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

Mixed-use demand fuels Drake Development’s project surge

“You’ve got to be willing to adapt and listen to the market and listen to your users as well,” said Ian Mussman, director of sales & leasing, at Drake Development LLC.

Mussman spoke at the September breakfast meeting hosted by CCIM Kansas City. He highlighted three of Drake’s current projects in the metro area.

Merriam Grand Station, located at the southeast corner of Shawnee Mission Parkway and I-35 in Merriam, Kansas, is nearing completion. The site once housed a Kmart, which sat vacant for more than a decade.

Drake completed its first site plan for the site in July 2020. It took Drake over 2 ½ years to work through the assemblage and entitlement processes. Drake acquired the five-parcel site from three different property owners.

The 50-foot grade change from the northeast corner to the southwest corner of the site presented the most significant challenge to redeveloping the site.

“One of the reasons that it sat available for so long is that it was in a hole. It sat almost 20 feet below Shawnee Mission Parkway grade, and none of the high-profile tenants of the city who would want to go into a project like this would ever accept a site like that. We came up with a creative solution and ended up raising the site just under 15 feet. So almost the roof of Kmart, more or less, became the finished floor of the new project,” Mussman said.

The original site plan featured a power center lineup. Mussman said there was little lending appetite for big box, and Drake’s attempt to add a hotel was not a winner in those early months of COVID.

After many site plan revisions and the expenditure of a hefty amount of architectural engineering dollars, the nearly completed project features 361 multifamily units with underground parking, retail space and a civic activity space. Mussman said all but one retail space has been leased.

The City of Merriam wanted an environmentally and green friendly civic space which, Mussman said, was never part of the original plan. However, through a public-private partnership with the city, Drake is constructing a canopied space that will have solar panels to help power the project’s common area parking lots.

A second project, on which construction is just starting, is Cocina 47, located at 604 W. 47th Street in Kansas City, Missouri. The project on the north side of the

Country Club Plaza is adjacent to another of Drake’s redevelopment projects, the Jack Henry building.

Cocina 47 on the Country Club Plaza , where the Seventh Church of Christ, Scientist used to be, is set to open in 2026. Image Credit: TR i Architects

Mussman said when Drake acquired the Jack Henry building, it learned that the neighboring Seventh Church of Christ, Scientist building had become too large for its shrinking congregation and too expensive to operate.

“So quickly we realized there was an opportunity to modernize their space in a way that better fits their needs. This is a super complex deal that we had to come up with a way to let them ‘condo-out’ their space,” said Mussman.

The church is reducing its footprint by approximately one-half and is acquiring the condo space at no cost to them. Until construction of Cocina 47 is complete, the church is housed in the Jack Henry building.

Mussman said it took 54 months between the time it acquired the property until it began construction on Cocina 47.

“We’ve completed demolition and now we’re working on everything that goes below grade before we go vertical,” he said.

According to Mussman, the tenants, who he was unable to disclose yet, will be high end restaurant groups on the second and third floors of the three-story building, with first floor space still available.

Mussman said Drake anticipates completing the building shell by late 2025 or early 2026 and having tenants open in 2026.

The third project Mussman discussed is located at the southwest corner of Highways 50 and 291 in Lee’s Summit, Missouri, the municipality where Drake has made its most investment. The project is in its planning stages.

Oldham Village, in Lees Summit, Mo., would include 15 retail pad sites, 300+ apartments and, potentially, a field house and fitness center. Image courtesy of Drake Development

Mussman said this project started in 2020. Drake initially purchased one parcel with the intent of developing it as industrial. Then Drake considered big box, which the city did not want. Drake settled on apartments with retail pads. According to Mussman, tenant recruitment is not an issue because currently 92,000 cars a day pass in front of the site.

“As the plan evolved, we ended up growing the scope and growing the property assemblage,” he said.

The project, which Mussman called a “monumental undertaking”, now involves 15 parcels from 12 different property owners and more than 46 acres.

“This one is especially hard because these businesses you see here, these are owner-occupied businesses. They don’t care what your appraisal says. They don’t care what your pro forma says. This is their livelihood. This is where they fed their family for decades. It’s a very emotional decision, and it requires a lot of creativity,” said Mussman.

Mussman said Drake purchased nearly half of the parcels on a sale-leaseback which allowed the sellers to raise capital to relocate, find a new home and continue to operate their businesses.

Besides tackling the assemblage issues, Mussman said the biggest challenge on this project is the sanitary sewer. He said there are approximately $3.5 million of offsite sanitary sewer upgrades needed to allow new businesses to open and operate at the site. This has discouraged other developers, but Drake will make the improvements which will benefit an 835-acre area. In addition, Drake must relocate a perimeter ring road.

Mussman said Lee’s Summit has been looking for a site for a fieldhouse for several years. In place of one of the three apartment phases Drake had planned, the city will construct a 120,000 SF fieldhouse facility.

“When we bought this site, if you would have told me we were doing a 120,000 SF fieldhouse with the city, I would have laughed. And here we are. It just went to council last week, and they approved the contract,” he said.

Mussman said he anticipates construction of the project will begin before the end of the year. The city’s planning commission approved Drake’s plan last week, and it is headed to the city council shortly.

Mussman noted that all three projects are located in core areas.

“We’re not trying to shift the center of gravity and go out in a cornfield and make everyone go somewhere. These already have an insane amount of traffic. They’re highly desirable areas for tenants and residents. And then we just figure out how do we solve the puzzle and make something economically feasible that also meets the city’s and residents’ demands,” said Musssman.

Header Image: The long-vacant Kmart site at the intersection of Antioch Rd. and Shawnee Mission Pkwy. is set to come back to life. Drake Development has submitted plans for a $136 million project, named Merriam Grand Station. Rendering courtesy of Drake Development

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.

Downtown Kansas City's inspiring comeback story

In 2002, only 60,000 employees worked in Downtown Kansas City, Missouri.

“They were fleeing as quickly as they could, and I think the access on Main Street was one way south to Johnson County. No one wanted to be here. No one wanted to live here. It was really a very difficult kind of situation,” said Bill Dietrich, president and CEO of the Downtown Council of Kansas City.

Dietrich was the featured speaker at the monthly luncheon hosted by the KC Downtowners last week.

Since 2002, Downtown has seen $11 billion in investment. It now boasts 124,000 employees and 32,000 residents.

“We’re the fastest-growing neighborhood. If we were a city, we’d be the 11th largest in the metroplex. That’s kind of cool. We’re also the fastest-growing neighborhood community. We’re adding more residents,” said Dietrich.

The area that Dietrich said he defines as “Greater Downtown” is approximately 2.5-mile square blocks and includes the Missouri River to 31st Street, 18th and Vine to State Line Road.

Dietrich shared publicly for the first time some new independent research data about Downtown’s post-COVID recovery. Like all major communities across the country, Kansas City suffered some economic losses as a result of the pandemic which struck in 2020. But, recovery has been healthy.

In 2019, Downtown had 5.3 million unique visitors. In 2023, Downtown had 6 million unique visitors, which equates to 133 percent of the pre-COVID levels. In addition, Downtown has recovered 95 percent of the number of visits (the visit frequency of unique visitors) from 2019. Kansas City’s recovery rate is surpassed by only Nashville and San Jose, Dietrich said.

“We need to build on that trend. That’s why these events are so important. Not only the FIFA World Cup, which we all know is coming in 2026, but we now have the Big 12 women’s and men’s for the next seven years. Those are huge plusses for our community, and they feed off of each other. The more of these you do, the more you get,” he said.

The employee base has increased by 11 percent since 2020. Thirty-five percent of all Kansas City, Missouri jobs are Downtown. Dietrich said that the employment base is important to support Downtown restaurants and cultural venues which helps spur the economy.

Dietrich said companies are drawn to Downtown because of its exceptional talent pool, vibrant environment and growing residential options. Downtown has 26.5 million SF of office space, making it the largest business district in the region.

According to Dietrich, approximately 76 percent of the Downtown pre-COVID employees are back in their offices at least three days a week, placing Kansas City fourth in the nation for employee recovery.

Bill Dietrich, president and CEO of Downtown Council of Kansas City presented to KC Downtowners earlier this month. Photo Credit: Marcia Charney | MWM KC

Data shows that where employees reside in the metro drives their use of Downtown. Dietrich said that employees who live within two miles of Downtown are 100 percent back in the office. This percentage drops to 80 percent for employees who live two to five miles away and to 70 percent for employees five to 10 miles away. Farther than 10 miles, the percentage drops even lower.

“What does that tell you about what you should be focusing on as a city as policymakers and at City Hall? You should be focusing on an economic development strategy for the city, in my opinion, which prioritizes and really focuses on multi-family residential in Downtown. . . . You can see it borne out in the data. The closer you are to the center, the more likely you are to go to your office, buy that lunch and go to that theater afterward, go to a game or a concert at T-Mobile Center or the Kauffman Center for the Performing Arts,” he said.

Although the number of Downtown residents has climbed, Dietrich said there is a need for more residential inventory of all types, not just luxury projects. He said the residential population is projected to be 43,000 by 2035.

“Residents are everything. Residents bring vitality. They demand things. They want streetcars. They want more cultural amenities. They want better jobs. And, it makes a huge difference to have them,” he said.

The demographics of Downtown residents show that 50 percent are men and 50 percent are women, and 51 percent are not majority culture.

So we’re a very diverse downtown. And that’s in pockets and areas that are less diverse and more diverse areas. That’s why we say Downtown is a collection of 22 unique neighborhoods, each with its heritage, history, value and culture,” said Dietrich.

Dietrich said there is $3.5 billion of Downtown investment currently underway, including the redevelopment underway by SomaraRoad Inc. in the West Bottoms, mixed-use development at the riverfront, the UMKC Health Sciences Building, streetcar expansion, Barney Allis Plaza and the Buck O’Neil Bridge. There also is the $225 million South Loop project, a four-block park on 5.5 acres which will be built over I-670 and will reconnect Crossroads to the Central Business District. To date, $125 million of the project’s cost has been raised, and Dietrich said construction should begin next spring.

“Downtown baseball is still a conversation we need to have. It’s the right decision to make. It would add three million more visitors to our marketplace, and absolutely you would see $2 to $3 billion of investment around it,” Dietrich said.

Other needs for Downtown include innovation districts, east-west transit connections and more parks, trees and open spaces.

Dietrich recognized that Downtown crime is escalating, and public safety is a huge issue.

“We’re seeing escalations in crime on property or person, and we are mobilizing our energy and our forces. It is a top priority for us to change that trend,” he said.

Dietrich cautioned that Kansas City must work to retain its progress and avoid what happened in downtown St. Louis, which has beautiful monumental structures and roads, but is empty.

“It’s very affordable Downtown. It’s very diverse Downtown. It is a very welcoming Downtown. None of those are a given. We all had to work really hard to make that happen. And, we can’t take our eye off the prize,” Dietrich said.

The header image shows the completed, under development and proposed mixed-use and multifamily Light Towers within the Kansas City Power & Light District’s nine-city block retail, entertainment, office and residential district, located in the heart of Downtown Kansas City directly adjacent to the T-Mobile Center. Image courtesy of The Cordish Companies.