Developers say e-commerce, amenities will drive successful future

An ABC Heart of America webinar recap

This week Associated Builders & Contractors (ABC) Heart of America held an online developers panel moderated by Eric Mann with Emery Sapp & Sons.

Panelists included Andy Ashwal, VP, senior asset manager of GFI Management, Mike Bell, senior vice president of Hunt Midwest and Oscar Healy, regional vice president of Opus Design Build.

The discussion focused on the challenges as well as the opportunities surrounding future development resulting from the COVID-19 pandemic.

One of the trends the panelists are seeing skyrocket is e-commerce and the need for additional storage space as the U.S. supply chain has relied on ‘just in time’ delivery for many consumer products that are imported and shipped overseas.

“You’re going to see a change from ‘just in time’ deliveries to having a 5% safety stock being held in distribution facilities. Based upon different national brokers, you’ll hear numbers ranging from 500 million to 750 million SF of additional industrial space needed just to supply distribution centers that 5% safety stock,” said Bell. 

“It will bring manufacturing back to the US. I think ‘Made in America’ will mean something more than it has in the past, said Healy.

The panelists also predict a surge of data centers to help fuel e-commerce.

“Kansas City is seeing the first wave of data centers. We’ve always been seen as a lower-level tertiary market, said Bell. 

Panelists agreed other side-markets to the e-commerce industry include an increase in the need for robotics and higher, stacked building spaces.

The importance of the ‘live, work, play, stay’ concept of living is not going away anytime soon. Having amenities for offices and apartments will become of even greater value to millennials who might be staying in lofts and apartments longer than they expected.

“I think the trend of millennials staying in multifamily or maybe moving up to larger multifamily spaces is going to continue (as) they’re going to start to have children. They’re going to need services for their children there and play spaces. That has not existed in the Kansas City market, said Ashwal.

The need for additional on-site package delivery storage was also discussed.

“The ripple-effect of what’s going to happen on the office and multifamily side is there will be a need for larger package rooms to accept trackable deliveries. Refrigerated storage in office buildings will be a new trend to accommodate employees that want packages delivered to their office to bring home,” said Ashwal. 

Some of the obstacles the panelists are seeing now and going forward are cost of construction and shortage of labor.

“Material increases and labor shortages have caused issues on our side from a development perspective, said Bell.

The panelists agreed that municipalities that are “developer-friendly” will be more attractive to developers going forward more than ever before.

“If you don’t have a tax incentive or tax abatement in some of our various cities or counties, you’re at a competitive disadvantage,” said Healy.

The discussion ended with hope that the pandemic is creating opportunities, especially for industrial development because of Kansas City’s well-built infrastructure and land availability. Also, KC offers 90% of the U.S. within a two-day shipping window.

Associated Builders & Contractors Heart of America is a commercial construction trade association serving contractors and construction related firms across Missouri and Kansas. ABC connects contractors to industry information and safety resources; serve as advocates at the state, local, and federal level; and provide a variety of educational opportunities for those in the industry including our federally registered apprenticeship program in multiple trades.

Sponsors of the event included: Nabholz Construction, Emery Sapp & Sons, Fogel-Anderson Construction, IMA Financial Group, HTH Corporation and Autodesk.

KC retail experts weigh in on the future of Independence Center

It appears that economic challenges and increased nearby competition are forcing Simon Property Groupto sell Independence Center. According to research firm Trepp, the debt-strapped regional shopping mall is in foreclosure and headed for sale to a special servicer next week.

It's no secret that shopping malls and their brick-and-mortar retailer tenants have been hit hard by the e-commerce boom. Here's a snapshot of local expert commentary on the retail climate in Kansas City:

"This news highlights the pressure that all brick-and-mortar retailers are facing to deliver an experience that cannot be matched by online shopping. Everyone is searching for that magic mix of unique dining, amenities and brands that keeps traffic flowing through the doors."

-Dave Claflin, Legacy Development

"Independence Center remains one of only two malls in the greater Kansas City area. The International Council of Shopping Centers (ICSC) estimates that of the roughly 850 malls around the country, only the top 550 malls will remain standing in the next five years. The landscape of retail is changing, and many malls are being back-filled with office, hotels, entertainment and residential components." 

-Kimberly Tranbarger, Colliers International

"Within the last few years, Independence Center has added a number of stores including Dick's Sporting Goods and H&M and remains home to multiple national, regional and local retailers. The retail market is changing but it's not going away. Retailers are right sizing and even expanding as landlords move toward a strategic mix of retailers, entertainment and restaurant tenants."

-Eric Mann, retail developer and broker

"As 2018 begins, LANE4 anticipates another year influenced by advances in technology and shifts in consumer preferences. As experience and entertainment become key components to successful business, we are eager to learn which tenants can effectively fill spaces formerly occupied by high-profile retailers and which retailers can keep up with technology by enhancing online presence and in-store technology."

-LANE4 Property Group, 2018 Kansas City Retail Report

MWM Panel: Eastern Jackson County poised for peak altitude

MetroWireMedia's 2017 events series took flight Tuesday at Lee's Summit Municipal Airport, as the region’s leading developers, brokers and attorneys offered a birds’ eye view of the Eastern Jackson County commercial real estate market.

Surrounded by business aircraft and aviation mechanical equipment, panelists tackled everything from incentives to infrastructure to industrial spec development while updating myriad mixed-use and multifamily projects already aloft in the metro's eastern suburbs. 

Cerner’s new South Kansas City headquarters already is driving demand for new, amenity-rich single-family and multifamily housing options in Lee’s Summit and along the I-70 corridor, creating ongoing opportunity for retailers and restaurant operators.

“Families are happy and want to be in Lee’s Summit. And if you have a community where people want to live, retailers will follow,” Block & Co., Inc. Director Bill Maas said.

The consumer shift to online shopping is forcing many retailers to re-evaluate and scale back their brick-and-mortar footprints, but it also creates an opportunity for well-situated retail centers, according to Eric Mann, director of development for RED Brokerage.

“It’s location, location, location,” Mann said. “What goes into that is demographics, visibility, access and workforce. I-70 continues to be a great access point for Lee’s Summit, drawing people from areas like Odessa, Concordia and even further away.”

All signs point to continued growth; Lee’s Summit’s population is expected to reach 100,000 by 2020 and new single-family building permits are approaching pre-recession levels. Anecdotally, NorthPoint Development’s The Residences at New Longview apartments saw the fastest lease-up of any community to date when it opened in 2016, according to NorthPoint VP of Development Mark Pomerenke.

With $1 billion in public and private investment in Lee's Summit in 2015-2016, the flight path is clear, but panelists cautioned that rising construction costs and availability of incentives could create headwinds.  

“There are a lot of opportunities in Jackson County, but many properties don’t have infrastructure in place,” said Christine Bushyhead, an attorney whose law firm Bushyhead LLC specializes in incentives and public finance. “The fact is we need infrastructure.”

Rick McDowell, Lee’s Summit EDC president and CEO, agreed on the need for more shovel-ready sites but said development of a 200,000 square foot speculative industrial building at The Grove, an 83-acre mixed-use project on south Missouri 291, should encourage future activity.

“The key to landing advanced manufacturing and warehouse and distribution tenants is having product ready and available,” McDowell said. “We see tremendous opportunity for industrial growth near The Grove and in the area near Lee’s Summit Municipal Airport on the north side of town.”

Panelists said Lee’s Summit has potential to attract Class A office users, thanks to its strong workforce and workforce development programs supported by the Missouri Innovation Campus and Summit Technology Center.

“The biggest challenge is lack of product, but Lee’s Summit has come a long way in getting ahead and having development-ready sites,” said Michael Van Buskirk, Newmark Grubb Zimmer executive managing director.

Developers of the Paragon Star soccer village and entertainment complex at I-470 and View High Drive are hoping to lure Class A office users. The first phase of the $200 million destination entertainment complex is master planned for Class A office space, as well as hotel and retail space, according to Paragon Star Principal Bill Brown.

“Paragon Star’s location is a gateway to Lee’s Summit and Eastern Jackson County, so office users and brokers should begin looking at Lee’s Summit in a different way,” Brown said.

Ron Baker, Saint Luke’s East Hospital CEO, also served on the panel. Lee’s Summit Mayor Randy Rhoads was emcee, and John Lovell III, Cobbs Allen risk consultant, moderated the discussion.

John Ohrazda, Lee’s Summit Municipal Airport Director, teed up the discussion by updating the airport’s 5,500 foot-long runway extension project, which will allow larger jets to takeoff and land and is expected to boost corporate airport traffic by up to 30 percent. The new runway is expected to open in August.