MWM Industrial Summit signals continued strong market

A panel of leading Kansas City commercial real estate developers, builders and municipal leaders shared insight into the region's booming industrial market at MetroWireMedia's 2017 Industrial Summit on Friday, Aug. 25 at Blue Hills Country Club. 

Here's a snapshot of industry insight from our panelists:

“We are seeing about 60 percent of users come from outside the Kansas City area, and we are on pace to deliver over 10 million square feet this year."  -Kevin Wilkerson, JLL

“The supply side of industrial development has been somewhat disciplined. Demand has not outpaced supply at all, so we expect it will continue in a healthy fashion.” -Mark Long, Newmark Grubb Zimmer

“Kansas City companies can reach 90 percent of the U.S. in two days' shipping, so a company that years ago believed they needed to be near population densities on the east or west coast can reach 90 percent of their customers right here.” -Mike Bell, Hunt Midwest

“We are seeing more 'small boxes' that are appealing to tenants who want to be in their own space and not have to share a building, or they are a 60,000 to 80,000 square foot tenant and it appeals to them to have a right of first refusal and be in their own space and growing.” -Sam Stahnke, ARCO Construction

“From a long-term perspective, Kansas City has now reached a new level within the country as a major destination for e-commerce distribution, and that’s not going to change. The growth is going to continue for some time.” -Whitney Kerr, Jr., Cushman & Wakefield

“We are looking for opportunities where there is going to be a significant incentive to do business in Kansas City. We aren’t trying to create winners and losers amongst you all; we are trying to create winners for all of you within our Port District.” -Michael Collins, Port KC

“One of the challenges for local government, especially a government as small as Edgerton, is to be aware of what all levels of government are doing and how that might impact our ability to provide attractive incentives. Edgerton is certainly looking for opportunities to be creative and to have incentives that look different from other areas of the country.” -Beth Linn, Edgerton City Administrator

"MetroWireMedia has assembled a group of Kansas City commercial real estate leaders who are at the top of their game in what is without question the strongest industrial real estate market in recent Kansas City history. I look forward to leading the discussion as we hear about best practices for sustaining the momentum in the current red-hot market." -Chris Gutierrez, KC SmartPort

Want more insider scoop? Mark your calendars for MetroWireMedia's 2017 Multi-Family Summit on Oct. 12. Contact Lisa Shackelford for sponsorship information. 

Check out our slideshow below, or head to our Facebook page and tag yourself in the event photos. 

KCRAR Commercial awards spotlight top producing local brokers

The local chapter of KCRAR Commercial is shuffling the way it decides which member of the brokerage community deserve its highest annual awards. KCRAR Commercial Vice Chairman Tom Houts of Cushman & Wakefield described the changes the committee was making at the KCRAR Commercial annual awards ceremony, held last week at Populous’ new space at 4800 Main St.

“It’s amazing the animosity and pushback you receive from collecting this data. The committee was wondering why we were pushing something that people were resisting? We made a decision at that point to change this. We get it that not everyone wants to list out their deals. Starting today, we’re going to look at more holistic volumes and the complexity of deals,” he said. “Moving forward, we’re going to take the burden off the brokers of submitting numbers, and their deals, and really put it on the awards committee. They’ll analyze data and figure out the appropriate winners.”

This year, seven brokers from five area brokerage houses took home top honors in their respective categories. Here’s a look at each of the winners.

The top volume dealmaker of the year in the investment world was Jeff Stingley of CBRE. Stingley had a capstone 2015 year with a total transaction volume of $480 million. But his favorite statistic of the year represents the fact that half of his transactions in 2015 brought a new owner to the market.

“I think it shows the desirability of Kansas City as a market for these guys to place millions of dollars of investment in. They don’t do that lightly. They do due diligence and they like what they see,” Stingley said.

All in all, the Kansas City market saw $950 million in total transaction volume for the year, and because some deals manage to sneak under the rug, he feels completely confident calling Kansas City a billion dollar market. Compare that to cities like Twin Cities, which also had a billion dollar year but is double the size of Kansas City. St. Louis, in comparison, brought in $650 million in deals while Cincinnati saw roughly $350 million.

The retail volume dealmaker of the year went to David Hickman of CBRE, who completed more than 2 million square feet worth of transactions in 2015, including the sale of Metro North Mall and an 88,000-foot-lease with AMC.

“Nothing is accomplished without a great team of coworkers at CBRE KC retail department, and the unbelievable network of talented retail brokers in KC that I shared many transactions with in 2015,” Hickman said in a statement.

In the industrial world, Whitney Kerr Jr. of Cushman & Wakefield took home the award for top volume, having completed some of the largest industrial transactions in the city in 2015.

Greg Swetnam of Kessinger Hunter took home the top volume award for the office category, thanks to his involvement in one of the largest renewals at the Country Club Plaza and in Crown Center.

“As most of us know, it’s all about relationships,” Swetnam said. “We do a lot of transactions, but it’s really a transactional business around a relationship.”

The KCRAR Commercial annual Rookie of the Year award is an award based upon production, community service, ethics, education, and contribution to the local association. The award winner, Matt Ledom of Block Real Estate Services, began his career in 2013 as an investment sales specialist — or as Ken Block calls it, “Probably the hardest thing you can do.” To date, Ledom has been involved in the sale of more than 400,000 square feet of commercial space worth more than $43 million.

But it wasn’t always easy. Ken Block says he and other company leaders would give Ledom pep talks, encouraging him to arrive to work early, leave late, make a lot of calls and relationships, and promised him he’d get the hang of it.

“Let me tell you what I think,” Block said. “The guys that have luck are the people that put themselves in that position by hard work, by dedication, and by being in a place to be lucky. You don’t get lucky if you’re not working. He kept at it with a lot of dedication and I have to tell you, he got lucky.”

The next award on the docket, the Roger Cohen Salesperson of the Year award went to Michael Sonnenberg of NAI LaSala-Sonnenberg Heartland. The criteria is based upon an exceptional record of ethics, cooperation with fellow brokers, contributions to the association. Sonnenberg, a partner with the firm, has served as a commercial realtor in both Kansas City and St. Louis and has been involved in more than $100 million worth of transactions in office, medical office, and retail sales.

Finally, Pat McGannon of Kessinger Hunter took home the Allen J. Block Broker of the Year award. Named in honor of an icon of the local brokerage community, the award highlighted McGannon’s career, which began in 1994 and now entails overseeing the industrial arm of 8 Kessinger Hunter brokers who handle leasing and sales for more than 9 million square feet of industrial properties in the Kansas City area.

Get the scoop on the next upcoming networking events with KCRAR Commercial and other groups by visiting our event calendar.

NorthPoint, Hunt Midwest, Karbank on KC’s industrial drivers

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Phil Algrim of JLL, Paul Fogel of Karbank, Mike Bell of Hunt Midwest, and Whitney Kerr Jr. of DTZ.

NorthPoint Development has been one of the strongest players on the industrial scene, and is currently working on delivering to the market its latest industrial buildings in Logistics Park Kansas City in Edgerton. In about a week, the shell will be complete on its latest building, Inland 11 – a 657,354-square-foot building that took a whopping four months to complete.

“And the interesting thing is that it went up over the winter,” JLL Senior Vice President Phil Algrim said. “We started in November and in four months, it’s done. That shows you the economies of scale and the rapid deployment of capital and building out here.”

Inland 11 will soon be home to Kubota Tractor Corporation, a machinery and equipment distributor, which will take 436,000 square feet. Inland 12 is underway as well, scheduled to be completed by March or April.

Algrim says Kansas City’s biggest strength and a big driver of the activity has been its ability to hit more of a population total than other centrally located cities. Within 1,000 miles of Kansas City, 161 million people can be reached within 2 to 3 days. That’s a greater population density than what it would be in Washington D.C., Chicago, or Dallas.

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Within a 1,000-mile range of Kansas City, companies can deliver their products to 161 million people within 2 to 3 days.

Hunt Midwest is seeing no shortage of activity either, and has benefitted from the expansion of the automotive and e-commerce industries here. Mike Bell, Hunt Midwest’s vice president and general manager of industrial commercial development, says the company is looking at 800 million square feet of future development of Class B buildings in the 1300-acre Subtropolis.

By locating in Kansas City, companies like Food Service Warehouse are finding faster and more cost-efficient means of distribution, contributing to staggering growth numbers. Bell says Food Service Warehouse is growing at a rate of 200 percent of year.

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Hunt Midwest has aggressive plans to expand.

“They reason they chose our location – and this is important for Kansas City – that FedEx and UPS terminals in relation to airport are very important for e-commerce,” he said. “The speed for an e-commerce company to get their product to a consumer, that’s what drives revenues.”

But there’s an important segment of the industrial market that’s often overlooked: Class B industrial properties. Paul Fogel, vice president at Karbank, says that while his company does have a few smaller 100,000-square-foot Class A buildings, it’s really Class B buildings that constitute the bulk of Kansas City’s overall market. But most importantly, the asset class brings stability.

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While the bulk of Karbank’s portfolio is made up of Class B warehouses, it does market a few Class A properties, like this 108,000-square-foot building in the Northland. More info here.

“The staying power of Class B industrial cannot go understated. There’s a lot of it in Kansas City and one of the reasons you’re seeing a lot of local real estate historically owned by a very limited number of families in Kansas City is because these things lease, they’re stable, and rent goes up every time you renew the lease,” Fogel said. “You don’t have the difficulty of carpet and paint every three years with brokers parachuting in and negotiating more improvements. These things are incredibly stable, and that’s why they’ve stayed as a mainstay in our portfolio.”

A huge indicator of Class B’s strength? Its vacancy rate in Kansas City hovers at about 6 percent, Fogel says.