they abated rent. 

“It was good for both parties. It’s always good for a landlord to show that they’re looking out for their customer and obviously they want them to be financially strong so the project remains successful,” Orschein said.

Miles said that availability of labor remains a concern in the industrial market, with uncertainty about how future stimulus or bailout legislation will affect unemployment and labor. 

Orschein noted that there is a challenge to find “really good tracts that are ready to go” in the Kansas City area in order to satisfy demand. “We’re getting weekly calls from out of town developers and capital sources that are looking to land here in Kansas City, and we just need more land. We’ve got to figure it out. There’s strong demand, and we’re not seeing any kind of a slowdown so we’re encouraging everyone to just keep putting them up and we’ll all fill them,” said Orschein. 

Orschein also noted that rental rates in the Kansas City industrial market are “pretty steady and level” and that he is seeing lower cap rates. He anticipates that the local industrial market will see one or two big institutional players enter by the end of the year. 

“Everybody is taking note of Kansas City,” Orschein said.   

According to Orschein, there is strong demand for industrial space for the food industry; however, the challenge is to figure out food requirements and freezer cooler needs. 

“It’s obviously very expensive and highly specialized, but the need is there. We’ve just got to figure it out in Kansas City. In the industrial world, it seems like after the first couple of weeks of COVID hitting, it’s like everybody just got on the same page and said let’s all get back to work and keep the train moving,” Orschein said.