161
The famous Kansas City song — first recorded by Wilbert Harrison in 1959 — says, “I’m going to Kansas City, Kansas City here I come.” Well, in 2013, the retailers did come to Kansas City, which was beautiful music to the ears of developers and landlords throughout the area.
Some of the most notable new additions to the Kansas City retail scene include IKEA, The Container Store, Academy Sports + Outdoors, Scheels Sporting Goods, REI, Fresh Market, Rock & Brews, Cinetopia, Eileen Fisher, Freebirds World Burrito, Chuy’s and Hallmark’s new store concept called “HMK.” Still other retail additions include Pinstripes, an upscale entertainment and dining venue featuring bocce and bowling, as well as Sprouts and Corner Bakery.
Geographic proximity to other established markets for these retailers led to a natural migration pattern to Kansas City.
However, the following factors created new inventory opportunities and supplied the key ingredients for an active retail climate in 2013 that should continue in 2014:
• the metro’s declining unemployment rate to 6.3 percent from a recent high of 8.4 percent in 2010;
• the buoyant housing market, with an estimated 5,960 new residential and apartment units added during 2013 versus 2,342 units in 2010;
• strong employment growth and willingness by the various cities in the metro area to offer developers incentives.
The Kansas City metro area, which boasts a population of 2.1 million, also experienced strong expansion growth from the existing base of retailers, including Neighborhood Market, Price Chopper, Sam’s Club and Hy-Vee, which added one of the largest grocery store footprints locally.
Other retailers that have expanded their footprint in recent months include Super Walmart, Ross, Staples, Marshalls Home Goods and Burlington Coat Factory, just to name a few.
Development Lull Ends
There was a reawakening of new retail development activity during 2013, which started in late 2012. Almost 90 percent of these projects have some sort of incentive-based assistance, such as a Community Improvement District (CID), Transportation Development District (TDD), or Tax Increment Financing (TIF).
Some of the most prominent projects include the new Prairie Fire development, a 350,000-square-foot, $580 million mixed-use project. The live/work/play concept will include the American Museum of Natural History and Cinetopia.
Other noteworthy projects include the 586,000-square-foot renovation of Truman Corners in Grandview, Mo., and the renovation and expansion of the 230,000-square-foot Wyandotte Plaza in Kansas City, Kan.
In addition, the long-stalled Corbin Park project, located at 135th Street in Overland Park, Kan., is in full swing with the signing of a 220,000-square-foot Scheels Sporting Goods store.
Retailers joining Corbin Park include SteinMart, Sprouts, Off Broadway Shoes, Ulta, Kirkland’s, Corner Bakery and Firebirds Wood Fired Grill.
Mall Makeovers
Kansas City continues to gradually reduce the number of enclosed malls, a trend that started in the 1990s. Where we once had 10 enclosed malls, we are now seeing the shift from indoor malls to outdoor centers.
Antioch Mall, located in Kansas City, Mo., was partially demolished to make way for a community shopping center anchored by a new Neighborhood Market surrounded by an existing Burlington Coat Factory and Sears. The new project will be called Antioch Crossings. When complete, it will consist of 500,000 square feet. Kansas City is down to six enclosed malls, three of which have less than 50 percent occupancy and are poised for redevelopment.
Another clear trend in Kansas City in 2013 was active multi-tenant pad development undertaken by medical users such as Aspen Dental, as well as drive-thru strip centers with Dunkin’ Donuts and Starbucks end caps.
Other pad site generators included Discount Tire, AutoZone, Advanced Auto Parts and QuikTrip. The national franchise scene in Kansas City is strong as well.
To compete with the Internet phenomenon (online sales on Cyber Monday in 2013 exceeded $2 billion, a record volume) occupiers of retail space in metro Kansas City are right-sizing their brick-and-mortar stores.
They are enhancing their customer service, offering specialized merchandise and creating more unique and exciting shopping environments to stay competitive with the online world. We will continue to see retailers relocate to more prominent retail trade areas in the metro area.
This is becoming a challenge as vacancy at our Class A centers tightens to pre-recessionary levels. Currently, the retail vacancy rate metro-wide is 8.8 percent for all retail property classes, thus creating leverage for landlords to increase rates in certain cases. In addition, the market is starting to hear more whispers of some large-scale projects on the drawing board.
In short, today’s market conditions are hitting the right note, bringing a diverse and exciting retail base to Kansas City.
— David Hickman, senior vice president of retail services, CBRE