Food Service Warehouse

Ora Reynolds on Hunt Midwest’s aggressive growth

Ora Reynolds is president at Hunt Midwest.

Ora Reynolds is president at Hunt Midwest.

Today, when you look at the professional day-to-day of Ora Reynolds, you’d never guess she stepped into her job by answering a newspaper ad – but that’s exactly what she did. As president of Hunt Midwest, a sister company to the Kansas City Chiefs owned by the Hunt family, Reynolds spends her days expanding the residential development side of the business and spreading the word about Hunt Midwest’s evolving identity as one of the region’s top real estate companies.

“We understand that our brand means a lot, so we’re trying to take some things we used to do and make them more visible,” Reynolds said.

 

Reynolds has been with Hunt Midwest since its early days as essentially three companies: a mining company, an entertainment company, and a real estate company. Since then, Hunt Midwest has sold off its mining and entertainment counterparts and has focused on its industrial/commercial and residential development.

In recent years, that’s meant expanding the residential component to encompass a person’s entire life cycle. Hunt Midwest in recent years began developing multifamily projects as well as larger, single-family home communities with heavy amenities for multiple lifestyles.

Hunt Midwest is providing capital and construction management for its boutique luxury apartment project, Mission 106 at Mission Farms. The 139-unit includes 7 townhomes and is a joint venture between ePartment Communities LLC and master developer Doug Weltner.

“We like to do larger [projects] because there are more barriers to entry,” Reynolds said. “Not everyone has the people and financial resources to build a 1,500-home community with neighborhood services, so that gives us a competitive advantage.”

Reynolds says she sees a big opportunity in a new, widening market created by millennials’ shifting lifestyle patterns. She says statistics show that more than 50 percent of 18- to 25-year-olds and 41 percent of 25- to 29-year-olds are still living with their parents. They’re also delaying obtaining full-time jobs, and need the geographic flexibility an apartment offers, and are waiting longer to get married.

In 2010, Hunt Midwest launched a joint venture with Principal Senior Housing to invest $32 million into starting a senior living platform in Kansas City. Since then, that investment has doubled to $65 million.

“Those patterns have moved the cycle for a homebuyer out, and it’s created a wider swath of apartment people,” Reynolds said. “It’s all about household formation and job creation, and that’s what we think is really feeding the apartment market right now.”

With a proven multifamily concept, Hunt Midwest ownership in recent years began to wonder: “What’s next?” With many of its communities master-planned for additional uses like senior living, the company decided to form a joint venture with Principal Senior Living in 2010. From the first initial project came the decision to build a $32 million, four-project platform in Kansas City. Today, Hunt Midwest now has four senior living communities up and running and four more under construction or design – a $65 million investment.

“That’s been really exciting because it takes our single-family buyer at all their life cycles, then moves us into when someone needs assisted living or memory care,” Reynolds said.

And that’s only the residential piece of the puzzle for Hunt Midwest. In its industrial/commercial division, the firm is having its best year ever. Its sprawling 1,100-acre Subtropolis, the world’s largest underground business park, now leases 6 million worth of space to a plethora of companies. In 2014 alone, Hunt Midwest added 1 million square feet – the most ever added in a year – including a 475,000-square-foot build-to-suit central distribution facility for a Denver-based e-commerce company, Food Service Warehouse.

SubTropolis became home to Food Service Warehouse in 2014, Hunt Midwest’s largest build-to-suit in the market. The 475,000-square-foot facility has made the underground business park its central distribution facility for all of its e-fulfillment needs.

On its surface, Hunt Midwest is also benefitting from its proximity to the Ford Kansas City Assembly Plant in Claycomo, Mo., and has become home to Automotive Alley, where Ford Transit vans are kept before they’re outfitted.

SubTropolis Technology Center also opened in 2014 as the first data center in the underground park. It’s anchored by LightEdge Solutions and currently houses four fiber carriers.

Subtropolis Tech Center opened in 2014 and houses four fiber carriers.

As if that wasn’t enough, Hunt Midwest is also looking at opportunities in the 15,000-acre Twin Creeks area, where it’s contributed $16 million to a $34 million effort to get the area sewered. With 5 people per acre, the area could potentially house 75,000 new residents over time.

Hunt Midwest owns 300 acres in that area, where it’s currently planning Park Place North, a development that will consist of a full range of housing from single-family homes through senior living facilities.

“In 1993, we opened our fist community in the Shoal Creek area, where we put in about 2,000 homes. There, we went in with homes and the retail followed those rooftops,” Reynolds said. “Here, it’s going to be the reverse, but we hope we can do what was done in the Liberty/Shoal Creek area on the Platte County side.”

As much as the company has expanded in recent years, Reynolds says Hunt Midwest must be cautious in its investments.

“We get to be entrepreneurial, but there’s a safety net,” she said. “We are stewards of the Hunt name, and we never can do anything that would risk that, so we tend to be more conservative when we’re looking at projects we can’t control what we think are the important pieces. We won’t get involved unless we think we can control that reputation we have.”

So what does Reynolds consider the biggest reason for Hunt Midwest’s success?

“I prefer to use what I call a ‘rifle approach’ to closing deals as opposed to a ‘shotgun approach.’ You can run around and look at a variety of deals where you don’t have the expertise, or you don’t know how you’re going to get to the end, so I like to go after projects that fit our expertise and where we want to go,” she said. “I learned a long time ago that you have this business plan, and you’re trying to get there, and you may not get there exactly the way you thought you’d thought you would – but as long as you get there, it’s okay.”

Why FSW chose KC for its thriving e-commerce business

Food Service Warehouse is a Denver-based e-commerce company that supplies food service equipment to restaurants and individuals throughout the U.S. Although the company is headquartered in Denver, it recently consolidated operations into a 475,000-square-foot facility in Hunt Midwest Subtropolis in Kansas City, where it has an option to expand up to 1 million square feet. Randy Cooke, director of distribution for FSW, explained to members of the Kansas City Area Development Council’s E.D. Alliance why his firm chose to locate and grow its operations here in Kansas City.

Cooke knows firsthand how quickly his company is growing. When he began working for the company, he had three hourly associates. Within a month, he had 60 associates working under him.

In 2014, FSW signed a 10-year lease with Hunt Midwest for 475,000 square feet, with the option to expand up to 1 million square feet of warehouse space. According to Cooke, FSW CEO Madhu Natarajan knew that locating within Subtropolis would provide his company the flexibility to expand quickly.

Shortly after the ink on the contract dried, Cooke took on the challenge of consolidating two warehouses — one in Denver and another 200,000 square foot space in Kansas City — into one unified space, while simultaneously ramping up hiring. Within a month, Cooke had grown his team from 5 hourly associates to 60, and moved 350 trailer loads of product from Denver to Kansas City without any service interruption to hist customers.

Today, FSW is a one-shift operation employing 43 full-time associates in the underground space at Hunt Midwest Subtropolis. There, the company stores approximately 4 million different items totaling $14 million worth of inventory.

He shared with the KCADC E.D. Alliance his challenges encountered during his company’s growth spurt, and what benefits he’s realized from locating within Kansas City.

As one of Amazon’s vendors, Food Service Warehouse is now shipping its products internationally to Canada, and will soon begin shipping to Mexico as well. It’s also landing new national restaurant accounts, like Bojangles, a southern fast food restaurant chain with 675 locations that just finished its IPO and plans to open an additional 40 to 50 stores in the coming years.

“We’ve got a big growth potential and all of that is coming out of Kansas City,” Cooke said.

On Kansas City’s talent pool

Growing quickly presents a number of challenges, Cooke said, especially as it comes to hiring. As a Kansas native, Cooke knew FSW could find a high quality of labor in Kansas City.

“I’ve worked on both coasts and will brag about the work ethic in the Midwest. I feel like we have a better quality. I think we have people that care more and enjoy coming to work. When I was on the east coast it was difficult to get that kind of attitude,” he said. “I look at it from an e-commerce standpoint; My box is my storefront. I have to find those associates who care what they’re doing, because they’re making that presentation when it goes out to the customers.”

But because the company identifies as itself as young, edgy and tech-savvy, Cooke struggled to find the right mix of younger associates who would not only adapt to the technology more easily, but would remain with the company for a longer period of time.

“We had to ramp up so quickly that I went through temp agencies,” he said. “I struggled a bit. We didn’t do that much advertising just because we didn’t have time to put a plan together.
Where I think I would have better success is if I had done campus recruiting.”

Despite his struggles, Cooke is clearly doing something right. Of the employees he hired roughly one year ago, he’s only seen a 2 percent turnover rate.

On the advantages of being underground

One of the newest items FSW plans to carry are K-Cups, the individual coffee serving cup designed for the Keurig. Because they must be stored at a certain temperature, it’s easy to carry these items in Subtropolis, where the climate is an average 72 degrees year-round.

Cooke said his truck drivers benefit from 24/7 access, while he enjoys the perk of avoiding weather elements.

For more information on FoodServiceWarehouse, including a blog designed specifically for new and upcoming restaurant owners, visit the company’s website.