AREA BlogKeeping you up-to-date on Kansas City commercial real estate trends.

Invest Like a Billionaire Podcast: Finding Opportunities in Industrial Commercial Real Estate ft. Brent Peterson

By | No Comments

AREA Real Estate Advisors’ vice president and director of the Industrial division, Brent Peterson, recently joined Bob Fraser and Ben Fraser of Aspen Funds on their podcast Invest like a Billionaire. This highly informative episode highlights commercial industrial opportunities and where to find them.

Some key highlights from the episode are:

– Vacancy rates across all real estate sectors are still low, however within the industrial sector the overall vacancy rate across the United States is below 5%. There are some markets that are seeing vacancy rates as low as 0.2%. With these low vacancy rates, we have evidence showing new deliveries and new construction showing that these properties are truly functioning operations.

– Industrial has been in a bull market for the past decade due to e-commerce. The growth spike in e-commerce was accelerated due to the COVID-19 pandemic, however we are still continuing to see growth. While the need continues to increase, e-commerce still may be growing at a slower rate as it has taken over more market share.

– There are three major categories of industrial real estate: distribution centers (think 500,000 SF Amazon warehouse), manufacturing facilities (think 300,000 SF – 500,000 SF Allstate facility), and flex space. Distribution centers are the wrap it in, wrap it out type spaces that try to get as much product through as they can. These can be typically found near intermodal hubs. Manufacturing facilities typically have heavier power, more lighting, more car parks in addition to the semi truck traffic that is coming in and out. Flex space can be single or multi-tenant, typically with 50% or more of office space similar to an HVAC contractor, car shop, etc.

– The market is experiencing some serious supply chain troubles due to a couple of things. First, the lag time in the length it takes to get the huge containers from other parts of the world to the United States. We have huge ships with thousands of containers on them showing up to the sea ports, but not enough people to them off of those ships and on to the trains quickly enough.  The other issue is that the demand for goods is much higher, as we are spending more money here in the United States. Because of this, companies who were used to having ‘just in time’ inventory, are now being forced to store extra inventory and pay a little more to keep them on hand so they will be able to deliver the goods.

– The trend of globalization is turning into a trend of localization. We have spent the last 30 years manufacturing overseas as labor is cheaper, cost if living is lower, but over the next several years we will see a shift as over half of the population will be retired. Like China, the US could see this at some point, as population seems to have hit its peak and there won’t be enough workers for the amount of work to be done. This in turn, will push us to focus on quality of construction and quality of goods. This will cause companies to pay a premium for the quality, but they will be getting the best product at the best price.

– While the surge for industrial space is still in demand, at some point we will over build and we will not have a need for all of this space.

To listen to the full podcast, click here.

Disclaimer: the statistics since the recording of this podcast may have changed. 

Kansas City’s Downtown Office Summit – Place Matters

By | No Comments

AREA’s Sean Craven and Tim Schaffer recently spoke at the Downtown Council of Kansas City Office Summit. With the theme of “Place Matters”, the panel analyzed where Kansas City has performed well in creating thriving ecosystems for employees, clients, residents and visitors. Sean Craven and Tim Schaffer floated around the benchmark from a city study in 2005 that Downtown ought to support 15% of the metro’s labor force to become fully actualized.  Flash forward to today, that percentage currently sits around 9.9% with 113,000 workers in 17.7 million square feet of office space. In order to attain that 15% goal, Kansas City needs to target the attraction of 50,000 new employees and construct 7.8 million square feet of office over the next 20 years. All speakers agreed that the goal is attainable, as the landscape for downtown is ripe for developers to execute new offices along with other mixed-use developments; and although downtown’s 360 office properties average 88 years of age, the outdated buildings will continue to present adaptive reuse opportunities.

Along with redevelopment of current office properties, the city has several large projects in the works, such as the South Loop Link, a new stadium for the Kansas City Royals, and a soccer stadium, to name a few. With Downtown’s vacancy rate of 9.1%, which lags that of Johnson County, who is at a 10.1% vacancy rate. “If Downtown was it’s own municipality, it would be the fastest grown city in the metro,” said Schaffer. The tone has been set and the trajectory for Downtown Kansas City is looking promising.

To read the full recap from the discussion, click here.

Nordstrom Rack Will Open Second KC Location

By | No Comments

Nordstrom Rack will open it’s second metro location next fall as part of the newly redeveloped Overland Crossing Shopping Center at 119th & Metcalf Ave. The Overland Park center is anchored by Whole Foods Market, Burlington, Five Below and Golf Galaxy. The 27,000 square foot Rack store will be the third in Kansas. Kansas City has another Nordstrom Rack location in Lenexa, as well as a Nordstrom location anchoring Oak Park Mall. Overland Crossing is owned and managed by Legacy Development.

“This strong retail intersection has been a targeted area for a long time, and we are excited to bring Nordstrom Rack to south Johnson County,” said AREA’s Tiffany Ruzicka, who represented Nordstrom Rack in this transaction.

AREA Assists Visiting Nurse Association

By | No Comments

AREA Real Estate Advisors recently closed on the sale of the 54,693 square foot Visiting Nurse Association building at 1500 Meadow Lake Parkway in Kansas City, MO. The building sits on 2.2 acres at the northeast corner of Meadow Lake Parkway & State Line Road, and was purchased by EPC Real Estate Group, LLC. EPC plans to keep the existing building, incorporating it into a brand new Class A apartment community.

In a strategic decision to better serve their clients and the broader Kansas City area, VNA will be relocating their offices to 1300 E 104th Street in Kansas City, MO.

The Visiting Nurse Association (VNA Home Health) is a locally based nonprofit home health agency, and the oldest home health agency in Kansas City (established in 1891).

AREA’s Sean Craven and Tim Schaffer assisted VNA on both the sale of their building and the lease of their new offices.

AT&S 3-Site Portfolio Sale

By | No Comments

AREA Real Estate Advisors & Jones Development recently sold a portfolio of low coverage real estate sites. The package, spanning three American Trailer & Storage sites in two different states, totaled 9,660 SF and 21.13 Acres. The three sites are in Kansas City and Omaha, NE.

  • 6900 E 39th Street, Kansas City, MO 64129
  • 6923 E 39th Street, Kansas City, MO 64129
  • 7202 N 16th Street, Omaha, NE 68112

AREA’s team included Brent Peterson, Tom Kennedy and Seth Sinovic as well as Brandon Heck with Jones Development.