Local school construction projects stay on schedule despite pandemic

As schools sit empty and students adjust to learning from home under the current stay-at-home order, many local school construction projects continue to progress.

Hollis + Miller Architects, who specializes in education (architecture and design) and works with a large number of Kansas City-area school districts, has not seen much of a slowdown on their schools’ projects.

The firm is currently working on several school projects to ensure they are ready for the upcoming school year, including Park Hill School District's LEAD Innovation Studio, Liberty School District's Performing Arts Center and new additions to Blue Springs High School, including a state-of-the-art band practice space.

While safety for all contractors has been paramount, the projects have nevertheless been able to move forward, despite the current obstacles.

“We’ve implemented procedures to ensure we maintain project safety and are meeting the safety guidelines of the authorities,” said Mike Chiles, senior project manager for JE Dunn Construction, who is overseeing the trade partners on the Blue Springs HS project.

“Communication is key, and the teams have handled that well with daily huddles and constant on-site supervision,” Chiles said.

Chiles admits the current situation isn’t ideal; nonetheless, has encouraged the team to overcome any obstacles in an effort to keep construction progressing and on schedule.

“It’s a major project for the school and the community, and it will allow them to really expand their programs and ability to impact the community,” Chiles said.

“Maintaining those partnerships among the architect, contractors and trade partners is crucial, especially when a project is facing additional challenges like they are now,” said Kirk Horner, partner at Hollis + Miller.

Several projects remain on schedule to open in time for the fall 2020 school year.

“While the local community will take a while to bounce back from this, we see this kind of construction as a positive sign of economic health. Our local schools are committed to consistently improving the learning environments for our local students, and we’re privileged to contribute to that effort,” Horner said.

Berkadia team remains positive, embraces new norm in midwest

As members of Berkadia’s Mid-Markets Group, we have seen first-hand the effects of COVID-19 across apartment markets in the Midwest. We have been fortunate to experience far fewer confirmed cases and deaths than the larger coastal metro-areas; however, the effects of the pandemic on the Midwest’s economy have still been significant.

“Stay-at-home” orders have saved lives, but they have also stunted local economic growth—particularly as these policies have shuttered small and mid-sized businesses throughout the region. The commercial real estate market is facing new challenges, but opportunities exist for those who have confidence in the long-term strength of the post-coronavirus apartment market.

Multifamily Industry Impacted, Opportunities Remain

At the beginning of this year, we were very confident we could match, if not exceed, our transaction activity from 2019. But now any attempt to accurately predict what the remainder of 2020 might hold for either our team or our industry is difficult.

Overall, property types are performing roughly as we might anticipate. Industrial and multifamily have fared well so far, while leisure, hospitality, and retail are struggling. What we have seen so far with April collections has exceeded our expectations, but the multifamily industry’s ability to continue to collect rents into May and beyond will be imperative to the industry’s long-term success.

While we are maintaining optimism and thinking the bulk of the damage will be to this quarter’s numbers, we wouldn’t bet against those who believe this could carry well into Q3 or even beyond. We do see long-term positive indicators for multifamily and are hopeful for this downturn to be brief with momentum reestablishing next quarter.

While the current market may seem to be a no-go, transactions are still occurring. From an advisory standpoint, we are providing clients with real time information, asking questions, giving feedback, and offering words of encouragement to help them make the best decisions for their business and their partners.

Working In the New Normal

The shift to working from home has certainly been an adjustment, but a smooth process overall. We are not complaining about the occasional poolside conference call. But in all seriousness, it can be challenging to create new routines and work toward new daily goals. One definite upside? Communication with teams is even stronger than when we were all in the office.

Our Mid Markets Team—made up of investment sales, mortgage banking and servicing specialists throughout the Midwest—has become even more collaborative during this time. We are doing more to stay connected, keep a pulse on the market, and share valuable data real-time so that we can most effectively counsel our clients.

The time we used to spend commuting is now time we are spending virtually connecting with coworkers, clients, friends, and family. We are learning more about the people in our lives every day and it is comforting to know that we are all going through this together.

Where We Go Now

All-in-all we need to listen—sometimes without providing answers—and make peace with the fact that there are many factors we cannot control. We can take solace in knowing that this too shall pass.

We should also explore how to give back to the communities around us. Those of us who are fortunate enough to still have our jobs and our health simply cannot take it for granted. We can all find meaningful ways to help and we should act on them immediately. Soon enough, we’ll be back in the “norm,” but for now, it’s important to embrace the “new.”

Northpoint's $60 million CORE apartment complex heads to Berkley Riverfront

NorthPoint Development's $60 million apartment complex, CORE, is heading to the Berkley Riverfront area in Kansas City, Mo.

The Port KC board unanimously approved the development earlier this week, which includes a revenue bond for up to $49 million in financing. The bond will be repaid by NorthPoint and its financial partner in the project, Northwestern Mutual.

CORE, an acronym for Connecting Our Riverfront to Everyone - also named by NorthPoint - will be the second apartment development in the Berkley Park area and Northpoint's third development in downtown Kansas City in the past couple of years.

The 355-unit community will showcase studio, one- and two- bedroom apartment homes offering a modern and convenient lifestyle within the urban core.

Amenities include a heated, saltwater swimming pool, poolside pickleball and bocce ball, a two-story fitness center and yoga studio, a library lounge, private conference rooms, a 16-ft indoor rock climbing wall, a virtual sports simulator, a WIFI lounge with gaming systems, co-working spaces and a pet spa.

Apartment home finishes will include custom melamine cabinetry, stainless steel appliances, modern backsplash, wood-plank flooring, oversized windows, keyless entry and modern hardware and lighting.

The NorthPoint development includes eight acres, previously owned by Port KC, just east of the Bar K dog park, restaurant and bar. Additional plans include adding a private street through the development as well as 70 parking spaces for public use, including Bar K patrons.

Plans to extend the KC streetcar to the Berkley Riverfront area is also in the works, according to Port KC.

Construction is scheduled to begin this summer, with the first phase of the apartments estimated to be complete in Fall 2021. The entire development is estimated to be complete in Fall 2022.

To view a complete rendering portfolio of the CORE Apartments, you may visit NSPJ's website here.

Dentons shares observations of COVID-19 impact on U.S. commercial real estate

Real estate practice attorneys from Dentons, the world’s largest multinational law firm with $2.36 billion in annual income, recently held a webinar to share challenges their clients are experiencing due to COVID-19.

The live webinar included insight from William Taxay, Dentons, Pittsburg, Tandy Patrick, Dentons, Louisville and John Snyder, Dentons, Kansas City; and was moderated by David Quam, public policy group, Dentons, Washington, D.C.

Taxay began by addressing challenges faced by buyers, sellers, owners and developers and the logistical issues involved with closing transactions during a pandemic. For example, finding appraisers, recording offices and notaries is no longer an easy task.

Although some states have adopted electronic notary services (Kansas adopted electronic notary in 2005 and Missouri recently signed off on it on April 6, 2020), something as simple as recording a deed or initiating a title search, is now challenging in some jurisdictions. 

New development, which requires planning commissions, zoning commissions and local council meetings to hold a public meeting before moving forward, is inevitably going to slow down.

“We are still closing deals (because) we were signing up deals before this started and during this (pandemic),” Taxay said.

Patrick discussed issues with landlords and tenants, as many tenants are giving notice that they are unable to make their next payment. These notices have precipitated a review of existing leases by both landlords and tenants.

“It’s no surprise that most of our force majeure clauses in current leases do not mention the word ‘pandemic.’ Some leases don’t even have a force majeure clause. Some with this type of clause expressly carve out rent and require the tenant to continue paying all monetary obligations notwithstanding the occurrence of a force majeure event,” Patrick said.

If a lease doesn’t contain a force majeure clause, some considerations to look into include:

-Possible actions against personal guarantors on the lease

-Existing business interruption insurance that may provide coverage in this situation

-Other non-monetary existing defaults by the tenant under the lease

-Whether the landlord can apply tenant’s security deposit

-Whether the landlord or tenant in default based on other lease covenants such as continuous operation, abandonment, co-tenancy requirements or interruption of essential services at the property.

“I think most of our force majeure clauses in current leases are likely to be reviewed and revised in the days to come to address specifically rent abatement during a pandemic virus event and it may be a good idea to include a pre-negotiated agreement or formula regarding suspension of rent as well as perhaps requiring business interruption insurance that would cover pandemic events," Patrick said.

Lenders and borrowers are facing their own challenges as well.

“Some federal banks are allowing loans to be closed without appraisal for 120 days because appraisals might not (hold the same value) right now,” Snyder said.

While the borrowers are requesting to delay payments and/or reduce interest rates, lenders are in need of cash escrow and additional collateral, in some cases.

“At some point the reality is, there will be forbearance requests. There will be massive loan defaults. We heard one loan servicer that already has 1,000 forbearance requests in the pipeline. The hotel industry is getting hammered, with occupancy down 70 percent and revenues down 80 percent from this time last year, a historic hit to the industry,” Snyder said.

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If you are interested in learning more perspective on COVID-19 and other current issues, you can sign up for Dentons continuing event series here.