EPC's McKeen sees stability in KC multifamily market

By Marcia Charney | MWM Contributing Writer

Stable. Steady. Cautious. Opportunity.

Those are the words Mike McKeen is using these days to describe the state of Kansas City’s apartment market. The principal and president of EPC Real Estate Group, LLC spoke to a record-breaking crowd of more than 150 brokers and real estate professionals at the April meeting of the Kansas City chapter of CCIM

Areas that will continue to succeed in the multifamily market will have “charm, character and are walkable, with jobs in good proximity,” McKeen said, noting that strong players currently include Lenexa City Center, downtown Overland Park, Olathe, Mission; and downtown Kansas City, Missouri, which leads the area in multifamily development. 

The living preferences of Millennials are driving the market. Some of EPC’s current products are Millennial-based, including Avenue 80 in downtown Overland Park, where Millennials comprise 70 percent of the tenant base. Empty nesters, who no longer want to maintain their homes and are seeking to live life a little differently, are another growing tenant segment.  

McKeen discussed how e-commerce is changing multifamily development. With the explosion of package delivery, developers are installing electronic parcel delivery systems, which allow tenants to retrieve packages by entering a security code. McKeen said that without these delivery systems, the buildings would need a massive storage room for delivered packages and staff to monitor receipt and storage.

McKeen said that developers now have to consider for the first time the amenities and unit size that Generation Z wants. He stated that studio apartments are the “quickest thing to fly off our lists right now because they hit a certain price point of affordability but they also cater to that lifestyle of people who spend most of their time playing video games.” McKeen added that the amenity most requested by Gen Z is blackout shades for better game screen visibility. 

McKeen discussed the challenges currently facing multifamily developers which include a decline in the number of skilled craftsmen; the threat of tariffs, causing suppliers to raise prices to offset the impact of possible future tariffs on costs; future tax treatment; the passage of city ordinances which impact the use of development incentives; aging infrastructure; low supply and high demand, particularly for precast concrete products; and rising operating costs.

McKeen also recognized new opportunities for multifamily developers such as the creation of new inventory to meet the demands of Millennials and empty nesters, affordable housing, and opportunity zones. In addition, new product types like micro-units, which range in size from 350 to 500 square feet, are in high demand with rising rents.  

Noting that “site selection is everything now,” McKeen said the average occupancy of multifamily properties in the Kansas City area has remained steady, staying between 93 and 95 percent.  

 

VanTrust, JE Dunn, and HOK partnership takes flight with TIA deal

VanTrust Real Estate, JE Dunn Construction Co., and HOK have leveraged their collective strength in the Kansas City market land a large-scale office development project adjacent to Tampa International Airport (TIA).  

The Hillsborough County Aviation Authority (HCAA) awarded a contract to VanTrust to develop a 9-story, 270,000-square foot office building near TIA, which served 21 million passengers in 2018. The tower will be the first commercial structure linked to the airport by a people mover.

“This will be a Class A office building in an excellent location with unrivaled access to Tampa International Airport,” said TIA Executive Vice President Chris Minner. “With easy connectivity to the Airport, downtown Tampa and St. Petersburg, this is really the ideal location for a wide range of companies.”

Located in a prime spot in the new SkyCenter development, the building will feature an elevated pedestrian walkway connecting its atrium to the SkyConnect station at the airport’s rental car center. Other amenities include a conference center, fitness center, café and access to multipurpose trails that will eventually join with Tampa Bay’s regional trail network.

 The building will serve as the primary home for HCAA employees and will comprise the nerve center for all airport operations. By relocating its in-terminal offices to the new building, HCAA is making way for expanded curbside service, with express lanes for passengers who aren’t checking bags.

Construction should be completed in 2021. VanTrust is leading development of the office building and adjacent parking garage; J.E. Dunn will provide construction services of the office building, and HOK will handle design. 

#FLEXKC Panel: Cold storage is next frontier for "on fire" Kansas City industrial market

Kansas City's industrial market remains strong, with more than 3 million square feet of speculative space currently under construction and 1.3 million SF completed in the first quarter.

But in order to succeed in the rapidly changing, omni-channel marketplace, communities and companies need to remain flexible on all fronts, ranging from operations to incentives to workforce development. That's the consensus of panelists at KC SmartPort's 2019 Industry Briefing, FLEXKC.

"While the economy and most indicators point to continued growth, the need for companies to increase flexibility in operations and hiring practices has never been greater. That is true of how companies build, use and occupy space as well,” said KC SmartPort President Chris Gutierrez.

One of the next waves in industrial development will be "Food on Demand" as consumers seek convenience and freedom from the kitchen. That means cold storage facilities are landing at the top of the shopping list for those scouting industrial locations.

"We are seeing an uptick in that sector," said Colby Tanner, BNSF Railway assistant vice president. "Over the last 18 months we have started to get a lot of inquiries from the cold storage sector asking how can we locate along the rail line or have rail access."

Although they come with significant investment and a subsequent boon to local coffers, cold storage facilities can present a challenge when it comes to incentives.

"These are really high-dollar projects, but they require a non-traditional workforce. So from an incentives perspective, you have a project with a huge investment but the challenge will always be workforce,” said Ann Petersen, Cushman & Wakefield managing director. 

Other barriers to entry include higher insurance costs, environmental impacts, and margins squeezed by waste.

"Food on demand is a challenging business, " observed longtime Amazon Site Selector and Keynote Speaker Mike Grella. "I think there’s room for growth there, but we are still in a period of experimentation and iteration." 

For a full event recap, click here.

Mission Gateway development lands key financing

The developers of Mission Gateway have secured intermediate financing needed to get construction moving on all fronts of the long-awaited mixed-use project located at the site of the former Mission Center Mall.

GFI Development and The Cameron Group are eyeing 2021 for the project’s full completion, thanks to $20 million in fresh financing secured through Metropolitan Commercial Bank. The funds will allow construction to commence on the project’s 130,000-square foot entertainment portion by the end of April. Site preparation began for Mission Gateway’s three apartment-over-retail buildings last fall and those structures are on target for delivery by the end of 2020.

 “The financing we have secured and closed will allow us to continue to deliver what we promised,” Tom Valenti of The Cameron Group told MetroWire Media.

Mission Gateway’s entertainment area will include an unnamed anchor tenant who will operate a 90,000-square-foot entertainment complex to complement a 40,000-square-foot food hall from Chef Tom Colicchio’s Crafted Hospitality.

“We were out there looking for financing, and it is coming to us in two ways. We secured the first wave of financing done through Metropolitan Commercial Bank, our lending partner. And we continue to work with Mission Capital, our capital advisors throughout the process,” said Andy Ashwal of GFI Development.

In January, GFI and the Cameron Group announced they were seeking a finance partner and bumping up the construction timeline after landing the unnamed destination entertainment tenant.  

Mission Gateway snapshot:

-Colliers International will handle Mission Gateway’s office and retail leasing.

-Neighbors Construction is expected to complete the multifamily portion of the project in April 2020.

-Fogel-Anderson Construction Co. is serving as construction manager for the entire redevelopment project at Johnson Drive and Shawnee Mission Parkway.

-El Dorado, Inc. designed the overall master plan. 

-NSPJ is architect of record for the Element by Westin hotel.

 For more info, please visit www.missiongatewaykc.com