Kansas City industrial experts tackle land scarcity, utility access and market opportunities

There may be a perception that land is scarce for industrial projects, but according to Morgan Mutert, director of business development and governmental affairs at Hunt Midwest, land is available. Still, it may not be development-ready to meet the tight timelines demanded by users.

Mutert, a panelist at MetroWire Media’s Kansas City Industrial Summit held last week, was joined by Michael Dustman, senior project manager at SCS Engineers; Kurt Jensen, SIOR, principal/industrial brokerage at Kessinger Hunter; Sam Stahnke, P.E., vice president at ARCO National Construction; and Sean Washatka, assistant vice president at Emery Sapp & Sons, Inc., to discuss the state of the industrial market and its challenges and opportunities. Joe Perry, vice president of real estate at Port KC, moderated.

“I think the users that we are seeing are really focused on speed to market. A lot of the projects that we’ve seen in the last year, two years, maybe even before that, when we receive the request, they want to be operational within 12 to 18 months, so they’re really looking for sites that check the box and that have the utilities and meet the labor force requirement. . . . Being able to meet their timeline is incredibly important,” Mutert said.

Mutert said projects used to be led by the availability of the labor force. While that remains a top requirement when users look for industrial sites, the availability of utilities is also vitally important.

“Utilities have become a big factor for any client right now. With some of the utilities, especially in Kansas City, having certain areas where they’re stretched as far as capacity is concerned, that becomes a big issue,” said Stahnke.

Jensen agreed that the availability of utilities is key to landing new industrial projects.

“I think utility nationally is really the conversation, and Kansas City, I think, can be well positioned to accommodate that. I think that as long as we can keep getting heavy power and the proper water to facilities, we’re going to see a lot of good activity in the next handful of years,” he said.

Mutert said if a site does not support the utility demand, it could add three years to the development timeline, which the project does not have.

According to Dustman, alternative power sources like solar could help solve utility shortages.

“We are putting solar on top of landfills. We are cleaning that solar and selling it back to the grid. . . . I think solar and utility usage is a big player, and we just need to find the sites,” Dustman said.

Above: Moderator Joe Perry of Port KC addresses the 2024 MWM Industrial Summit KC panelists at JCCC in Overland Park, Kan. Panelists from left to right: Sean Washakta, Kurt Jensen, Morgan Mutert, Sam Stahnke, and Michael Dustman. Photo credit: Jacia Phillips | Arch Photo KC

Another big factor in the site selection process for an industrial project is the availability of incentives, Mutert said.

Perry said that in the second quarter of 2024, there was a hyper-supply of industrial products with 2.3 million SF on the market in Kansas City. By the third quarter, that shrank to 700,000 SF.

Although industrial development projects have slowed down this year, Jensen said that has protected the Kansas City market from skyrocketing vacancies.

According to Jensen, demand from smaller operators in Kansas City remains strong.

“We’re starting to see a lot of clients who want to go to a building that’s just for them, so that becomes that 100,000, 150,000, maybe up to 300,000 SF building,” said Stahanke.

Perry said Kansas City currently has approximately 10.6 million SF under construction, with more than nine million of that being build to suit.

“It’s all preleased. So, we’re not really bringing a lot for next year. We just talked about 2.3 million SF hitting the market in Q2. Next year, we may only have 1 million SF for the whole year,” said Perry.

Reshoring nationally will be a big emphasis for the industrial market, especially in Kansas City, Jensen said.

Perry said in the last three years, manufacturing construction in the United States due to reshoring has nearly tripled from $100 billion in 2022 to just shy of $240 billion by the end of this year.

“We are genuinely just at the cusp [of reshoring]. We aren’t even prepared for what’s going to come in the next three, five, 10 years. So there’s a lot of opportunity out there, but also a lot of pressure to be able to deliver and make sure that we can reshore and bring things home. . . . I’m optimistic we’re headed toward a healthy 2025 where we’re going to see a lot of activity from reshoring, and a lot of build to suit activity will maintain that,” said Jensen.

Dustman said developers might look at repurposing existing buildings to create industrial space, citing a St. Louis client taking steps to convert an old 14-story health department building into a data center.

“The property sits at the juncture where the power comes in. . . . Maybe developers doing a little bit of utility research up front where those resources are already laid will expedite a little bit of timing,” he said.

Washatka said construction costs on industrial projects have not increased substantially in at least the last 12 months.

“I’ve got a feeling that 2025 is going to be about a flat year as far as growth in construction costs. So if lease rates are moving, it’s a good time to build, in my opinion,” Stahnke said.

Perry said that year over year, the industrial market is looking at an approximately five percent rent growth for the last quarter of this year.

“That’s pretty healthy,” said Perry.

New industrial projects create new jobs but can also result in a housing shortage. If there is increased residential construction activity in Kansas City and other markets, that could negatively impact available resources and drive

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Header image: MWM Industrial Summit KC attendees listen in on discussions related to the Kansas City Industrial sector landscape. Image credit: Jacia Phillips | Arch Photo KC

Playing for keeps: expanding KC's reach as a sports mecca city

Across the country and internationally, the Kansas City region has become known as a sports mecca, according to Chris Duke, director of sports operations and events at Paragon Star USA.

“There’s always room for growth and we don’t limit ourselves,” said Duke.

Duke and panelists Jake Farrant, CEO and owner at Mammoth Sports Construction; Darren Varner, lead landscape architect at Olsson Studio; Justin Wood, principal and sports and higher education practice director at Dimensional Innovations; and Marcia Youker, VP, client solutions at JE Dunn Construction Company, joined moderator Justin Stine, STS, senior championship sales manager at National Association of Intercollegiate Athletics (NAIA), at MetroWire Media KC’s 2024 Sports and Recreation Summit. The panelists showcased some of the current cutting-edge sports and recreation facilities around the metro area and their impact on the local economy and community.

For years, Kansas City’s Northland was underserved with sports projects or big complexes. In 2023, Central Bank Sporting Complex, located at the intersection of Route 152 and Platte Purchase Road, was completed. Last year, the 76-acre multi-sport complex hosted 32 tournaments. Varner said the complex is on pace to do that again this year. Sporting Kansas City operates the facility.

Wood said he believes that Kansas City has grown to become “Soccer City USA,” although some in St. Louis may disagree. He cited the extraordinary partnerships that have grown between Sporting Kansas City and the community and between the Kansas City Current and the community.

“Just being able to see the amount of community enthusiasm and backing that they have garnered is just extraordinary. . . . The outreach from professional teams down to supporting and enhancing the growth of the youth sports in this city has been unrivaled in any other city,” said Wood.

The panelists discussed the increasing importance that public and private partnerships and sponsorships have played and will continue to play to benefit sports and recreation projects and enhance the player and fan experience.

100+ attendees listen in on MetroWire Media’s 2024 Sports and Recreation Summit inside Dimensional Innovation’s stadium-like conference area. Photo credit: Jacia Phillips | Arch Photo KC

Wood said that AdventHealth’s partnership with the Bluhawk development is a great example of an organization that is committed to health and youth sports and that AdventHealth’s brand likely will show up more and more in youth sports.

“When we talk about partnerships and sports, ever since 2020, everything has pivoted pretty fast. . . . I mean whoever thought that the Kansas City Royals were going to have a giant red QT on their sleeve? That would have been unthinkable just a few years ago,” Farrant said.

Farrant also said that sports will be overwhelmed with marketing and advertising going forward as teams and facilities try to come up with more ways to make money.

To be successful, sports and entertainment facilities must have multi-uses and operate year-round.

“Whether it’s professional sports or a college football stadium or even youth soccer fields, you can’t build something for a few days a year or even Saturday or Sunday. These facilities have to be used 365 days a year, and there has to be revenue generation throughout,” Wood said.

Youker said youth recreation sports are now competitive sports and driving area economies.

“The days of orange slices and Gatorade at half time are over. It is now traveling and tournaments, the need for lodging and dining and retail,” said Youker.

Within walking distance of Celebration Park and Sports Complex in Gardner, Kansas, are multiple restaurants, a liquor store and a nail salon.

“That is just one area. That is just one complex. There are so many more across Kansas City that are all increasing the economy. It damages the parent’s checkbook, but it is wonderful for the economy in the metro,” Youker said.

Wood said that competitors and their families who travel to Kansas City for a tournament do not want to have to get back in their car and go somewhere else to eat, sleep or be entertained.

Jake Farrant, CEO and Founder of Mammoth Sports discusses the impact both professional and recreational sports have had on the Kansas City metropolitan area. Photo credit: Jacia Phillips | Arch Photo KC

“We have a captive audience. . . . If you can connect them with a bunch of familiar brands and give them something great to do, they’ll stay and spend,” he said.

“Now you’re seeing more facilities that are purchasing more land than what they need for the actual facility because they want to build around it. Once they get you there, they want you to stay there for as long as you can,” Stine said.

Varner said Scheels Overland Park Soccer Complex last year generated more than 24,000 hotel rooms, which equated to $40 million to the economy.

“Those are people coming from Oklahoma, Iowa, wherever. They weren’t going to be here necessarily other than to come to those tournaments. That brought money into our economy. They passed 1.2 million people through that facility last year. That’s a lot of people spending money through there,” he said.

And once you can create awareness of Kansas City as a destination, visitors who come for tournaments may think about coming back for a vacation to take in some of the other area attractions, Stine said.

According to Varner, it’s important to create facilities that will last a long time.

“It’s important that we do the details right and get materials that are durable and that we use good design practices to make things sustainable,” Varner said.

According to Duke, it’s crucial to do research and make sure your facility stays ahead of the game. When it comes to technology, Duke said everybody’s looking at that next new thing.

“We have a hunger for these facilities. As soon as they open, they are going gangbusters. They are bulging at the seams and we’re ready for the next one. So, I don’t think we’ve reached our limits by any means here in Kansas City. The numbers seem to still work, and there’s still that fervor out there,” said Varner.

Farrant said that his company worked in 36 different states across the country last year, and nobody does it better than Kansas City.

“Kansas City is number one when it comes to youth sports. There is a lot to be proud of,” he said.

Header Image from L to R: Lisa Shackelford of MetroWire Media along with the 2024 Sports and Recreation Summit panelists: Justin Stine of STS, Chris Duke of Paragon Star, Justin Wood of Dimensional Innovations, Darren Varner of Olsson Studio, Marcia Youker of JE DUNN, and Jake Farrant of Mammoth Sports Construction. Photo credit: Jacia Phillips | Arch Photo KC

Click here to view event photo album by Arch Photo KC.

Panel unveils plans to add sparkle to KC’s crown jewel

When it opened in 1923, Kansas City’s Country Club Plaza was the first planned regional shopping center in the United States designed with parking to accommodate shoppers who traveled by car.

For a period from about 1905 to 1919, developer J.C. Nichols was assembling the land for the Country Club District, of which the Plaza was a part, according to Kate Marshall, president and founder of Plaza District Council. Marshall said Nichols was very focused on the Country Club District being trolley-centric.

Marshall was one of the speakers at last week’s luncheon hosted by CREW Kansas City to discuss future plans for the Plaza. Marshall was joined by panelists Aaron Mesmer, chief investment officer of Block Real Estate Services, LLC, and Mark O’Briant, COO of HP Village Partners, LP. Tyler Enders, founder and owner of Made in KC, moderated.

For its first 75 years, the Plaza was owned by J.C. Nichols Company. In 1998, J.C. Nichols Company merged with Highwoods Properties, a North Carolina-based real estate investment trust.

HP Village Partners, a Texas-based company with ties to the Hunt family (owners of the Kansas City Chiefs), recently purchased the Plaza from The Macerich Company and Taubman Centers, Inc., which acquired it in 2016.

The Plaza is often called Kansas City’s “crown jewel,” but as tenants have left and crime has climbed in recent years, the jewel has lost some of its luster. HP Village Partners seeks to polish it up and make it shine again.

O’Briant said HP Village Partners has been working to acquire the Plaza since the summer of 2023 when it was approached by the property’s lender.

“I think they saw us as the right operator. They saw the tenants that we bring, how we manage properties, how we operate properties and said this is really a good marriage, a good fit. . . . The problem is that through the 10 months - 12 months [before closing], the tenants started leaving,” he said.

O’Briant said HP Village Partners are legacy owners with no plans to sell the Plaza.

“So in 10 years, we’re still here. We’re not going to come in and fix it up and sell it off. Everything we do right now is to fortify the asset for the next 15, 20, 30 years,” he said.

O’Briant said no institutional money is involved with its Plaza ownership.

The CREW KC Panelists take questions from attendees regarding the future or the Country Club Plaza. Photo credit: Marcia Charney

“What we saw was something unique to Kansas City that we’re not bringing in a Wall Street firm offering institutional money. We’re teaming up with local people - it’s important that we share things with our neighbors. I don’t think I’ve ever seen as much interest and excitement in buying real estate. This is not like real estate. This is truly like we’re coming into a community that wants to be involved and wants to help morph and transition this into something that’s really unique,” said O’Briant.

O’Briant said the first battle the new owners will fight is security because neither tenants nor customers will come to the Plaza until they feel safe.

He said they meet with the police regularly. There also have been meetings with the prosecutors and judges.

“You’ll start seeing now that we’re relighting the parking garages, restriping the parking garages. We’ve already started working on that. It’s brightening them up, lightening them up. Put more signs out, more cameras out,” he said.

HP Village Partners already has installed Flock Safety cameras, which are license recognition cameras, at some garage locations.

“Police can look for a certain car. If that car pulls in, it automatically notifies the police. They don’t have to look for them. They know they are in this garage,” said O’Briant.

“We need more police officers. Communication is really big. Communication with other owners in the area. . . Why are we not talking to each other, making the tenants more aware? We’ll have people come in and do personal training on how you can store your stuff or show your stuff inside your store so that it creates less of an opportunity for someone who’s just looking for an opportunity. There are little things that we can do, but at the end of the day, we’ve got to get more people to the Plaza,” he said.

O’Briant said it’s important to get more Plaza offices leased, and he has a little more than $2 million slated to create some spec suites.

“We need to get some office leasing going quickly, and that’s kind of a low-hanging fruit. We’ll start bringing in retailers. We’ll start bringing in restaurants,” he said.

With regard to the planned tenant mix, O’Briant said the new owners want local tenants who bring local flair along with a mix of national and luxury tenants. He said they’ve already met with many local chefs.

One of dozens of fountains found throughout the Country Club Plaza in Kansas City, Mo. Photo credit: Country Club Plaza

“We work with a lot of restaurants that are very unique places that you would drive 20 or 30 minutes to go eat at because it’s unique and different,” he said.

O’Briant said there are plans to reskin some of the buildings that don’t have the Plaza’s signature Spanish motif and to expand the sidewalks.

In addition, HP Village Partners will be tackling some capital improvements that have been neglected.

Although the improvements to the Plaza will take several years to complete, HP Village Partners plans to stick around.

“I think what you’ll see is a cleaner, nicer, healthier market, a more secure market and more vibrant market,” O’Briant said.

With plans to improve the Plaza underway, other investors will be undertaking more development in and around the Plaza.

According to Mesmer, during the last five to 10 years, it’s been harder and harder to make that investment.

“I think that today, though, what we’re seeing is that there’s a much greater level of civic support, whether it’s the mayor’s office, with the city staff helping to break down some of those barriers that make it a little more challenging to do business there than it might be in other municipalities. That’s a big change. But, really, for us, now that the Plaza has returned to someone with a long-term outlook, and someone who is going to be a generational owner of the Plaza, that is very much aligned with how we invest,” he said.

And, harkening back to the Plaza’s early days when trolleys transported people to and from the Plaza, the streetcar soon will be dropping off an estimated 7,000 to 10,000 people a day into the Plaza District.

“The streetcar is going to change everything,” Marshall said.

Header Image: The panelists at the CREW KC luncheon last week from left to right: Tyler Enders (moderator), Mark O'Briant, Kate Marshall and Aaron Mesmer. Photo credit to Elizabeth (Liz) Wampler.