MWM panelists Tim Cowden, president and CEO of KCADC; Nick Suarez, SIOR, CCIM, senior managing director and principal at Newmark Grubb Zimmer; Tim Homburg, co-president of NSPJ Architects; David Caffrey, chief lending officer at Country Club Bank; Todd LaSala, partner at Stinson, LLP; and moderator, Chris Vaeth, vice president, business unit leader at McCownGordon all agree — the Kansas City commercial real estate market is booming.
A summary of the panelists’ remarks from last week’s MWM 2020 Market Forecast event follows:
ON BOOMING KANSAS CITY MARKET:
Tim Cowden, KCADC: “I’m really excited about 2020 because we are coming off a really great 2019. There is a lot of momentum in the market. Our pipeline is full. Kansas City is ascending.”
Tim Homburg, NSPJ: “We see Kansas City maturing into a nice, large-sized metro area. We don’t need to rely on any single one thing to keep the wheels churning for Kansas City because there are multiple different locations around the whole metro area that make it exciting.”
Chris Vaeth, McCownGordon: “The reality is that it’s great right now. The market is doing well; the economy is doing well; and Kansas City has been a robust place to work and live the last several years. There’s a lot of growth, a lot of opportunity. However, 2020 can be a pivotal year. You can’t help but follow the news to see what’s going on. You’ve got to ride it while you have it.”
ON MULTIFAMILY MARKET:
Tim Homburg, NSPJ: “People are coming into the metro area so there is going to be a housing need. Housing will drive a lot of the growth in Kansas City, and we’re seeing very positive signs on the multi-family side coming into this next year. A single family home 15 years ago that was $175,000 is now $350,000 and so people are staying in multifamily “for rent” product longer until they build up the wealth to get to that breaking moment in their life when they can afford the down payment on that $350,000 starter home.
We’ve never seen an oversupply [of multifamily product in Kansas City]. We’re pacing with what the demand is.”
ON OFFICE MARKET:
Nick Suarez, Newmark Grubb Zimmer: “Right now the office market is strong. The vacancy rate is right around eight and one-half percent. We do see rental rates increase slightly across the market. The big issue we have is just the lack of big blocks of quality space, but that’s all going to change [with projects like Strata and the Platform Ventures Building downtown].
Not only will our skyline be changing, we’re also going to have property that is going to be able to compete with all of our peer cities. But, it’s not just downtown. All over the city we’re seeing a lot of new projects [like the Edison District in downtown Overland Park and CityPlace at U.S. 69 Highway and College Boulevard]. It’s an exciting tine to be in the business.”
ON TRUCE BETWEEN KANSAS AND MISSOURI:
Todd LaSala, Stinson: “The two states have finally agreed that you will not treat jobs for border counties that are leaving one side [of the state line] and moving to the other as net new jobs. [The truce] really does level the playing field for us and it’s sort of a new day for us in this market.”
Tim Cowden, KCADC: “It’s good for the region because we can focus now on net new from outside the market here. And we need both Kansas and Missouri to be at the top of their game. That’s really important for Kansas City to reach its potential.”
ON GROWTH OPPORTUNITY MARKETS:
Nick Suarez, Newmark Grubb Zimmer: “Kansas City is a very desirable place for investors to park their money. Investors are getting pushed out from markets like Denver, Nashville and Minneapolis because they are too expensive to do business. They look at Kansas City as another alternative. I think we’re going to see that evolve in the next several years.”
Tim Cowden, KCADC: “Kansas City is so well positioned for e-commerce. We’ve been building these spec industrial buildings. Ten or 15 years ago, we didn’t see that in Kansas City.
One area that we really need more activity in is cold storage. Food is a big deal right now. We’re seeing a lot of food production operations.”
David Caffrey, COUNTRY CLUB BANK: “Network operating centers where companies store their towers or the towers are provided to them. It’s a very specialized facility that we’ve been seeing. We’re in the center of the United States, and we have every internet line coming through Kansas City.”
ON KANSAS CITY COMPETING WITH PEER CITIES:
Tim Cowden, KCADC: “I think our opportunities in Kansas City are limitless. I think we are just now getting to the point where we can compete in a legitimate way with these markets we hear all about—Nashville, Austin, Raleigh-Durham. Look at the USDA deal. That came down to Indianapolis, Raleigh-Durham and Kansas City, and they are going to be right down the street here—600 really highly paid jobs.
There are more opportunities out there, but we have to have the product on the shelf, whether it’s Class A office, office and industrial, and then go get it.”
Tim Homburg, NSPJ: “Another thing I’d like to see for Kansas City as a whole that you see in that next tier level city is a plan on mass transportation.”
Todd LaSala, STINSON: “I think you have to be strategic and thoughtful and not panic.”