JLL

MWM Industrial Summit signals continued strong market

A panel of leading Kansas City commercial real estate developers, builders and municipal leaders shared insight into the region's booming industrial market at MetroWireMedia's 2017 Industrial Summit on Friday, Aug. 25 at Blue Hills Country Club. 

Here's a snapshot of industry insight from our panelists:

“We are seeing about 60 percent of users come from outside the Kansas City area, and we are on pace to deliver over 10 million square feet this year."  -Kevin WilkersonJLL

“The supply side of industrial development has been somewhat disciplined. Demand has not outpaced supply at all, so we expect it will continue in a healthy fashion.” -Mark LongNewmark Grubb Zimmer

“Kansas City companies can reach 90 percent of the U.S. in two days' shipping, so a company that years ago believed they needed to be near population densities on the east or west coast can reach 90 percent of their customers right here.” -Mike Bell, Hunt Midwest

“We are seeing more 'small boxes' that are appealing to tenants who want to be in their own space and not have to share a building, or they are a 60,000 to 80,000 square foot tenant and it appeals to them to have a right of first refusal and be in their own space and growing.” -Sam Stahnke, ARCO Construction

“From a long-term perspective, Kansas City has now reached a new level within the country as a major destination for e-commerce distribution, and that’s not going to change. The growth is going to continue for some time.” -Whitney Kerr, Jr., Cushman & Wakefield

“We are looking for opportunities where there is going to be a significant incentive to do business in Kansas City. We aren’t trying to create winners and losers amongst you all; we are trying to create winners for all of you within our Port District.” -Michael Collins, Port KC

“One of the challenges for local government, especially a government as small as Edgerton, is to be aware of what all levels of government are doing and how that might impact our ability to provide attractive incentives. Edgerton is certainly looking for opportunities to be creative and to have incentives that look different from other areas of the country.” -Beth Linn, Edgerton City Administrator

"MetroWireMedia has assembled a group of Kansas City commercial real estate leaders who are at the top of their game in what is without question the strongest industrial real estate market in recent Kansas City history. I look forward to leading the discussion as we hear about best practices for sustaining the momentum in the current red-hot market." -Chris Gutierrez, KC SmartPort

Want more insider scoop? Mark your calendars for MetroWireMedia's 2017 Multi-Family Summit on Oct. 12. Contact Lisa Shackelford for sponsorship information. 

Check out our slideshow below, or head to our Facebook page and tag yourself in the event photos. 

NorthPoint, Hunt Midwest, Karbank on KC’s industrial drivers

Phil Algrim of JLL, Paul Fogel of Karbank, Mike Bell of Hunt Midwest, and Whitney Kerr Jr. of DTZ.

NorthPoint Development has been one of the strongest players on the industrial scene, and is currently working on delivering to the market its latest industrial buildings in Logistics Park Kansas City in Edgerton. In about a week, the shell will be complete on its latest building, Inland 11 – a 657,354-square-foot building that took a whopping four months to complete.

 

“And the interesting thing is that it went up over the winter,” JLL Senior Vice President Phil Algrim said. “We started in November and in four months, it’s done. That shows you the economies of scale and the rapid deployment of capital and building out here.”

Inland 11 will soon be home to Kubota Tractor Corporation, a machinery and equipment distributor, which will take 436,000 square feet. Inland 12 is underway as well, scheduled to be completed by March or April.

Algrim says Kansas City’s biggest strength and a big driver of the activity has been its ability to hit more of a population total than other centrally located cities. Within 1,000 miles of Kansas City, 161 million people can be reached within 2 to 3 days. That’s a greater population density than what it would be in Washington D.C., Chicago, or Dallas.

Within a 1,000-mile range of Kansas City, companies can deliver their products to 161 million people within 2 to 3 days.

Hunt Midwest is seeing no shortage of activity either, and has benefitted from the expansion of the automotive and e-commerce industries here. Mike Bell, Hunt Midwest’s vice president and general manager of industrial commercial development, says the company is looking at 800 million square feet of future development of Class B buildings in the 1300-acre Subtropolis.

By locating in Kansas City, companies like Food Service Warehouse are finding faster and more cost-efficient means of distribution, contributing to staggering growth numbers. Bell says Food Service Warehouse is growing at a rate of 200 percent of year.

Hunt Midwest has aggressive plans to expand.

“They reason they chose our location – and this is important for Kansas City – that FedEx and UPS terminals in relation to airport are very important for e-commerce,” he said. “The speed for an e-commerce company to get their product to a consumer, that’s what drives revenues.”

But there’s an important segment of the industrial market that’s often overlooked: Class B industrial properties. Paul Fogel, vice president at Karbank, says that while his company does have a few smaller 100,000-square-foot Class A buildings, it’s really Class B buildings that constitute the bulk of Kansas City’s overall market. But most importantly, the asset class brings stability.

While the bulk of Karbank’s portfolio is made up of Class B warehouses, it does market a few Class A properties, like this 108,000-square-foot building in the Northland. More info here.

“The staying power of Class B industrial cannot go understated. There’s a lot of it in Kansas City and one of the reasons you’re seeing a lot of local real estate historically owned by a very limited number of families in Kansas City is because these things lease, they’re stable, and rent goes up every time you renew the lease,” Fogel said. “You don’t have the difficulty of carpet and paint every three years with brokers parachuting in and negotiating more improvements. These things are incredibly stable, and that’s why they’ve stayed as a mainstay in our portfolio.”

A huge indicator of Class B’s strength? Its vacancy rate in Kansas City hovers at about 6 percent, Fogel says.