Olathe pioneer spec building sells to investors

The region's first large speculative industrial building at 167th Street and Lone Elm in Olathe has sold to a Dallas investment group. Developed by Kessinger/Hunter, the 600,000+ square foot warehouse and distribution facility at 22101 W. 167th St. in I-35 Logistics Park is fully occupied by FedEx and Bushnell Corp.

Developer Dan Jensen of Kessinger/Hunter saw the current industrial real estate wave coming over a decade ago and worked with Sun Life Assurance to get the building approved, financed and out of the ground.

“This was the first large spec building in our market. It was very rewarding to take this project from an idea back in 2007, through design, permitting, construction, leasing, management and finally sale ten years later," said Jensen, who brokered the building's recent sale to Sealy & Co.

When Jensen first proposed the Lone Elm spec, commercial real estate investment was in a deep freeze. Nonetheless, Jensen persisted and successfully made his case about the potential for growth in Kansas City due to its interstate highway access and central U.S. location. Today, the metro is one of the top 10 industrial markets in the country.

"It is incredible the way the Kansas City metro has exploded with quality big box distribution facilities over the past 10 years. I do not see this slowing down anytime in the near future," Jensen said.

Jensen, meanwhile, continues to ride the wave he helped create. Kessinger/Hunter just announced construction plans for its third warehouse facility in I-35 Logistics Park, a "semi-spec" project that is partially pre-leased. For those keeping track, that brings Jensen's team to just under 2 million square feet of industrial space developed in South Johnson County.

Holliday Fenoglio Fowler, L.P. (HFF) negotiated the sale on behalf of the buyer. Kessinger/Hunter will continue to manage the Lone Elm building.

BluHawk arena + Cosmosphere will be game-changer for South OP

Price Commercial Realty is finally going public with its plan for a massive new 300-acre mixed-use development in south Kansas City. BluHawk is the name for a 100-million-square-foot new retail power center that will occupy a stretch of land situated between 159th and 167th street, bordered by Highway 69 to the east and Antioch to the west.

It’s the southernmost development in Kansas City, with a population of about 40,000 in a three-mile radius. John Nolan, president of Price Commercial Realty, says the questions he gets most often are whether the area is ripe for development and just how much it’s expected to grow.

The demographics

It’s an easy answer for Nolan, who presented details of the BluHawk plan to members of KCRAR Commercial on Wednesday. He responds by plotting its location on a map: Not only is it a short 3.5 miles south of Prairiefire and Corbin Park, the hottest retail areas in the market, but it’s surrounded by high quality $500,000 homes, some of the top ranked schools in the country with Blue Valley schools, and in a 3-mile radius, an average household income of about $150,000.

“At different ICSC events, we spoke with groups out of L.A., San Francisco and Washington D.C. and asked whether they saw numbers like that, and everyone’s response was that they’d be happy to have those numbers at any development,” he said. “We view that as an amazing opportunity.”

And there’s plenty of room for growth. Nolan said the City of Overland Park is looking at more than 500 homebuilding permits issued per year for $500,000 homes. BluHawk will help foster that single-family home growth. It’s currently sold all 60 home lots in its first phase of the plan, and the majority of those homes – about 55 – have already been built. Another 60 homes will come in another phase, and it will include a mix of town homes and villas and other options that have yet to be defined.

The centerpieces

Because it’s a STAR bond project, Nolan said the developers are taking a new approach to attracting tourists. So, instead of first focusing on retailers, they want to create a sense of intrigue and excitement around the plan’s two main centerpieces: a 6,000-seat hockey arena and an 60,000-square-foot extension of the Hutchinson-based Cosmosphere.

“We got together and what we decided to do with BluHawk is create a reverse interest in the area,” said Scott Buescher, vice president of acquisitions and development for Price Brothers. “We’re not going for retail first; We’re going for programs.”

The Cosmosphere located in Hutchinson is the largest non-government affiliated space entity/museum in the world. Although it’s a truly fascinating facility, attendance is falling. Because of that, Price brought in two former Disney employees, who will pack the facility with programming utilizing the building’s 40X theater, a Legos robotics system called Mindstorm, and other technological and educational components.

For the hockey arena, the team is in negotiations to bring a U.S. Hockey League team to the arena as part of a larger concerted effort to get 20,000 Kansas City kids in the metro to play hockey.

“There’s an underlying interest here,” Nolan said. “The purpose of the hockey team is to create a movement in Kansas City much like soccer did with the Legends facility.”

Retail

With the hockey arena and Cosmosphere in place, Nolan said the team is working to bring first-to-market retailers to the area. So far, he’s received commitments from a new-to-market movie theater/bowling alley, and plans to add a number of restaurants.

But the first piece to open in the development will be the portion dubbed BluHawk Marketplace. It will house the newest 60,000-square-foot Cosentino’s concept, a much larger and more technologically advanced than any its similar versions in Brookside and downtown Kansas City. The store is scheduled to open around Thanksgiving this year. An additional 70,000 square feet of retail surrounding the grocery store will also be the first part of the development to open.

So far, other pieces of the plan include a small plot of land that was sold to an area bank, as well as three or four other large parking garages.

Click here to see a full site plan.

For more information on BluHawk, click here. For more information on future KCRAR Commercial events and other industry happenings, check out our event calendar by clicking here.