When Gib Kerr, managing director of Cushman & Wakefield, returned to his hometown of Kansas City in 1992, he described its downtown as a desolate war zone.
“It was horrible,” he said.
Kerr discussed the resurgence of Downtown over the past 25-plus years in a presentation last week at the monthly breakfast hosted by CCIM Kansas City.
Since 1995, Downtown has seen 8 million SF of new construction and approximately 9 million SF of historic conversions. But, the revitalization didn’t occur overnight.
According to Kerr, one of the most important things that happened was the formation of the Downtown Community Improvement District, spearheaded by the Downtown Council of Kansas City.
“Sean O’Byrne [vice president of the Downtown Council and executive director of the Downtown and River Market Community Improvement Districts] deserves a ton of credit because that’s when Downtown really started turning around in 2002,” said Kerr.
By 2006, at one point there were 13 city blocks in Downtown under construction. That was the year that saw the opening of the Power & Light District, the H & R Block headquarters building and the T-Mobile Center (formerly the Sprint Center).
“It was such an amazing transformation,” Kerr said.
Since 1995, more than 60 historic buildings in Downtown, which Kerr described as “functionally obsolete office buildings,” have been renovated, with 80 percent of them converted to residential use. Kerr credits the historic tax credit program for making this happen.
“But now we’ve kind of gotten to the point where we’ve almost run out of old buildings with the exception of the West Bottoms and a couple of remaining buildings in the Central Business District. So we’ve made that transition from restoring old buildings to building new construction. Unfortunately, you don’t have the tool of the historic tax credit for new construction, so we need some new tools to compete,” said Kerr.
The late 1990s and early 2000s saw a lot of new Downtown office development. The last 15 years, however, have seen very little new office space added. In addition, COVID has negatively impacted the office market.
According to Kerr, there’s never been a better time than now to office in Downtown because of the amenities, including the restaurants, entertainment offerings and the KC Streetcar.
“People are using their office space as an HR recruiting tool. So, I think that works to Downtown’s advantage,” he said.
Kerr said nothing has had a bigger impact on Downtown’s resurgence than the Streetcar, which brought several billion dollars worth of redevelopment.
“Before the Streetcar went in, we were selling land in the Crossroads and Downtown, kind of average land price of $30 per SF. And now you’re seeing land prices at $150 per SF, so land prices have just gone through the roof,” said Kerr.
Another market sector that has seen a resurgence is hotels. After the Kansas City Marriott Downtown opened in 1984, it was 30 years before Downtown saw a new hotel.
But since 2016, Kerr said 12 to 14 hotels have opened Downtown, adding more than 2000 rooms in a six-year period. He estimates there are another 1400 or so hotel rooms currently either planned or under construction.
“I think the hotel sector is one of the most positive signs about Downtown,” he said.
Kerr said several major catalytic projects are on the horizon for Downtown Kansas City, including a possible move by the Kansas City Royals to a stadium Downtown; the South Loop park project, a $200 million plan to cover Interstate 670 and convert it to a park; the extension of the Streetcar and the redevelopment of the Berkley Riverfront.
In addition, Kerr said there are several projects in the River Market at various stages of development or pre-development that could bring 1500 or more residential units.
SomeraRoad Inc. has plans for a mixed-use project in the West Bottoms, which boasts one of the highest concentrations of old historic brick and timber buildings anywhere in the United States, said Kerr.
Kerr said Downtown comprises a little more than one percent of the overall land mass of Kansas City, Missouri, but it brings in 20 to 25 percent of the city’s earnings tax revenue.
“Downtown, I always say, is the goose that lays the golden eggs,” he said.
Kerr cautioned against Kansas City resting on its laurels. According to Kerr, Kansas City is a city on the edge as it grapples with anti-development politics and homeless and crime issues. In addition, rising construction costs and interest rates have slowed development.
“The revitalization is not complete. I’d say it’s kind of a fragile situation that we’re in, but if we play our cards right, I really believe that the next 5 to 10 years can be some of the best years we’ve ever had,” Kerr said.
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FEATURE PHOTO CREDIT: MARCIA CHARNEY | MWM KC