What area is your expertise?
• I am an associate partner with Hendricks & Partners and a veteran real estate advisor in the Kansas City and Midwest region. After completing my graduate degree in urban planning and working as a city planner, I joined the multifamily housing industry in brokerage. Over the last twenty years, I have connected the buyers and sellers of some of Kansas City’s highest profile apartment communities and condo conversions. The Kansas City metropolitan area straddles the border between Missouri and Kansas encompassing a 15-county Metropolitan Statistical Area, anchored by Kansas City, Missouri and Overland Park (Johnson County) Kansas. It is the 27th largest metropolitan area in the United States with an estimated population of 2.1 million.
What trends do you see presently in multifamily development in your area?
The Kansas City apartment market begins 2008 in relative market equilibrium with sound market economic fundamentals and supply in check. The downtown urban living trend gained significant momentum in 2007 with the opening of the Sprint Arena and the Power & Light District, a dynamic nine-city block mixed-use retail, entertainment, office, and loft district. In 2007, downtown had an estimated population of 17,000 people, which is up by approximately 3,900 from just four years earlier according to the Downtown Council. Following his 2008 “State of the City” address, the mayor added his desire to see that number grow to 35,000 over the next decade. Current growth is fueled by new jobs, including those stemming from the opening of H&R Block Headquarters and the IRS Regional Headquarters in the downtown core. Recently, GSA announced interest in moving its headquarters to downtown or the riverfront, potentially bringing 2,000 more employees to the area. The Downtown Council estimates job growth of 7 percent in 2007 bringing the number of jobs in the central core to 107,000.
Kansas City’s condominium market is characterized as demand driven, not speculative so there is no looming collapse or “shadow market” impact on the apartment sector. Condos and lofts have played an important role in downtown’s resurgence but still remains a relatively small market segment accounting for only 2 to 3 percent of annual home sales in the metro. In 2007, lofts and condos also became part of the multifamily development mix in the suburbs. Overland Park and neighboring Leawood, Kansas now have upscale ($500,000+) condos for sale in the Meridian, Mission Farms and Parkway 133 communities while Missouri’s northland offers new urban lofts and condos at The Ravello in Briarcliff Village and the Zona Rosa Lofts.
Who are the active multifamily developers in your area?
• In 2008, New York developer GailoydEnterprisesCorp. will begin construction of the Power and Light Condos. This project is located next to a downtown skyline landmark art-deco office building on the west edge of the Sprint/Power and Light entertainment district. The new project will offer 100 luxury condos with street level retail and a 700 space public-private garage. Gailoyd joins fellow New Yorkers, Time Equities, and area developers DST, Embassy Properties, McGowan-Walsh, Matt Abbott, Nate Accardo, George Birt, Tom Trabon, and Gary Hassenflu, among others, that have supplied the market with trendy lofts. Cordish, the developer of the Power and Light district, has a ready site for a new 100-unit high-rise, while Texas-based The Morgan Group has approvals for a 300-unit, urban density “branded” community in the City Market overlooking the Missouri River. Minnesota-based Sherman Development, Massachusetts-based Antheus Capital and Maine-based Eagle Point LLC all are undertaking ambitious residential redevelopments in the urban core. AMLI, Embry and Price Brothers have garden-style projects approved in the suburbs. Georgia-based Davis Development has acquired a site in south Johnson County for its third apartment community in as many years. Developer Walt Clements recently told a gathering of commercial real estate professionals that he was thinking about adding high-rise condominiums to his Deer Creek Woods office and retail project in Overland Park, Kansas.
Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?
• The Cold Storage Lofts, located in the downtown City Market, had its grand opening in 2007. This unique 450,000-square-foot building started out in life as the Muelbach Brewery and later housed 38 million cubic feet of cold food storage space. It now boasts 224 apartment lofts, including some affordable housing units (90 percent affordable living/10 percent market rate). The lofts range from 700 to 1,300 square feet, with rents running from $575 to $1,300 per month. The local developer, Gary Hassenflu, teamed up with the Lenexa, Kansas-based Miller-Stauch to undertake this $20 million design-build project. Funding for the project includes: LIHTC funds, Missouri environmental clean up funds, Missouri Historic Preservation tax credits and city property tax abatement.
The Meridian at Park Place, now under construction, offers 52 luxurious condominiums ranging from 1,300 to 4,000 square feet priced at $500,000 to $2 million+. This 30-acre, pedestrian friendly cosmopolitan project is located in Overland Park, Kansas, across from Sprint-Nextel Corporate offices at 135th and Nall avenues. It is part of a 750,000-square-foot mixed-use project that will include a luxury hotel, office and retail space and 700-car parking facility. The 750,000-square-foot Town Center Plaza Shopping Center is also within walking distance to the south. Developers and builders include The Alpert Company, Presidian Development (Hotel) and J.E. Dunn Construction.
Where is the majority of development taking place? Why is this area doing well?
Downtown Kansas City, Missouri — The acceptance of urban living in Kansas City has exceeded all expectations as evidenced by rental absorption, rising rents and increasing condominium prices. This development has occurred largely due to major commitments from corporate citizens like Sprint (arena) and H&R Block (HQ) to invest downtown. The government sector contributed a new Federal Courthouse and FAA facility. The Federal Reserve also built its new facility in the urban core. The IRS opened in 2006 adding 5,000 jobs in the urban core after consolidating divisions near Hallmark Cards Corporate Headquarters. GSA is also site shopping downtown. All this has been accomplished without light rail, which the voters have approved but is not yet finalized.
Johnson County, Kansas — The southwest suburbs continue to grow at near double digits fueled by steady job growth in Overland Park, Kansas, home of Sprint Nextel and a host of Fortune 500 firm offices. This high income, high-growth area offers great schools, transportation network, executive housing and access to land and utilities for expansion. Other growth hot spots in Johnson County include south Olathe and western Lenexa and Shawnee. Apartment developers are also eyeing western Wyandotte County, Kansas, to add new affordable housing near NASCAR and the new Legends shopping and entertainment district.
Northland (Kansas City, Missouri North) — When you land at KCI airport in Kansas City north and get directions from your Kansas City made Garmin, you may be heading to one of many new developments like the Zona Rosa center at Interstate 29 and Barry Road that has combined upscale retail, entertainment and lofts in a 500,000-square-foot urban center. The Steiner C