Developers say e-commerce, amenities will drive successful future

An ABC Heart of America webinar recap

This week Associated Builders & Contractors (ABC) Heart of America held an online developers panel moderated by Eric Mann with Emery Sapp & Sons.

Panelists included Andy Ashwal, VP, senior asset manager of GFI Management, Mike Bell, senior vice president of Hunt Midwest and Oscar Healy, regional vice president of Opus Design Build.

The discussion focused on the challenges as well as the opportunities surrounding future development resulting from the COVID-19 pandemic.

One of the trends the panelists are seeing skyrocket is e-commerce and the need for additional storage space as the U.S. supply chain has relied on ‘just in time’ delivery for many consumer products that are imported and shipped overseas.

“You’re going to see a change from ‘just in time’ deliveries to having a 5% safety stock being held in distribution facilities. Based upon different national brokers, you’ll hear numbers ranging from 500 million to 750 million SF of additional industrial space needed just to supply distribution centers that 5% safety stock,” said Bell. 

“It will bring manufacturing back to the US. I think ‘Made in America’ will mean something more than it has in the past, said Healy.

The panelists also predict a surge of data centers to help fuel e-commerce.

“Kansas City is seeing the first wave of data centers. We’ve always been seen as a lower-level tertiary market, said Bell. 

Panelists agreed other side-markets to the e-commerce industry include an increase in the need for robotics and higher, stacked building spaces.

The importance of the ‘live, work, play, stay’ concept of living is not going away anytime soon. Having amenities for offices and apartments will become of even greater value to millennials who might be staying in lofts and apartments longer than they expected.

“I think the trend of millennials staying in multifamily or maybe moving up to larger multifamily spaces is going to continue (as) they’re going to start to have children. They’re going to need services for their children there and play spaces. That has not existed in the Kansas City market, said Ashwal.

The need for additional on-site package delivery storage was also discussed.

“The ripple-effect of what’s going to happen on the office and multifamily side is there will be a need for larger package rooms to accept trackable deliveries. Refrigerated storage in office buildings will be a new trend to accommodate employees that want packages delivered to their office to bring home,” said Ashwal. 

Some of the obstacles the panelists are seeing now and going forward are cost of construction and shortage of labor.

“Material increases and labor shortages have caused issues on our side from a development perspective, said Bell.

The panelists agreed that municipalities that are “developer-friendly” will be more attractive to developers going forward more than ever before.

“If you don’t have a tax incentive or tax abatement in some of our various cities or counties, you’re at a competitive disadvantage,” said Healy.

The discussion ended with hope that the pandemic is creating opportunities, especially for industrial development because of Kansas City’s well-built infrastructure and land availability. Also, KC offers 90% of the U.S. within a two-day shipping window.

Associated Builders & Contractors Heart of America is a commercial construction trade association serving contractors and construction related firms across Missouri and Kansas. ABC connects contractors to industry information and safety resources; serve as advocates at the state, local, and federal level; and provide a variety of educational opportunities for those in the industry including our federally registered apprenticeship program in multiple trades.

Sponsors of the event included: Nabholz Construction, Emery Sapp & Sons, Fogel-Anderson Construction, IMA Financial Group, HTH Corporation and Autodesk.

The Donovan prepares for June opening in Lee's Summit

Phase two of Summit Square's luxury apartment complex, The Donovan, is expected to open this summer at 837 NW Donovan Rd. in Lee's Summit, Mo.

Developed and managed by NorthPoint Development, the 327-unit, multifamily community will showcase one and two bedroom units, highlighted by a cross-sharing amenities program with their phase-one counterpart.

The long (and impressive) list of unique and modern amenities includes a grotto-style plunge pool and meditation spa, zero-entry pool, 16-ft rock climbing wall, 24-hr cyber cafe + gourmet coffee bar and a private yoga studio.

"In my twenty-nine years of managing, leasing and opening brand new apartment communities in the Kansas City metro, I have never been so excited about a project. We can not wait for everyone to see how spectacular this community will be," said Pam Lakey, multi-site manager for NorthPoint.

The apartment amenities also include:

• 24-Hour cardio blast fitness center

• Poolside BBQ center

• Media lounge with jumbo screen sports simulator

• Resident event kitchen

• Detached and attached garages

• 24-hour emergency maintenance

• Poolside ping-pong & foosball

• Hammock garden

• Three-seasons solarium resident lounge

• Steam/dry sauna

• Controlled-access buildings

• Elevator-serviced building

• On-site guest suite

The Donovan plans to move in their first residents on June 20th and hopes to stabilize occupancy in less than a year. One-bedroom units start at $959/month; two-bedroom start at $1,449/month.

Summit Square opened in December of 2017 and reached stabilization in April 2019. To date, Summit Square is 96% occupied, increasing occupancy during the COVID-19 shutdown. 

Project partners include NSPJ Architects and Neighbors Construction. Construction will continue on the remainder of the five-building multifamily community, expected to be complete by January 2021. 

For more info, photos and leasing information, you may visit their websites at www.thedonovankc.com and www.summitsquarekc.com.

Pharmaceutical and e-commerce companies continue to thrive in SubTropolis

Less than a year after locating in SubTropolis, pharmaceutical company Nostrum Laboratories and online retailer FarmFoods have expanded their respective footprints a combined 52,000 SF within the world’s largest underground business complex.

Nostrum Laboratories more than tripled the size of its distribution facility while FarmFoods increased its footprint six-fold.

“We can deliver Class-A industrial space to our tenants in as little as 120 days, allowing companies like Nostrum and FarmFoods the ability to capitalize on the growth of their business,” said Mike Bell, senior vice president of commercial development at Hunt Midwest.

As an Energy Star-rated facility providing 24/7, year-round security, company leaders at New Jersey-based Nostrum Laboratories recognized the value proposition SubTropolis offered in meeting their climate-controlled requirements for product safety and quality control.

“The consistent control room temperature ranges in the underground allow us to efficiently meet these  requirements. Onsite security staff provide an additional level of security and peace of mind to our team,” said Teneshia Powell, senior production manager at Nostrum Laboratories. 

A soaring increase in online grocery shopping triggered the need for FarmFoods, an online retailer of fresh, farm-to-table food, to quickly expand its packaging and distribution facility to keep up with consumer demand.

“As a nationwide distributor, timely delivery of our products to consumers is critical. Locating in SubTropolis has allowed us to reach 90% of the United States within two days and in these uncertain times, quick, reliable food delivery is more important than ever,” said Janna Land, co-founder and chief operations officer at California-based FarmFoods.

Earlier this year, Hunt Midwest completed construction of 400,000 SF of speculative Class-A industrial and warehouse-logistics space, bringing the amount of leasable space in SubTropolis to more than 6.5 million SF.

With more than 7.5 million SF available for development and its adjacency to robust highway infrastructure, SubTropolis continues to offer an ideal option for growing e-commerce companies.

Community Builders of Kansas City acquires Sun Fresh

Community Builders of Kansas City (CBKC), the area’s largest urban core developer, announced today it will become the owner/operator of the Sun Fresh on Blue Parkway, one of the few full-service supermarkets east of Prospect Ave.

The transaction will be effective June 30, 2020, following the retirement of the current operator. CBKC, a 501(c)3 nonprofit corporation formed in 1991, established Blue Parkway Grocers, LLC, as a for-profit entity to operate the store. Terms of the transaction were not disclosed.

“This is another opportunity for CBKC to do what is right for our community in the urban core,” said Emmet Pierson, Jr., president and CEO of CBKC.

“Make no mistake, this is a big commitment for the organization but it is the right one to keep our community’s money in the community, to give them a best-in-class grocery and shopping experience and to ensure the continued performance of this grocery-anchored retail center that CBKC established here on Blue Parkway in 2005.”

The retail center, at more than 90 percent leased, is part of a larger real estate and asset management portfolio owned by CBKC that consists of 700 units of rental residential properties and 200,000 SF of commercial and retail space. The center is adjacent to a 69,000-SF office building where CBKC is headquartered, which is 100 percent leased.

CBKC is building a 64-unit, market rate apartment building, The Rochester on Blue Parkway, on the campus, part of more than $30 million in new development in the organization’s project pipeline.

Pierson noted that the Sun Fresh on Blue Parkway is more than just a real estate asset. The grocery store is about personal needs and experience, for both employees and customers. Addressing those starts with store leadership.

“We are pleased to welcome John King as the store director. King has had a long career as a grocery industry professional, including nearly twenty years as a Price Chopper/Hen House store director. We are excited to have his passion for quality in both the food product and customer experience as part of this store’s refresh,” Pierson said.

As is routine with similar operator transitions, all of the store’s employees will reapply for positions with eligibility subject to the usual hiring requirements. Downsizing of staff is not anticipated.

“We are excited and challenged by this new venture. While we never expected CBKC would become a grocery operator, we have found that doing what is needed for our community frequently exceeds expectations.” Pierson said.