Hunt Midwest's SubTropolis expands to meet today’s need for speed

Hunt Midwest has announced plans to build out an additional 700,000 SF of Class-A space in SubTropolis, the world’s largest underground business complex.

This expansion, built on speculation, provides an excellent solution for warehousing and distribution operations struggling to meet the current supply chain and speed-to-market demands created by today’s online shoppers.

With more than 7,000,000 SF of industrial space, SubTropolis offers benefits beyond traditional above-ground industrial buildings. Lower operations and leasing costs top the list, along with a naturally temperature-controlled climate, ideal for storing inventory with a limited lifespan or specific temperature needs.

“The naturally climate-controlled environment in SubTropolis provides a low-cost solution for distribution space in the heart of the logistics corridor,” said Mike Bell, senior vice president with Hunt Midwest.

SubTropolis delivers warm-shell warehousing with demisable space from 50,000 – 300,000 SF and occupancy in 90 – 120 days. The short build-out period ensures that businesses experiencing rapid growth can scale operations to continue to meet consumer demand in a timely manner.

“Building a business complex into limestone cliffs isn’t something that’s done every day. But Hunt Midwest has been able to successfully leverage one of Kansas City’s natural resources to create a unique environment that benefits many business models,” Bell said.

A substantial portion of SubTropolis’ footprint is currently occupied by e-commerce, archival and document storage, pharmaceutical and animal health facilities and food distributors.

The complex’s location also adds value, as Kansas City is the most centrally-located of major U.S. markets. KC is at the heart of a railway corridor reaching from coast to coast and Canada to Mexico and the Kansas City International Airport moves more air cargo each year than any airport within a six-state region.

Tenants residing in SubTropolis reach 90 percent of the country with their products within two days via ground or air, resulting in reduced delivery costs.

Combined with other features such as an on-site, low-latency fiber network and 24/7/365 armed security, the expanding footprint of SubTropolis is poised to support the future growth and business needs of industries focused on keeping up with today’s fast-paced economy.

About Hunt Midwest: Hunt Midwest is a dynamic real estate development company privately held by the Lamar Hunt family. Based in Kansas City with over 50 years of development, construction and management experience, Hunt Midwest’s wide range of projects include industrial, commercial, mission critical, self-storage, residential, multifamily, senior living, mixed use and SubTropolis, the world’s largest underground business complex. Hunt Midwest is part of the Lamar Hunt family’s diverse portfolio of entities involved in real estate, sports/media, energy/resources and private equity investments. In addition to Hunt Midwest, marquee entities include the Kansas City Chiefs, Hunt Southwest, FC Dallas Soccer Club, Toyota Stadium, Chicago Bulls and United Center.

About SubTropolis: As the world’s largest underground business complex, SubTropolis sets the standard for subsurface business developments. SubTropolis was created through the mining of a 270-million-year-old limestone deposit creating a 1,200-acre real estate development. In the mining process, limestone is removed by the room and pillar method, leaving 25-foot square pillars that are on 65-foot centers and 40 feet apart. SubTropolis is home to more than 55 local, regional, national and international companies that employ in excess of 2,000 people.

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.

Pharmaceutical and e-commerce companies continue to thrive in SubTropolis

Less than a year after locating in SubTropolis, pharmaceutical company Nostrum Laboratories and online retailer FarmFoods have expanded their respective footprints a combined 52,000 SF within the world’s largest underground business complex.

Nostrum Laboratories more than tripled the size of its distribution facility while FarmFoods increased its footprint six-fold.

“We can deliver Class-A industrial space to our tenants in as little as 120 days, allowing companies like Nostrum and FarmFoods the ability to capitalize on the growth of their business,” said Mike Bell, senior vice president of commercial development at Hunt Midwest.

As an Energy Star-rated facility providing 24/7, year-round security, company leaders at New Jersey-based Nostrum Laboratories recognized the value proposition SubTropolis offered in meeting their climate-controlled requirements for product safety and quality control.

“The consistent control room temperature ranges in the underground allow us to efficiently meet these  requirements. Onsite security staff provide an additional level of security and peace of mind to our team,” said Teneshia Powell, senior production manager at Nostrum Laboratories. 

A soaring increase in online grocery shopping triggered the need for FarmFoods, an online retailer of fresh, farm-to-table food, to quickly expand its packaging and distribution facility to keep up with consumer demand.

“As a nationwide distributor, timely delivery of our products to consumers is critical. Locating in SubTropolis has allowed us to reach 90% of the United States within two days and in these uncertain times, quick, reliable food delivery is more important than ever,” said Janna Land, co-founder and chief operations officer at California-based FarmFoods.

Earlier this year, Hunt Midwest completed construction of 400,000 SF of speculative Class-A industrial and warehouse-logistics space, bringing the amount of leasable space in SubTropolis to more than 6.5 million SF.

With more than 7.5 million SF available for development and its adjacency to robust highway infrastructure, SubTropolis continues to offer an ideal option for growing e-commerce companies.

Unique incentive, multi-tenant footprint attract companies to Hunt Midwest Business Center

Hunt Midwest is seeing strong leasing activity for two Class A industrial buildings at Hunt Midwest Business Center (HMBC), a 2,500-acre commercial development in Clay County at I-435 and Parvin Road.

Four new tenants totaling about 250,000 square feet are leasing space in HMBC Logistics I and II, including American Tire Distributors Inc., ORBIS Corporation, Spartan Motors, Inc., as well as a leading supplier to the e-commerce industry set to open in April.

Each tenant qualified for a 100 percent, 25-year tax abatement. According to CBRE’s Austin Baier, who handles leasing for the buildings, the Enhanced Enterprise Zone incentive is helping close deals.

"The unique tax abatement available at HMBC really gets the attention of warehouse users. Once a tenant qualifies, then the whole building is qualified, so both HMBC Logistics I and II are solidified and locked in. That guarantees companies a true 100 percent tax abatement for 25 years," Baier said. 

Mike Bell, Hunt Midwest vice president of commercial real estate, agreed: "The EEZ is a game changer for companies looking to locate in HMBC. With the tax incentives offered, companies are benefiting greatly from substantial savings."

The robust leasing activity validates Hunt Midwest’s strategic decision to invest in multi-tenant facilities geared to tenants starting at 40,000 square feet, according to Hunt Midwest President and CEO Ora Reynolds. The strategy has been so successful, a third multi-tenant building is on the books.

"Phase 5 of the Hunt Midwest Business Center includes a third 200,000 SF multi-tenant building along with room for additional buildings ranging from 450,000 to 1.2 million square feet. As businesses grow, we will have the inventory to meet their growing demands within HMBC," Reynolds said.

Hunt Midwest co-developed the buildings with Chicago-based HSA Commercial.