CREW KC hosted panelists Elli Bowen, vice president, business development at KC SmartPort; Julia Taylor, partner at Dentons; and Leah FitzGerald, managing director at CBRE to discuss the successes and challenges of attracting companies to, and retaining businesses in, the Kansas City metro. Debbie Swearingen, vice president, commercial banking at CommunityAmerica Credit Union, moderated the July 20th quarterly luncheon program.
“We were already a growing logistics hub long before COVID-19 hit, but really became a shining star in that market,” said Bowen.
Bowen said that with rapid growth of e-commerce and the food and beverage industry, Kansas City was well positioned to capture and has captured a lot of that growth. She estimated that approximately 80 percent of the industrial pipeline is in some sort of manufacturing, with the majority being food and beverage.
Bowen said a lot of the spec industrial buildings in the region were built with a distribution type model in mind and do not meet the needs of the growing food and beverage manufacturers.
“We need to rethink how we’re building spec product in order to accommodate a variety of users,” Bowen said.
In 2020, the US market saw $145 billion in multifamily investment; 2021 investment likely will exceed 2020. FitzGerald said Kansas City will capture some of that investment money. She said one of Kansas City’s selling points is its stable population growth, which investors really like.
FitzGerald said multifamily rents are projected to rise by 5.5 percent this year, and by as much as 16 percent in some pockets.
“If you’re paying that rent, that’s not a good thing - but if you’re investing in that space, those are really strong numbers,” said FitzGerald.
Many of the projects in the Kansas City area would not occur without the use of private/public partnerships.
“We’re seeing some municipalities who historically sat out and weren’t very sophisticated deciding it’s actually beneficial for their communities. We’re seeing how investing in these projects can really enhance communities, bring additional workforce, bring additional business and taxes. We’re seeing more players in the area. We’re seeing other municipalities who have been in this for decades fine tuning their policies, tweaking their policies and asking for more things that they haven’t asked for in the past to make sure that they’re getting quality product,” Taylor said.
“Also some of our communities are getting a bit more creative on their incentive offerings,” Bowen said.
The panel discussed the types of infrastructure needs the metro area should be focusing on to attract more businesses. Taylor said the new airport will have a huge impact for attracting both companies and talent.
“Otherwise -with the airport crossed off the list - taking care of basic aging infrastructure, such as upgrading sewers and bridges, should be a priority. We have a good road system. We’re not Austin where you only have two highways and they’re both clogged all day long. There are plenty of ways to get around here. It’s just maintaining them that’s extraordinarily expensive considering how many miles there are,” said Taylor.
Taylor said environmental remediation provides another area for opportunity.
“We’re seeing municipalities buying back land that’s been contaminated and remediating that and incentivizing companies to get that land back on the tax rolls. Finding solutions to situations like that and creating a place where people want to be at will make us more competitive,” she said.
Taylor said even though Kansas City may not land a company’s primary headquarters, there is opportunity to attract a company’s secondary headquarters. She noted that several businesses have sent their back office operations to Kansas City.
FitzGerald said the region’s ability to attract and retain companies often turns on the incentive package offered. Unlike places like Denver with its mountains or the coastal beaches, this region must rely on the strength of its incentive packages.
Bowen said labor is the number one driving factor for attracting new projects to the area. Weeks and months before a company wants to talk about real estate, they inquire about the local labor situation, said Bowen.
“When you’re looking at Kansas City versus another market, even though we’re feeling a pinch on labor, we’re not as bad as other markets,” FitzGerald said.
Bowen said perception is one of the greatest challenges to attracting new business to the region.
“What I mean by that is we all live here, we love this community and we always call it the epiphany of the visit if we can just get our client from the coast to come into Kansas City. They’re blown away, but sometimes I think we still struggle with that,” said Bowen.