$26.5 billion Sprint and T-Mobile merger paves stability for Johnson County

Last week a federal judge ruled in favor of the $26.5 billion Sprint and T-Mobile merger, shutting down anti-trust arguments brought by a group of attorney generals and clearing the way for the merger to close as early as April this year.

Prior to this ruling, reports of concerns on the stability of Sprint as a standalone company if the merger was blocked, created uncertainty of Sprint and T-Mobiles’ future office presence in South Johnson County. 

"These fears are now alleviated, as the merger will pave the way for stability in the Kansas City office market and the companies’ commitment to remaining in Kansas City. All signs point to continued stability in Johnson County," according to a recent report by JLL Research*.

The former Sprint Campus, now renamed as The Campus, sold to Occidental Management in July 2019. That quarter, availability in South Johnson County increased 0.4% after several former Sprint spaces became available. 

Availability in South Johnson County currently stands at 13.7%, below the market average of 16.2%.

Sprint currently occupies an estimated 2.2M SF of The Campus, with long-term leases to remain in about 1M SF. Sprint has also committed to at least $25M of capital investment to improve their long-term space.

About 1.5M SF is currently leased by third party tenants; 120,000 SF of which was leased since Occidental acquired The Campus. About 130,000 SF is currently available and marketed for lease. Occidental Management plans to invest significant capital in the campus to add amenities and attract third-party tenants.

A Place For Mom recently leased 42,000 SF at The Campus to house their first Kansas City office and has plans to hire 600 new employees to the KC metro.

Sprint currently employs 6,000 people at the campus and has shared speculative plans to hire 1,000 more.

*Statistics, opinions and other facts in this article sourced by JLL Research.

Occidental completes purchase of Sprint Headquarters Campus

Occidental Management, a Wichita, Kansas-based, "turn-key" commercial real estate development and management firm, closed on its purchase yesterday of the 20-building, 190-acre Sprint Headquarters Campus.

Sprint Corp. chose Occidental after an extensive, nation-wide selection process based on their shared vision for working with Sprint and the other campus tenants to re-invigorate and create an environment for companies to recruit and retain top workforce talent in the region and country.

This vision includes the recently completed OPx redevelopment, which neighbors the campus and was transformed into a vibrant, contemporary Class A office complex.

"The Sprint campus has been one of our ideal acquisition targets in the Kansas City market, and we’re excited to start work to enhance the already amenity rich campus," said Gary Oborny, CEO and Chairman of Occidental.

The Sprint headquarters will remain on the Overland Park campus. As part of the agreement between the two companies, Sprint is leasing back buildings for its long-term office needs, primarily in the southern portion of the campus.

"We are excited to add to our operating platform in Overland Park. Sprint has solidified its long-standing commitment to Kansas City and we look forward to working with them and the other tenants on campus as they look to grow their businesses in our home State," said Chad Stafford, president of Occidental and Overland Park native.

With the transaction complete, Occidental expects to announce more details for its future plans for the campus by year’s end.

A.L. Huber grows in scope and size

Coming off a record year in 2018, A.L. Huber is building on its longtime reputation for quality construction and positioning itself for growth in additional market niches such as healthcare, industrial, and information technology.

 “We are a 116-year old company and in a successful time of transition,” said A.L. Huber President Phil Thomas who assumed majority ownership of the company in 2015. “It’s been a great 3 ½ years. Along with my ownership, we have four additional owners as well. Our future is very exciting.”

 A.L. Huber’s revenue topped $83 million in 2018, up more than 70 percent from $48 million in 2017. Thomas says the growth is largely due to the firm’s strong preconstruction team, which has tripled over the past five years and has helped transform A.L. Huber’s business model.

“A lot of times, people think because we are doing preconstruction work that our pipeline is two years out, but we actually can build 6-8 months down the road,” Thomas said. “We collaborate closely with owner and design team and move projects through the design phase quickly. We know that if we can get the budget and schedule to the owner early, that means we don’t have hiccups when submitting for permits and don’t end up over-budget.”

In the technology market, A.L. Huber recently completed Fishtech Group’s new Cyber Security Operations Center in Martin City as well as Sprint’s new 5G Experience project. The firm reinforced its industrial division in 2018, completing a 315,000-square foot manufacturing facility for Aspen Products in Kansas City and a 255,000-square foot distribution center for TVH in Olathe. On the healthcare front, A.L. Huber is expanding geographically – currently completing construction of a hospital addition in Fall Rivers, S.D..

A.L. Huber’s founding family, the Huber’s, remain partners and very active in the storied construction firm, with Augie Huber serving as CEO. Thomas and Senior Vice President Keith Dorrian guide the firm’s day-to-day operations.

“One of the unique things about our story is that my only job has been at A.L. Huber, and Keith’s only job as been at A.L. Huber. I started here 35 years ago and Keith 23 years ago, so try to drive best practices from everyone we meet—including our peers,” Thomas explained.

With more than 100 years as a family-run business, A.L. Huber prides itself on low turnover. Once they start, employees typically stay with the firm for the remainder of their career.

“It’s still a family culture here, and we truly work hard at finding the best people and then we work hard at keeping them together.”

Sprint campus sale, new DT office tower among most anticipated CRE events of 2019

The expected sale of Sprint's 4 million square foot Overland Park campus will be a bellwether event for the Kansas City regional commercial real estate market in 2019. That's the consensus from panelists at MetroWire Media's KC Market Forecast held Jan. 8, at Johnson County Community College. The event was moderated by Kansas City Area Development Council (KCADC) President and CEO Tim Cowden.

"It's going to have a monumental impact. We're talking about 25 percent of the KC office market trading hands in 2019," said Mike Klamm, Managing Director for CBRE's Kansas City office. "The new owner will have new objectives, motivations and strategies to put tenants on that campus."

The sale could bring an estimated 1 million to 1.5 million square feet of Class A office space up for lease in the historically strong Johnson County submarket by the middle of the year. 

Beyond Overland Park, Sprint's pending merger with T-Mobile will reverberate throughout the region's office market as communities seek creative ways to backfill the carrier's inventory of older office space.

"We have a lot of Class B space in Platte County," said Alicia Stephens, Executive Director of the Platte County Economic Development Council. "To see what Sprint did when it first opened and then when it downsized- and now with the merger-  I think it has a long-term impact for us."

As Sprint seeks suitors for its campus, Copaken Brooks will continue to build its case for a new, Class multi-tenant high-rise office building in Downtown Kansas City. The 250,000-square foot tower would be the first of its kind in about 30 years.

"We think people will pay a premium for something new and innovative in terms of layout, size and technology. The task is figuring out how deep is that market, and how much do people really want to pay?" said Jon Copaken, Principal of Copaken Brooks. "We feel the time is right to explore than and get that done."

Other top development stories to watch in 2019, according to MetroWire Media panelists:

*Construction of the new KCI (Alicia Stephens)

*Growth in Data Center, K-12 Educational projects (Randy Bredar, JE Dunn Construction)

*Fruition of several sports-themed mixed-use projects, such as Bluhawk in South Overland Park (Bart Lowen, Price Brothers Development)

*KC Streetcar extension to UMKC (Jon Copaken)

*Access to Opportunity Zones (Mike Klamm, CBRE)

Check out a slideshow from the event here. Photos courtesy of Jacia Phillips, Arch Photo KC.