commercial real estate forecast report - colliers.com

commercial real estate forecast report

colliers international

2017 c o m m e r c i a l r e a l e s tat e f o r e c a s t r e p o r t

table of contents KANSAS CITY OFFICE MARKET OVERVIEW

KANSAS CITY INDUSTRIAL MARKET OVERVIEW

KANSAS CITY RETAIL MARKET OVERVIEW

KANSAS CITY INVESTMENT MARKET OVERVIEW

KANSAS CITY CONSTRUCTION MARKET OVERVIEW

LAWRENCE, KANSAS MARKET OVERVIEW

CORPORATE SERVICES & LOCAL DEPARTMENTS

3

kansas city

office market overview The Kansas City office market continued its positive momentum with another strong performance throughout 2016. The overall vacancy rate declined to 9.5%, down from 10.8% this time a year ago, and lower than pre-recession vacancy levels that bottomed out at 10.2%. With a lack of speculative office development, expect vacancy levels to continue to push downward throughout 2017. By the end of 2016, the Kansas City metro recorded 1.28 million SF of positive absorption of office product. On a national level, the U.S. vacancy

rate pushed downward to 12.4%, which was 40 basis points lower than a year ago. From a national standpoint, job growth and employment reports accelerated over the past few months, which is fueling office leasing, despite economic uncertainty over slower global economic growth. Locally, based on the healthy economic conditions, projected job growth, and a well-diversified office sector, the Kansas City office market is well-positioned for another successful year in 2017. Office-related employment is expected to continue to grow throughout 2017. The U.S. economy continues to demonstrate resilience with a string of strong monthly job growth figures. Based on the Mid-America Regional Council (MARC) data, the Kansas City metro added nearly 20,100 jobs in 2016. The MARC economic forecast projects job creation for 2017 and 2018 to slow slightly relative to 2016, however, a significant portion of future growth stems from office-related sectors. MARC anticipates 19,300 jobs will be created in 2017 for Kansas City, and nearly 17,300 new jobs will be added in 2018.

MEDICAL SERVICES, along with PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES are expected to account for the majority of the office growth. These two sectors are expected to account for nearly half of the job creation throughout the new year.

KANSA S CITY OFFICE MARKET VACANCY VS. ABSORPTION 900,000

14%

800,000

12%

SQUARE FEET

700,000

10%

600,000 500,000

8%

400,000

6%

300,000

4%

200,000 2%

100,000 0 -100,000

Q1 2012

Q2 Q3 Q4 Q1 2012 2012 2012 2013

Q2 Q3 2013 2013

Q4 2013

Q1 Q2 Q3 2014 2014 2014

Q4 Q1 2014 2015

Q2 2015

Q3 Q4 2015 2015

Q1 Q2 2016 2016

Q3 2016

Q4 Q1 Q2 Q3 Q4 2016 2017F 2017F 2017F 2017F

0%

Source: CoStar and Colliers Research

5

Colliers International | Kansas City-Lawrence | Office Market Overview

AVERAGE ASKING RENTAL RATES

growth and activity

$/SF (FULL-SERVICE GROSS) CLASS A

$21.00

around the metro

CLASS B

$20.00 $19.00

SUBURBAN GROWTH

$18.00 $17.00 $16.00 $15.00 $14.00

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

BURNS & MCDONNELL


vacancy rates As a result of solid office fundamentals, and lack of new office construction, office vacancy rates steadily declined throughout 2016. The outlook for 2017 is expected to follow the same trajectory, as all office sectors are projected to experience positive growth across the Kansas City metro. The strongest office submarkets include the Country Club Plaza and South Johnson County, which continue to boast low vacancy rates, along with some of the metro’s highest rents. The Downtown area continues to improve and tighten, as more companies seek space within the vibrant urban areas of Kansas City, aided by an influx of multifamily redevelopments and the completion of the streetcar.

and

asking rents

Overall, the average asking rents rose by nearly $0.26/SF across the metro from the previous year. Asking rents continue to be a direct reflection of the current demand levels for office space. As several submarkets around the metro continue to tighten, landlords continue to gain a favorable position on rental growth. Deals continue to be completed more in line with asking rents, while fewer concessions are being offered on leases. As vacancy rates push downward and demand levels remain high, asking rates are expected to rise slightly again throughout 2017. The largest rental growth is anticipated in the stronger markets such as South Johnson County and Downtown, while submarkets such as the Northland and East Jackson County will remain relatively flat.

8320 WARD PARKWAY

HOLMES CORPORATE CENTER II

KC OFFICE MARKET INVENTORY BY BUILDING CLA SS CERNER INNOVATIONS CAMPUS

Class A


Class B

Class C

PARK PLACE

The South Kansas City submarket, particularly the Ward Parkway corridor, was very active throughout 2016. Burns & McDonnell completed their headquarters expansion with the opening of their new 311,000 SF building. NBKC Bank recently leased 105,000 SF and will relocate to 8320 Ward Parkway in the coming months. eScreen elected to relocate from Overland Park to Kansas City, aided by incentive money through the Missouri Works program. eScreen moved 265 employees into approximately 75,000 SF at their new office located within the former Applebee’s space at 8140 Ward Parkway. Store Financial also elected to move from their existing Overland Park location into 28,000 SF at 8330 Ward Parkway. Rassmussen, Willis, Dickey & Moore LLC moved from their existing Ward Parkway location to Holmes Corporate Center I. The law firm leased around 35,800 SF. TREKK Design Group also moved into their newly renovated 16,300 SF office headquarters located at 1411 E 104th Street. Regus opened up their 11th metro office location within Holmes Corporate Center II, occupying 14,000 SF. Construction of the first phase of Cerner’s $4.45 Billion Innovations Campus office development is nearing completion in South Kansas City. The first phase includes 805,000 SF of office space in two buildings, and a service center. Development of the campus will be a multi-phase project over the next decade, which will ultimately add 4.5 million SF of office space, nearly 600,000 SF larger than the Sprint Campus in Overland Park. The College Boulevard corridor in South Johnson County remains extremely limited on options for users seeking sizeable blocks of space. The heavy demand to locate within the submarket continues to increase asking rents at a faster rate relative to previous years. SelectQuote announced they will move into 85,000 SF at Overland Park Xchange in the coming year, as recent growth forced them from their existing 56,000 SF footprint in Leawood. Two other South Johnson County employers who recently completed new headquarter projects in the past couple of years have already hit their capacity due to recent growth. In 2013, AMC moved into a new 127,000 SF building in Leawood, but due to growth, leased additional space in 2016. To alleviate space concerns, AMC elected to lease an additional 36,000 SF within the Aubrey Building of Park Place. Teva Pharmaceuticals also moved into a new 156,000 SF office building in 2013. The pharmaceutical company will move a specialty pharmacy unit into a fully renovated 47,000 SF building at 4500 W 107th Street upon completion in 2017.

7


SPRINT CAMPUS

Additional moves in South Johnson County include LockPath, leasing 14,500 SF within the Sprint Campus, and Security Benefit leasing 14,000 SF within Corporate Woods. National Association of Children’s Hospitals will lease over 34,000 SF of space within the Southlake Technology Park. TEK Systems Inc. will lease 17,000 SF within the Southcreek Office Park, while eSolutions will occupy 20,000 SF at 8215 W 108th Terrace, along the College Boulevard corridor. With the completion of the fully renovated 6601 College building, the nearing completion of Nall Corporate II and additional space within the Sprint Campus, there are a few new options for large blocks of space for South Johnson County heading into the new year.

The continuum of care delivery for an aging population and society’s on-demand service expectations, are two driving factors for a rapidly evolving healthcare industry, along with the associated real estate that is becoming an ever more consumer metric.

MEDICAL

Healthcare patients’ demand for convenient, flexible healthcare services, is driving demand by physicians and health systems for real estate beyond the traditional hospital campus and medical office building complexes. As the industry continues to grow rapidly, two medical office clinics were recently announced in South Johnson County. Saint Luke’s Health System completed construction on a three-story, 43,000 SF specialty clinic located at Mission Farms. Saint Luke’s will occupy 35,000 SF, with additional retail shops at the mixed-use development. Saint Luke’s has a second clinic under construction in Blue Springs. The specialists rotate in order to be accessible to the patients, rather than patients traveling to the hospital campus. Additionally, Saint Luke’s rolled out several convenient care clinics and labs in Hy-Vee stores to bring greater healthcare access into the community. Saint Luke’s also announced plans to build four micro-hospitals in the Kansas City area. The micro-hospitals will have a footprint ranging between 15,000 to 50,000 SF and feature approximately 10 overnight beds, along with 24-hour emergency services. Currently, the new locations are planned for Roeland Park, Overland Park, Leawood, and Kansas City, Kansas. As the healthcare industry landscape continues to transform, expect to see additional clinics, micro-hospitals, and post-acute facilities coming out of the ground in 2017 from several providers.

SAINT LUKE’S - MISSION FARMS

6601 COLLEGE

In Wyandotte County, Dairy Farmers of America is nearing completion on their new $30 Million, 100,000 SF global headquarters near the fast-growing Village West area. The move will shift nearly 325 jobs from the Northland to their new Kansas location in early 2017.

The urban core of Kansas City continues its massive resurgence by attracting employers, millennials, and a solid population growth back into Downtown Kansas City. One key driver has been the emergence of the Kansas City streetcar that opened in May 2016. The 2.2-mile track serves the urban core with ten stops between Crown Center/Union Station and the River Market. In the first six months after the grand opening, total ridership had surpassed 1.27 million rides, with a daily average exceeding 6,000. While rides are free, the economic impact of the project has been significant to the urban core, as developers have invested nearly $2 Billion along the streetcar route in terms of multifamily, hotel, mixed-use and office development since 2012, when the streetcar plan was announced.

SAINT LUKE’S - BLUE SPRINGS

URBAN GROWTH

SAINT LUKE’S - CONVENIENT CARE HY-VEE

VanTrust Real Estate will also deliver a new threestory, 81,000 SF medical office building at 6650 W 110th Street in Overland Park, the former Quad Six building site. Diagnostic Imaging Centers will lease 41,000 SF of the space, with the remaining space available for medical office users. The building is expected to be completed in the summer of 2017.

KANSAS CITY STREETCAR

One of the most significant wins for the Kansas City market is VIRGIN MOBILE USA electing to move its headquarters to Downtown. After a nationwide search, the company was attracted to the growth and vision of the area. Virgin Mobile occupies 8,000 SF within One Kansas City Place and brought 50 new jobs to the metro. The Crossroads area continues to become a creative epicenter for the Kansas City metro. Demand for commercial space within this area has increased significantly over the past couple of years, with several creative agencies and tech firms transforming the area into an emerging hotbed of innovative talent. Currently, there are very limited options available within the Crossroads. With a wealth of marketing, advertising, architectural and design talent in the area, firms continue to recruit and cater to the millennial workforce, which are attracted to urban centric work/live/play options. Holmes Murphy, previously based in Overland Park, elected to relocate into 11,000 SF within the Crossroads district at Corrigan Station, which is currently undergoing a $42 Million redevelopment. Holmes Murphy will join Hollis + Miller, who will occupy 25,000 SF upon completion. BNIM ultimately elected to relocate their headquarters and stay in Downtown Kansas City by signing a 20,000 SF lease at Crown Center, after dropping plans for a redevelopment opportunity in the Crossroads.

6650 W 110TH STREET

GREATER KC METRO OFFICE VACANCY 16% ONE KANSAS CITY PLACE

14% 12% 10% 8%

CROWN CENTER

Q1 Q3 Q1 Q3 2009 2009 2010 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 Q3 Q1 2016 2017F 2017F


9


OFFICE MARKET ABSORPTION

IN SQUARE FEET

800,000 700,000 600,000

office investment activity

500,000 400,000 300,000 200,000 100,000 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017F 2017F 2017F 2017F Source: CoStar and Colliers Research

the growth of

coworking spaces U.S. Bureau of Labor data projects that by 2020, about 40% of the country’s workforce, or 65 million Americans, will be independent workers. As the economic and social landscape in the U.S. continues to change, coworking spaces will increasingly become an acceptable alternative to a traditional office environment. With a growing millennial population and the rapid growth of technology-based startup companies seeking flexible space to accommodate business growth, the demand for coworking space has risen significantly. New tech firms are expanding at a pace rarely seen before in other sectors, with many tenants growing from a 5,000 SF startup to a 100,000+ SF market mover in the matter of a few years. The fierce competition for talent and rising cost of living as millennials start families have been factors in this expansion outside of the traditional tech hubs. Many secondary markets offer lower real estate costs and well-educated workforces.

REGUS - OVERLAND PARK

SPRINT ACCELERATOR

The Kansas City metro has experienced an explosion of coworking and incubator spaces around the metro within the last year. Expect additional

spaces to crop up in 2017, as the strong entrepreneurial spirit of Kansas City, partnered by programs such as the Kauffman Foundation, Sprint Accelerator, and KC Rising continue to foster future opportunities in this arena.

KC COWORKING LOCATIONS COMPANY

METRO LOCATION

BetaBlox Blue Hills Contractor Incubator Digital Sandbox Innovation Café (Office WORX) iWerx

KCMO

Kauffman Labs

KCMO

KC Startup Village

Village Square - KCK

Plexpod

SparkLabKC

Lenexa, Midtown Briarcliff, Commerce Plaza, Corporate Woods, Country Club Plaza, Crown Center, Leawood Park Place, Lee’s Summit, Lighton Tower, South Kansas City, The Cosby Building, Zona Rosa KCMO

Sprint Accelerator

KCMO

Regus

Institutional investors, and particularly international investors, show a clear preference for major market assets, where the majority of office investment transactional activity occurred throughout 2016. Deal volume within secondary markets remains active, however, as a result of some buyers shifting their focus away from major markets due to sub-4 percent cap rates for prime office properties in several gateway CBDs. The lack of yields in gateway cities continue to create additional investment opportunities for fundamentally sound secondary markets, such as Kansas City, throughout 2017. Looking ahead, we expect prices to continue rising, and investor interest in the U.S. property markets to remain strong, while transaction volumes regain traction. The relative strength and stability of the U.S. economy is likely to attract

KCMO UMKC Innovation Center KCMO

IWERX

Specific to the Kansas City market, office investment activity remained red hot throughout the entire year. The Taubman Group and The Macerich Company closed the sale of the Country Club Plaza from Highwoods Properties for $660 Million in early 2016 with a sub 5% cap rate. The 15-block shopping and entertainment district contains more than 800,000 SF of retail and 617,000 SF of office space. Highwoods Properties continued their exit strategy of the Kansas City market with the sale of two additional Class A Country Club Plaza assets, Plaza West and Park Plaza. Stanton Road Capital closed on the 16-story, 265,000 SF Plaza West building for $32.8 Million, and Price Brothers purchased Park Plaza, an 82,365 SF building for nearly $172/SF.

KCMO

The urban core generated several investment transactions throughout 2016. VanTrust Real Estate purchased Two Pershing located adjacent to Union Station in Crown Center. VanTrust

The Bunker Labs KC Lenexa PLEXPOD - LENEXA

more offshore capital to our markets, and record-low interest rates will continue to make real estate a compelling option for investors.

ThinkBig Partners

KCMO

WeWork

KCMO

purchased the 11-story, 520,000 SF building from TA Associates. In the CBD, Price Brothers purchased Rivergate Business Center, a sixstory building containing 156,000 SF for $17.6 Million. In the River Market, Orix USA sold 300 Wyandotte, a 94,385 SF building that was formerly occupied by Populous, to Taconic Capital Advisors LP for just over $13.5 Million. In South Johnson County, seven College Boulevard properties totaling over 806,000 SF sold for $94 Million in September. New York-based Group RMC purchased the portfolio from Colony Realty Partners. The portfolio included the Commerce Plaza buildings, Financial Plaza buildings and 7101 College. The buildings were approximately 91% leased at the time of the sale. Tower Properties Inc. acquired a twobuilding office portfolio in Overland Park for $33 Million from Normandin Investments LLC. The portfolio consisted of Creekview Corporate Center and Indian Creek Campus I totaling 234,016 SF.

Expect 2017 investment activity to follow on a similar trajectory as the previous year. Several multi-tenant buildings are expected to make their way to the investment market in both suburban and urban core submarkets.

7101 COLLEGE BOULEVARD

11

office sales

significant transactions & major developments # PROPERTY

SUBMARKET SALE PRICE

1

Country Club Plaza

2

College Boulevard Portfolio

3

Overland Park Portfolio

SF

$/SF BUYER

4

Plaza West

5

Rivergate Office Center

Downtown

$17,600,000

156,000

6

Park Plaza

Midtown/ Plaza

$14,150,000

82,365

7

300 Wyandotte Street Downtown

$13,591,440

94,385

Madison $125.20 Stanton Road Capital 4600 Associates DiCarlo Commercial $112.82 Price Construction Realty Company Highwoods $171.80 Price Brothers Properties Taconic Capital $144.00 Advisors Orix USA

$13,460,000

77,828

$172.95 SSR Capital

KDM Associates

$11,600,000

116,703

$99.40

Talon Real Estate

Block Real Estate Services

$8,085,000

116,318

$69.51

CapRocq Core Real Estate

Block Real Estate Services Broadway Development Shamrock Real Estate #1

8

Six Pine Ridge Plaza

9

Broadmoor Place

10

5800 Foxridge

11

DST Crossroads Portfolio

leases

12

8601 & 8555 Monrovia Street

Centers/ $660,000,000 1,205,369 $547.55 Taubman The Macerich Co

Highwoods Properties

$94,000,000

806,244

$116.59

Colony Realty Partners

$33,250,000

234,016

Properties $142.08 Tower Company

$32,800,000

261,980

Group RMC

Downtown

n/a

82,084

n/a

North Johnson County

Jernab Acquisition Corp. I

n/a

31,464

n/a

FTIH

# PROPERTY

SUBMARKET

EXCELSIOR SPRINGS

KANSAS CITY

Kansas City International Airport

GLADSTONE

LEASED SF

TENANT

South Johnson County

176,000

Quintiles

2

Sprint Campus*


121,000

Apria Healthcare

3

8320 Ward Parkway

South Kansas City

105,000

NBKC

4

Overland Park Xchange


85,000

SelectQuote

5

8140 Ward Parkway

South Kansas City

75,000

eScreen

6

Sprint Campus**


75,000

UnitedLex Corporation

7

11224 Holmes Road

South Kansas City

73,000

FEMA

8

Executive Hills C*

South Kansas City

62,000

NASB

9

114 W 11th Street

Downtown

48,000

Auto Alert

10

4500 W 107th


47,000

Teva Pharmaceuticals

11

6650 W 110th


41,000

Diagnostic Imaging Centers

12

3435 Broadway

Midtown/Plaza

38,000

Citizens of the World

13

Park Place


36,000

AMC

14

Mission Farms


35,000

Saint Luke’s

LIBERTY

CLAYCOMO

NORTH KANSAS CITY KANSAS CITY, KANSAS Downtown Airport

7 5 9

INDEPENDENCE

11 12 6 4 1 10

6700 W 115th*

** Renewal / Expansion

Clay County Regional Airfield

Normandin Investments

1

*Lease Renewal

PLATTE CITY

SELLER

Midtown/ Plaza South Johnson County South Johnson County Midtown/ Plaza

North Johnson County North Johnson County North Johnson County

KEARNEY

Sherman Army Airfield

9

BLUE SPRINGS

KANSAS CITY

SHAWNEE

12 LENEXA

OVERLAND PARK

2

OLATHE

5 3

8

RAYTOWN

3 10

11 4 1 6 2 13

7

14 8

LEE’S SUMMIT GRANDVIEW STANLEY

GREENWOOD BELTON RAYMORE

PECULIAR

13

kansas city

industrial market overview The Kansas City industrial market powered through 2016 to reach new heights in growth and activity that our market has never experienced before. Over 6.1 million SF of positive net absorption surpassed the previous annual record. Active construction reached all-time highs, and delivered product crushing the previous record within the Kansas City market. Demand continues to be driven by distribution and e-commercerelated activity, both aided by solid national and local industrial market fundamentals. From a national standpoint, key economic fundamentals related to a solid labor market, income growth, low interest rates and low fuel prices will continue to promote future industrial activity. Economic indicators related to positive GDP growth projections, record level

projections in the automotive sector, a solid housing recovery, and positive manufacturing reports, indicate another strong year ahead in 2017. Building off the momentum that began a couple years ago, the Kansas City market has successfully added a significant amount of speculative Class A inventory, which has paved the way for a tremendous amount of new industrial growth within the metro. The majority of recent growth has stemmed from the distribution and warehouse sectors. The addition of 7.5 million SF of delivered spec product in 2016, coupled with future pipeline development in 2017, will lead to additional industrial opportunities and growth within the Kansas City region.

CONSTRUCTION AT LPKC

KANSA S CITY METRO INDUSTRIAL MARKET a b s o r p t i o n v s va c a n c y r at e 8%

3,000,000 2,750,000

7%

SQUARE FEET

2,500,000 6%

2,250,000 2,000,000

5%

1,750,000 4%

1,500,000 1,250,000

3%

1,000,000 2%

750,000 500,000

1%

250,000 0

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017F

Q2 2017F

Q3 2017F

Q4 2017F

0%


15

Colliers International | Kansas City-Lawrence | Industrial Market Overview

vacancy rates The overall vacancy rate in Kansas City climbed to 6.9% by year-end 2016, the highest reading since Q3 2012 for the Kansas City market. The vacancy rate continued to rise, as a result of a significant amount of speculative development that was delivered in 2016. Completed project totals continue to outpace absorption figures in the near term, but will begin to stabilize in the upcoming quarters, as the development pipeline begins to slow to some extent. Throughout 2016, 7.5 million SF of speculative space has been added to the Kansas City inventory, a record amount of spec construction for our market. Despite a recent climb

asking rents

and

While the vacancy needle may be rising slightly, the Kansas City metro recorded 6.1 million SF of positive net absorption throughout 2016, another record for our market. The upcoming year is expected to experience additional demand and positive net absorption related to bulk distribution space, as e-commerce and intermodal activity increase on a national scale. Asking rates on bulk space have risen slightly relative to previous quarters and years, but have remained relatively unchanged as a result of the strong competition amongst developers, where recently delivered spec options sit idle within the market. Landlords have been aggressive on rates in an attempt to land the first tenant in their building, especially with additional speculative deliveries coming down the pipeline. Conversely, for smaller industrial product, where new construction is not prevalent, demand remains high and there is a very limited amount of quality options. Landlords have been able to successfully increase rates over the past year, especially in submarkets such as Johnson County. Expect rates to remain relatively stagnant in the upcoming year when it comes to large bulk spaces, while smaller industrial buildings will continue to rise incrementally.

distribution, e-commerce, warehouse, and intermodal growth

Retailers, wholesalers and third-party logistics companies are consolidating multiple warehouses into larger state-of-the-art facilities located near population centers, ports and other major intermodal facilities. This consolidation is part of an overall supply chain overhaul to cut costs, and more importantly, meet the needs from the fastest growing demand driver in North America: e-commerce.

8%

The Kansas City market continues to become an emerging power and prime target for companies, as a result of the central location and multiple intermodal operations, which allows the growing e-commerce and distribution sector the ability to quickly deliver goods. For an industry that relies on efficiency and expedited delivery times, Kansas City allows goods to be delivered to 85% of the nation’s population within two days. As a result of the steady supply of speculative development being completed, the metro was able to attract several new tenants to the market, based on location and reduced timing, to establish a new facility that is fully operational.

7%

E-commerce sales GREW

in market vacancy rates over the past year, positive absorption and the ability to attract tenants that need large blocks of space quickly, continue to justify the current levels of spec construction that is occurring.

From a national perspective, the industrial vacancy rate has plummeted to 5.7%, the lowest on record, largely in part due to continued growth of e-commerce sales and the demand of industrial space that compliment these types of operations.

k a n s a s c i t y va c a n c y r at e

16% relative to 2015.

6% 5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017F 2017F 2017F 2017F


av e r a g e a s k i n g r e n ta l r at e s $/ s f

nnn

$5.00 $4.50 $4.00 $3.50 $3.00

BY

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013


Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Amazon, known for expedited delivery times, invested heavily in the Kansas City market in 2016 with the announcement of three large deals, just two years after entering the market. During Q1 2016, Amazon announced the largest lease at the time within the Kansas City metro, electing to occupy all 822,100 SF within Inland Port XIV in Edgerton, KS. The new fulfillment center created nearly 1,000 new jobs for the region and began operation in

August. By September, Amazon officially broke ground on another new fulfillment center in Kansas City, KS. The Kansas City, KS facility contains a footprint of 855,000 SF with nearly 2.3 million of usable square feet. The facility will also employ an additional 1,000 workers and will be open by mid-2017. Amazon Prime Pantry also signed a 446,500 SF, long term lease at the former Kimberly-Clark distribution center in New Century, KS. Logistics Park Kansas City (LPKC), located adjacent to the BNSF intermodal in Edgerton, continues to grow and attract tenants at an unprecedented pace for our market. LPKC delivered over 3.1 million SF of industrial product in 2016, with over 2.7 million SF of that product already accounted for by tenants. Tenants such as Smart Warehousing, Excel Industries, and Jet.com expanded their existing operations at the park. Smart Warehousing leased the entire 548,333 SF within the recently completed Inland Port XV. The third-party logistics company has now occupied over 1 million SF at LPKC since 2014. Excel Industries expanded their footprint to nearly 680,000 SF by fully occupying Inland Port V, which was also completed during the second quarter.

INLAND PORT XIV

BNSF INTERMODAL

SMART WAREHOUSING - LPKC

JET.COM - LPKC

INLAND PORT XV

17


Jet.com expanded within LPKC by over 400,000 SF. The e-commerce company expanded by occupying the remaining balance of Inland Port XII, where Excel was previously located. Additional tenants such as Amazon, Triumph Group, and XPO Logistics added to the park directory. XPO Logistics will lease 460,000 SF within Inland Port XXXIII. CVS also made a major announcement after a national search. The company selected Kansas City for a new $110 Million, 752,000 SF distribution center within the Skyport Industrial Park near the Kansas City International Airport. The new distribution facility will bring an additional 400 jobs to the region. Hallmark also completed a 500,000 SF expansion to their underground distribution facility within Carefree Industrial Park in Independence. Additional announcements in the metro include two recent leases at Lenexa Logistics Park, where ProPak leased 155,000 SF in the building, while LMC leased 83,000 SF. Exide Technologies leased 187,000 SF at AirWorld Distribution Center. As distribution and e-commerce-related activity accelerates into 2017, Kansas City continues to be very well-positioned for future growth.

INLAND PORT V

CAREFREE INDUSTRIAL PARK

SPEC CONSTRUCTION DELIVERIES IN 2016 SUBMARKET

SF

DEVELOPER

BUILDING NAME

DELIVERY DATE

automotive A strong automotive and manufacturing industry continues to fuel a healthy industrial market within Kansas City.

and

manufacturing

additional 500 local jobs. GM suppliers elected to fully lease a new 830,000 SF building that NorthPoint is currently building immediately adjacent to their Fairfax assembly plant. The new building will allow GM to operate their current plant more efficiently.

U.S. light vehicle sales reached 17.5 million vehicles sold by year-end 2016, which surpassed the previous record high set in 2015. The strong run of the automotive industry is expected to continue throughout 2017, with current projections expected to be in line with the 2016 record volume. The news is positive for both the local Ford and General Motors assembly plants, and the automotive suppliers that have added local operations to assist the plants’ needs.

The past year did not produce a migration of additional Tier-1 auto suppliers into the market to help support GM and Ford, as we have seen in years past, but a couple suppliers continue to grow their operations. Knapheide Manufacturing purchased 23 acres to expand their footprint at the Hunt Midwest Business Center. The expansion allows for the staging of up to 2,600 F-150 trucks and Transit vans to be upfitted with interior racking systems and wall liner packages. Grupo Antolin, a supplier of headliners for both Ford and GM, signed a lease for 36,000 SF within Hunt Midwest’s SubTropolis.

Johnson

822,104

NorthPoint Development

Inland Port XIV

Q3

Johnson

764,800


Inland Port XXXII

Q4

Johnson

716,040

VanTrust Real Estate

Lone Elm 716

Q3

Johnson

679,897


Inland Port V

Q3

Johnson

548,333


Inland Port XV

Q2

Johnson

515,000

VanTrust Real Estate

Lone Elm 515

Q4

Johnson

496,500

Odyssey Real Estate

Lone Elm Logistics Center

Q3

Platte County/NKC

491,448


Riverside Horizons V

Q1

Jackson

450,660

CenterPoint Properties

CenterPoint/KCS Intermodal

Q1

Platte County/NKC

432,640

Trammell Crow Company

Logistics Centre IV

Q3

Johnson

378,022


Inland Port XXXI

Q3

Jackson

364,000


Three Trails Industrial Park - Building I

Q2

Jackson

331,280


Three Trails Industrial Park - Building II

Q3

Platte County/NKC

245,343

Block Real Estate Services

Riverside Logistics Centre

Q3

NE/Executive Park

200,582

Hunt Midwest

Hunt Midwest Business Center I

Q4

U.S. LIGHT WEIGHT VEHICLE SALES

Jackson

96,800

Ward Development

East Kansas City Industrial Park

Q1

20

From a manufacturing standpoint, economic activity in the sector registered growth for a third consecutive month. According to the December Purchasing Managers’ Index (PMI) reports, the index currently stands at 54.7%, indicating an expansion period. The overall economy continued to grow for the 90th consecutive month, which bodes well for the industrial sector locally and nationally. Several area manufacturers, including JCI Industries, High Tech Solutions, Sparhawk Laboratories, and Multivac General Motors recently bolstered expanded their existing operations throughout 2016. The housing market their local Fairfax plant operation with the announcement of a new $55 recovery also remains a major contributor to robust growth in industrial real estate, given its tie to increased consumer spending and confidence. Million investment that will net an

IN MILLIONS

18

INDUSTRIAL MARKET ABSORPTION

16

IN SQUARE FEET

14

3,000,000

12

2,500,000

10

2,000,000

8

1,500,000

6

1,000,000

4 2

500,000 0

0 Q1 2013

Q2 2013

Q3 2013

Q4 2013


Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017F

Q2 2017F

Q3 2017F

Q4 2017F

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: U.S. Bureau of Economic Analysis (FRED research), Motorintelligence

19


sales activity

future growth

Nationally, higher sale prices reduced cap rates to 6.5% for all industrial product types. Overall, lower transaction volumes relative to 2015 are not due to a lack of demand, but rather, the lack of large, national portfolio sales that made 2015 a record-breaking year for industrial investment. Economic volatility often makes industrial real estate a safe haven for capital, with owners less likely to part with a major portion of inventory without another secure source to place it. Foreign investors are weighing the strength of the dollar in their calculations, with the dollar likely to strengthen further once the Fed increased interest rates in December. With fewer portfolio options, investors switched gears in 2016 to single building or smaller portfolio sales, and expanded their search into growing secondary markets such as Kansas City. As quality product makes its way to market, sellers will remain in a favorable position, based on current demand to invest in industrial product. Monmouth Real Estate purchased the new FedEx Ground building located at 22525 W 167th Street in Olathe. Jones Development Company sold the building to Monmouth for $31.7 Million at a reported cap rate of 6.33%. Jones Development completed the building in early 2016 on a 45-acre site. The 313,000 SF building is fully leased to FedEx for 15 years. Clarion Partners purchased a Johnson County portfolio from Deutsche Bank RREEF for $55.35 Million. The portfolio sale included 24 industrial buildings, totaling 1.08 million SF across five business parks located in Overland Park and Lenexa. The buildings ranged between 12,600 to 136,000 SF in size and was over 90% occupied at the time of sale. Colony Realty Partners also sold a 24-buidling industrial portfolio across three business parks located in Riverside, and one located in Overland Park. The portfolio was purchased by a joint venture between Block Real Estate Services and L & B Realty Advisors. The portfolio totaled 1,184,028 SF and sold for around $55 Million.

Stag Industrial Holdings recently acquired Lone Elm Logistics Center. Odyssey Real Estate Capital recently completed the 496,150 SF building in Olathe. The building has yet to land a tenant, but is located in a booming area located north of the LPKC. The property sold for approximately $23.1 Million. Users will continue to compete for the limited amount of quality product that is offered for sale. Similar to the institutional investors, many companies would like to own, but based on the lack of quality options available, many companies have elected to complete expansions or seek build-to-suit opportunities simply because they cannot find existing buildings that meet their needs.

Large distribution inventory dominates the development scene both nationally and in Kansas City, quenching demand from occupiers looking for higher clear heights, larger truck courts, and other amenities necessary in modern logistics and e-commerce. 2016 was a record-breaking year for the Kansas City market in terms of active construction and total deliveries. The majority of completed projects were built on a speculative basis, which points to the strength of the industrial market as a whole. A record 7.5 million SF of speculative construction has been completed throughout the year, with over half of the delivery total coming from Q3 2016 alone. Industrial construction remains strong, despite so many buildings being delivered throughout 2016. Currently, an impressive 6.5 million SF of industrial inventory remains under active construction within the Kansas City market, with additional developments on the horizon.

The Lone Elm corridor added three new buildings to the area with the addition of a 716,000 SF and 515,000 SF building developed by VanTrust Real Estate, along with the 496,000 SF building completed by Odyssey Real Estate. LPKC completed five buildings totaling 3.1 million SF. Additional deliveries around the metro include completions at Three Trails Industrial Park, Riverside Logistics Centre, CenterPoint Intermodal, Hunt Midwest Business Center, East Kansas City Industrial Park and Logistics Centre IV near KCI. The future pipeline remains full for additional development opportunities across all submarkets within the Kansas City metro. Expect construction activity to remain elevated throughout 2017. LPKC will continue to remain very active, as several sites are currently being graded for future spec development.

HUNT MIDWEST BUSINESS CENTER JOHNSON COUNTY PORTFOLIO

INDUSTRIAL CONSTRUCTION

IN SQUARE FEET

7,000,000

UNDER CONSTRUCTION DELIVERIES

6,000,000 LONE ELM LOGISTICS CENTER

k a n s a s c i t y i n d u s t r i a l m a r k e t i n v e n to r y BY SUBMARKET

5,000,000

SQUARE FEET

With demand remaining robust for industrial real estate, national sales prices reached record highs by the end of 2016.

within the metro

4,000,000 3,000,000 2,000,000 1,000,000

Jackson County

Johnson County

Platte/North Kansas City

Wyandotte County

Exec Park/ Northeast

0

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Source: CoStar and Colliers Research Source: CoStar and Colliers Research

21

industrial

significant transactions & major developments

KEARNEY

sales


# PROPERTY


SF

$/SF BUYER

RREEF Industrial Portfolio

Johnson County $55,350,000

1,082,380 $51.14 Clarion Partners

2

Colony Industrial Portfolio

Johnson & Platte/NKC

$55,000,000

Real Estate/ Colony Realty 1,184,028 $46.45 Block L&B Realty Advisors Partners

3

FedEx Ground

Johnson County

$31,700,000

313,763

Real $101.03 Monmouth Estate

Jones Development Company

4

Lone Elm Logistics Center

Johnson County

$23,100,000

496,150

Industrial $46.56 Stag Holdings

Odyssey Real Estate Capital

5

Lenexa Logistics IV

Johnson County

$17,400,000

260,707

Teachers $66.74 Colorado Pension Fund

Block Real Estate

6

9806 Lackman Road

Johnson County

$15,215,000

195,000

$78.03 Vertex

Karbank Holdings

7

10236 Marion Park

Jackson County

$12,500,000

302,148

$41.37 Cerner Corporation

Sanofi-Aventis

8

Park/ 2840 Heartland Drive Executive NE

$5,500,000

117,000

$47.01 Amber Meadows

Krausse & Drummond

9

23501 W 84th Street

Johnson County

$4,920,000

142,608

Logistics $34.50 Shawnee Centre

ECM Real Estate Holdings

Johnson County

$4,900,000

66,000

$74.24 Locke Capital

City of Olathe

leases

Deutsche Bank RREEF

SF

TENANT

TRANSACTION TYPE

Wyandotte County

855,000

Amazon

BTS

Central Industrial Park

Wyandotte County

842,000

General Motors

Direct

3

Inland Port XIV

Johnson County

822,104

Amazon

Direct

4

Skyport Industrial Park

Platte/NKC

762,000

CVS Health

BTS

5

Inland Port V

Johnson County

679,897

Excel Industries

Direct-Expansion

6

Inland Port XII

Johnson County

657,000

Jet.com

Direct-Expansion

7

Inland Port XV

Johnson County

548,500

Smart Warehousing

Direct-Expansion

8

Carefree Industrial Park

Jackson County

500,000

Hallmark

Direct

9

Inland Port XXXII

Johnson County

463,500

XPO Logistics

Direct

10 27200 W 157th

Johnson County

446,500

Amazon Prime Pantry

Direct

11 2115 E Kansas City Road

Johnson County

240,000

Sioux Chief

Direct

# PROPERTY

SUBMARKET

1

Amazon

2


EXCELSIOR SPRINGS

SELLER

1

E Kansas 10 1671-1685 City Road

PLATTE CITY

12 AirWorld Distribution Center

Platte/NKC

187,000

Exide Technologies

Direct

13 1501 N Taney Road

Platte/NKC

187,000

DoorLink

Renewal

14 Inland Port XXXI

Johnson County

156,000

Triumph Group

Direct

KANSAS CITY


4

8

12

GLADSTONE

LIBERTY

CLAYCOMO

NORTH KANSAS CITY

2 2

KANSAS CITY, KANSAS

13

Downtown Airport

8 INDEPENDENCE

1

BLUE SPRINGS

KANSAS CITY SHAWNEE

9 6

LENEXA

1

OVERLAND PARK

RAYTOWN

7

5 10

OLATHE

11 LEE’S SUMMIT

10

GRANDVIEW STANLEY

3 3 7 5 9 6 14

4


PECULIAR

23

kansas city

retail market overview The Kansas City retail market remains very healthy and active, as a result of solid employment gains, a relatively strong economy, and median household income growth over the past year. Retail spending continues to increase from previous years, and solid employment gains are contributing factors that paved the way for advancement of the retail sector. Based on the positive market fundamentals and a lack of speculative retail construction, vacancy rates continued to fall within the Kansas City metro. Through year-end, the Kansas City vacancy rate stands at 8.5% within shopping centers, and 6.0% for total retail product. Vacancy rates within shopping centers declined a full percentage point relative to this time a year ago.

upward, based on the strong market fundamentals. Overall, shopping centers have only raised the average asking rent by $0.18/SF over the past year, but several of the highest quality centers have successfully raised their rents by much more than that in recent months. As construction costs continue to increase, new construction projects remain limited. Overall, retail rents have not yet risen enough to justify more than a very limited amount of traditional shopping center construction, which will continue to keep demand levels high for quality product throughout 2017. Big box space and lower quality assets in undesirable locations will continue to face their challenges heading into the new year. These centers are not in a position to effectively raise rents, and concessions remain a necessity to attract new retailers.

Retailers continue to seek only the most prominent and highly visible locations around the metro, which in turn, have created a hyper competitive market for remaining quality retail space around the metro. Asking rents continue to push SUMMIT FAIR

RETAIL MARKET VACANCY RATE TOTAL RETAIL SHOPPING CENTER POWER CENTER

12% 10% 8% 6% 4%

Q1 2012

Q3 2012

Q1 2013


Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017F

Q3 2017F

25

Colliers International | Kansas City-Lawrence | Retail Market Overview

Lee’s Summit continues to cater to the growing population and strong demographics.

The Kansas City market continued to expand and attract several national retail concepts to the local landscape throughout 2016. The majority of retail growth occurred in concentrated suburban areas around the Kansas City metro, with a healthy mix of green field and infill development opportunities.

The majority of Lee’s Summit retail activity is focused near the corridor around I-470, Chipman Road and Highway 50. New retail developments in the vicinity include Summit Place and Summit Orchards. Summit Place is a planned 355,000 SF regional retail that will be anchored by a Sam’s Club. Red Development will combine big box retailers and supporting pad tenants for the third center at the interchange. Dick’s Sporting Goods will move from a 30,000 SF store at Summit Woods to an expanded 50,000 SF store in Summit Fair, and will be joined by H&M. No tenant has been announced to backfill the Dick’s Sporting Goods space at Summit Woods.

SUMMIT FAIR

growth and activity around the metro

Based on solid population growth, the Northland remained one of the hottest retail markets throughout 2016.

THE NORTHLAND

Legacy Development has recently transformed the southeast corner of I-35 and 152 Highway into a 330,000 SF, $85 Million redevelopment named Liberty Commons. The project is anchored by Academy Sports, Gordmans and Natural Grocers, which all opened last fall. Additional tenants include Off Broadway, ULTA, Home Goods, Petco, Louie’s Wine Dive and others. B&B Theatres is building a state-of-the-art, flagship facility adjacent to Liberty Commons. The 14-screen theater is expected to open by mid-2017. New green field retail development opportunities are starting to take shape with the announcement of the first Northland Costco location, which will open at the southeast corner of 152 Highway and Platte Purchase Drive. The new store is expected to open in early 2017, while future retail projects are expected to join Costco at the other three undeveloped corners of this interchange in the coming years.

Summit Orchards, located east of Summit Fair, is currently under construction in Lee’s Summit. The $85 Million mixed-use project, upon completion, will include 320 apartments (Summit Square Luxury Apartments), 150,000 SF of office space, and an additional 100,000 SF of retail and restaurants. NorthPoint is currently developing the luxury apartments, while Red Development will partner on the commercial buildings.

PARAGON STAR

Another recent development in Lee’s Summit includes the recent groundbreaking of Paragon Star, a new $212 Million entertainment district. The 130-acre youth sports complex will feature 10 artificial turf fields. Remaining development includes a clubhouse, a 220-unit upscale multifamily residential project, 90,000 SF of office product, a 120-room hotel and 79,000 SF of entertainment and retail attractions. The development should attract future retail growth in the vicinity. In Grandview, Truman Marketplace, formerly known as Truman Corners, completed a $75.6 Million redevelopment in September. The center was able to attract new retailers, including Burlington Coat Factory, McAlister’s Deli, Ross Dress for Less, Shoe Carnival, and T.J. Maxx.

SUMMIT SQUARE LUXURY APARTMENTS

LIBERTY COMMONS

TRUMAN MARKETPLACE COSTCO - NORTHLAND

AVERAGE A SKING RENTAL RATES tota l r e ta i l m a r k e t

$/ s f

nnn

$12.85

Eastern Jackson County, another trade area that has experienced a tremendous population boom, continues to add additional retail to support the new rooftops. In Independence, Menards recently opened a 162,000 SF store near I-70 and Little Blue Parkway, which has spurred ancillary development, including a QuikTrip in the immediate area. In early 2016, Dick’s Sporting Goods held a grand opening of their new location within Independence Center after relocating from Bolger Square. Main Event opened their first Kansas City location in late 2015 near the Falls at Crackerneck Creek, which has helped to spur additional restaurants, including Cheddar’s, Slim Chickens, Los Cabos, Pizza Ranch and Old Chicago.

$12.75

EASTERN JACKSON

$12.65 $12.55 $12.45 $12.35 $12.25 $12.15 $12.05 $11.95 $11.85 $11.75

MAIN EVENT - INDEPENDENCE

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016


27


In Johnson County, the intersection of 119th and Roe continues to be one of the most active retail trade areas in the metro.

JOHNSON COUNTY

2016 ADDITIONS

Town Center Plaza and Town Center Crossing, owned by WP Glimcher, are home to some of the premier national and local brands within the metro. Due to the high demand for quality retail space, and limited space options, the owner has successfully been able to push rents upward within the centers. Restoration Hardware recently held a grand opening for their new location at Town Center Plaza in August. The store and gallery space is a three-story, 56,000 SF freestanding building that features a courtyard and landscaped rooftop park. Another center at the 119th and Roe intersection recently underwent a massive renovation effort. MD Management recently spent $36 Million to renovate Camelot Court. The grocery-anchored center recently reopened Hen House in early August 2016, after a temporary closure for eight months to expand and completely renovate the store from 55,000 SF to 75,000 SF. The renovation was aided by Leawood’s first approved CID, which covers nearly $8 Million in costs. The Container Store opened their first location in the metro at the same intersection, with the completion of their new 25,000 SF freestanding store at Hawthorne Plaza in Overland Park.

the plan has been approved by the Overland Park City Council for a smaller scale, $80 Million development on the existing site. The new plan calls for the vacant 600,000 SF center to be demolished and be replaced with 305,000 SF of retail, which will be anchored by a 165,000 SF Lowe’s. Demolition of the center will begin soon and Lowe’s is expected to be complete by Spring 2018.

In Olathe, the second Main Event location opened their doors next to Bass Pro Shops in Olathe. The third Main Event, located in the Northland, is currently under construction within the new Edgewood Farms development. One of the fastest growing areas within the metro will soon be home to a new $220 Million development. Sonoma Plaza, located at 87th Street and I-435 near Lenexa City Center, will add apartments and up to 175,000 SF of retail and commercial space. The 85-acre, mixed-use plan will seek an anchor tenant and will feature several pad sites that front 87th Street. A second retail development in Johnson County will soon begin construction. After the initial plan for Metcalf South was scraped, a new version of

SHOPPING CENTER ABSORPTION

KANSAS CITY METRO RETAIL ACTIVITY SF

LOCATION

STATUS

Menards

218,000

Independence

Opened November 2016

Menards

208,000

Belton

Opened October 2016

Menards

200,000

Olathe

Opened December 2016

Academy Sports

63,000

Liberty Commons

Opened September 2016

Restoration Hardware

55,000

Town Center Plaza

Opened August 2016

Main Event

50,000

Olathe

Opened October 2016

Hobby Lobby

50,000

Belton

Opened February 2016

Zone 6 Fitness

47,000

Burlington Plaza

Opened December 2016

Gordmans

45,000

Liberty Commons


Ross Dress for Less

35,000

Ward Parkway Center

Opened October 2016

Planet Fitness

29,000

Mission

Opened October 2016

Apple Store

29,000

Plaza 211

Opened August 2016

Sprouts

26,000

Lee's Summit

Opened March 2016

True Value

22,250

K7 & Santa Fe


Westlake Ace Hardware

15,500

Stanley Station

Opened October 2016

Stock Hill Steakhouse

14,000

Board of Trade

Opened November 2016

Natural Grocers

13,000

Liberty

Opened October 2016

TOWN CENTER PLAZA

ACTIVE CONSTRUCTION SITE OF FUTURE SONOMA PLAZA

IN SQUARE FEET

700,000 600,000 500,000 400,000

SF

LOCATION

Edgewood Farms

191,000

I-29 & Barry

Costco

155,000

N Platte Purchase & 88th

BluHawk

128,000

BluHawk

Dick's Sporting Goods

50,000

Summit Fair

Whole Foods

45,000

UMKC

Dave & Buster’s

40,000

Corbin Park

Ward Parkway CenterRestaurant Expansion

31,000

Ward Parkway Center

H&M

20,000

Summit Fair

SF

LOCATION

EDGEWOOD FARMS

300,000 200,000

NEW ANNOUNCEMENTS

100,000 0

Summit Place

352,000

SEC I-470 & NW Blue Pkwy

Sonoma Square

175,000

I-435 & 87th Street

-100,000

Sam's Club - Northland

136,455

NEC I-29 & Hwy 152

-200,000

Prairiefire Phase II

130,000

SEC 135th & Nall

Metcalf South/Lowe's

165,000

Metcalf South Redevelopment

Aldi

18,500

Tiffany Springs Marketplace

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015


Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 Q2 Q3 Q4 2017F 2017F 2017F 2017F

SUMMIT PLACE

29


r e ta i l

the rise of restaurants

investment activity

The outlook remains bright for the food industry in the upcoming year.

Retail investment activity within Kansas City continued throughout 2016, as investors had an appetite for high-quality retail assets, pointing to the healthy state of the local retail sector.

The National Restaurant Association projected that 2016 would be the seventh consecutive year of growth in the restaurant industry, eclipsing $783 Billion in sales. Quick service restaurants “QSR”, and fast-causal concepts remain the strongest segments of the industry and are expected to perform well in the upcoming year. QSR’s are expected to have a strong showing throughout 2017, as a result of several expansions and new concepts making their way to the market. Fast casual concepts remain solid, despite a fairly rough showing last year, which was notably dragged down by Chipotle at the beginning of 2016. Casual dining remains the weakest of all restaurant segments, as dining trends continue to shift and evolve to a more efficient and less expensive format. The outlook remains bright for the food industry in the upcoming year, as new restaurant and food concepts are exploding and opportunities are being created for retail centers of all types from mixed-use developments to small strip centers to neighborhood centers. People are increasingly looking for dining convenience, and retail centers are

capitalizing on these trends to create vibrant and lively areas anchored by a growing collection of food offerings. Locally, Ward Parkway Center is constructing a restaurant district to compliment this growing trend. Legacy Development is creating a $16 Million, 31,000 SF retail addition to include five restaurants, along with an outside patio/courtyard space for people to gather. The restaurant district is expected to open in the Spring of 2017. Shopping centers are migrating to a mixed-use format that supports crossshopping, thanks to careful foot traffic planning. In strip or neighborhood centers, shared parking encourages consumers to walk by other offerings that beckon them to enter or entice them to return at another time. We continue to see thoughtful design supporting cross-shopping in mixed-use developments with restaurants joined by office space, luxury multifamily housing, shops, cinemas and entertainment venues. These newly-minted urban enclaves function as suburban downtowns and are magnets for millennial workers and employers. Two restaurants that recently opened within new mixed-use developments include Blue Sushi Sake Grill at Woodside Village in Westwood, KS and Stock Hill, a 14,000 SF steakhouse, which recently opened at the newly renovated Board of Trade building near the Country Club Plaza.

Stateline Station, located in South Kansas City, sold for $17.5 Million. The 142,600 SF center was nearly 85% occupied at the time of purchase and anchored by Marshalls and Cost Plus World Market, along with a Super Target, which was not included in the sale. Ohio-based Schottenstein Property Group purchased the asset from Retail Properties of America, Inc. State Line Point, a 162,000 SF retail center located adjacent to Stateline Station, also traded hands in 2016. Jared Enterprises purchased the

center from a joint venture between Jasper Stone Partners and Agman Partners for $11.6 Million. The center was 94% occupied at the time of the sale, and is currently anchored by Gordmans, Michael’s, and Lukas Liquors. In Overland Park, Metcalf 103 also sold in early 2016. A TIC sold the 189,000 SF shopping center to The Staenberg Group for $16.6 Million. Another center along Metcalf Avenue sold in late June. The Home Depot Center, located at 9600 Metcalf Avenue sold for $20 Million. The building traded at a 5.70% cap rate for the 114,000 SF building. California-based Realty Income purchased the building from Kimco Realty. Barry Towne Shopping Center, located in the Northland, was purchased by United Development Company from MD Management. The 274,223 SF center was only 47% occupied at the time of the sale, but is anchored by Target, Kohl’s and Famous Footwear.

Investment activity in 2016 got off to a hot start with Highwoods Properties selling the Country Club Plaza for $660 Million to a joint venture between Taubman Centers and The Macerich Company. The Country Club Plaza portfolio was the largest commercial real estate transaction in Kansas City’s history. The 15-block shopping and entertainment district contains more than 800,000 SF of retail and 617,000 SF of office space.

KANSA S CITY RETAIL MARKET BY CENTER TYPE

Single Tenant Buildings

Neighborhood Centers

Super/ Regional Malls

Strip Centers


Power Centers

Lifestyle Centers

COUNTRY CLUB PLAZA

31

retail


KEARNEY

sales


# PROPERTY


SF

1

Country Club Plaza

Midtown/Plaza $660,000,000 1,272,000

2

Legends Outlets Kansas City

Wyandotte County

$193,500,000

3

Home Depot Center North Johnson $20,000,000 (9600 Metcalf) County

BUYER

SELLER

$518.87

Taubman Centers/ The Macerich Co

Highwoods Properties

685,841

$282.14

& Co/RED Walton Street Capital KKR Legacy

113,969

$175.49

Realty Income Corporation

Kimco Realty Corporation Retail Properties of America LNR Partners

4

Stateline Station

South Kansas City

5

Regency Park Shopping Center


6

Metcalf 103

South Johnson $16,600,000 County

189,002

7

Southridge Retail Center

South Johnson $12,200,000 County

41,485

8

State Line Point

South Kansas City

9

Parkway Shopping Center


Towne 10 Barry Shopping Center

$/SF

$17,500,000

142,570

$122.75

Schottenstein Property Group

$16,775,000

225,109

$74.51

Mission Peak Capital

$87.83

Metcalf 103 The Staenberg Group TIC Center

$11,600,000

$294.08 Highpoint Capital

161,910

$71.64

Jared Enterprises R. H. Johnson Company

Shawnee TIC Owners

UDC Global

MD Realty

88,495

$86.45

n/a

278,000

n/a

Kansas City North


2

10

7

leases

TENANT

LEASED SF

SUBMARKET

STATUS

1

Multiple Locations

Menards

210,000

Multiple Locations

Open

2

Northland Costco

Costco

155,000

Kansas City North

Under Construction

3

Liberty Commons

Academy Sports

63,000

Kansas City North

Open

4

BluHawk

Consentino's Market

60,000


Under Construction

5

Town Center Plaza

Restoration Hardware

55,000


Open

6

Olathe Gateway

Main Event

50,000


Open

7

Edgewood Farms

Main Event

50,000

Kansas City North

Under Construction

8

Belton Gateway

Hobby Lobby

50,000

Jackson County

Open

9

Summit Fair


50,000

East Jackson County

Under Construction

10 Burlington Plaza

Zone 6 Fitness

47,000

Kansas City North

Open

11 Liberty Commons

Gordmans

45,000

Kansas City North

Open

12 UMKC

Whole Foods

45,000

Country Club Plaza

Under Construction

13 Corbin Park

Dave & Buster’s

40,000


Under Construction

14 Ward Parkway Center

Ross Dress for Less

35,000

South Kansas City

Open

15 Plaza 211

Apple Store

29,000

Country Club Plaza

Open

3 11

GLADSTONE

LIBERTY

CLAYCOMO

NORTH KANSAS CITY KANSAS CITY, KANSAS

10 Downtown Airport

2

INDEPENDENCE

1

# PROPERTY

EXCELSIOR SPRINGS

KANSAS CITY


Southridge Retail Center Jasper Stone Partners/Agman Partners

$7,650,000

PLATTE CITY

9

15

1A

12

BLUE SPRINGS

KANSAS CITY

SHAWNEE

14

5 OVERLAND PARK 3

LENEXA

RAYTOWN

6 6

7

9 5

OLATHE

13

1C

4 8

LEE’S SUMMIT GRANDVIEW

STANLEY

4

GREENWOOD BELTON

8

1B

RAYMORE

PECULIAR

33

kansas city

investment market overview Commercial real estate fundamentals are currently at their strongest point in this economic cycle and given that inventory supply threats remain low, the outlook remains positive for future investment activity. With near universal expectations that GDP output will increase, property fundamentals will only continue to improve, ensuring continued investor interest. Meanwhile, low interest rates make real estate investment all the more compelling for two reasons: the low cost of debt keeps acquisition costs down, and the risk-adjusted rates of return remain attractive compared to other financial investments. Commercial real estate prices are expected to slowly rise, while transaction volumes regain traction through 2017. Investors are likely to turn more attention to strong but overlooked secondary markets that can potentially provide greater upside potential, a real positive for the Kansas City market. The search for yield will continue with many investors seeking value-add opportunities which typically provide higher returns.

As expected, the Federal Reserve announced an interest rate hike by another 25 basis points in 2016, and signaled a potential for three additional 25 bps increases throughout 2017. As the Federal Funds Target Rate is not directly tied to capitalization rates or longer-term bond rates, neither one may immediately rise in step with future Fed hikes. Historically, property returns are often strongest when interest rates are high and/or rising, such as in the late 1990s and the mid-2000s. The same forces that compel the Fed to raise rates, namely a robust, expanding economy, are what support strong property fundamentals and returns, which should help to maintain strong demand for investment in U.S. property in the coming year.

INVESTMENT SALES ACTIVITY - KC METRO IN $ MILLIONS $900 $800 $700 $600 $500 $400

2010 2011 2012 2013 2014 2015 2016

$300 $200 $100 $0

Industrial

Multifamily

Office

Retail

Source: Real Capital Analytics, CoStar and Colliers Research

35

Colliers International | Kansas City-Lawrence | Investment Market Overview

Foreign buyers continue to be attracted by the relative strength and stability of the U.S. economy, as well as compelling returns compared to returns from their home nation. Expect capital flows across borders to remain strong in the upcoming year with a preference toward major U.S. markets, where in 2016, foreign investors have placed 67% of their investments into the top six U.S. metro markets. Despite strong market fundamentals, Commercial Mortgage Backed Securities “CMBS” issuance decreased relative to 2015. Several factors seem to account for the lower debt issuance this year, including the risk-retention rules coming into effect at the end of 2016 that will require CMBS issuers to retain a 5% stake in all issues. The overall lending decline is also partly driven by tightening lending standards, particularly in secondary markets. Regardless, lenders seem optimistic that volumes will rise again.

investment activity around the metro OFFICE

The well-diversified office sector allows the Kansas City metro to not rely solely on one industry or economy. Historically limited speculative office development translates into low vacancy rates around the metro. Rents are beginning to escalate and grow for the best assets. The strength of the capital markets, as well as private equity, has driven the fierce competition for high-quality properties in primary markets. As a result, secondary markets like Kansas City will continue to be an attractive option for investors chasing higher returns that one cannot get in the core markets.

U.S. CMBS ISSUANCE IN BILLIONS $250 $200 4600 MADISON

$150

The Kansas City market remains a strong secondary market that continues to be sought after from investors all across the country. Driven by the strong market fundamentals, domestic investors continue to place capital into the market. Recent transactions included acquisitions by Stanton Road Capital LLC (4600 Madison), a California-based firm. Group RMC (College Boulevard Portfolio), and Taconic Capital Advisors (300 Wyandotte) are New Yorkbased. CapRocq Core Real Estate Fund (5700 Broadmoor) is Arkansasbased, while Taubman Centers and The Macerich Company (Country Club Plaza) are Michigan-based and California-based, respectively.

$100 $50 $0

2003

2004

2005

2006

2007

2008

2009

2010

The Kansas City metro is a recession-proof economy relative to the rest of the U.S. The office market is historically more stable and less volatile compared to the national metrics.

2011

2012

2013

2014

2015

2016

2017F

2018F

300 WYANDOTTE

Source: Real Capital Analytics, CMAlert, Urban Land Institute/Consensus Forecast, and Colliers Research

U.S. CMBS LOAN MATURITY DATES IN BILLIONS

RETAIL

$120

Several high-quality retail assets also traded in 2016, significantly surpassing recent years in terms of transactional volume and activity. When quality retail investments came on the market, investors from across the country responded positively. All of which pointing to the healthy state of Kansas City’s local retail sector.

$100 $80 $60 $40

METCALF 103

$20 $0

The historic sale of the Country Club Plaza significantly raised retail investment activity within Kansas City.

2012

Source: Trepp LLC

2013

2014

2015

2016

2017F

Some of the high quality retail asset sales include: The Home Depot Center located at 9600 Metcalf Ave sold for $20 Million, Metcalf 103, purchased by The Staenberg Group, sold for $16.6 Million, Stateline Station, located at 135th and State Line, sold for $17.5 Million to Ohio-based Schottenstein Property Group, Jared Enterprises purchased State Line Point for $11.6 Million and Barry Towne Shopping Center, located at 169 Highway and Barry Road, was purchased by United Development Company.

2018F STATELINE STATION

37


MULTIFAMILY

KANSA S CITY 2016 INVESTMENT ACTIVITY BY PRODUCT TYPE

Multifamily

Office

Retail

Industrial

Source: Real Capital Analytics, CoStar and Colliers Research ARIUM OVERLAND PARK

Positive demand drivers continue to attract investors to industrial product. Despite the decrease in cap rates since 2010, industrial properties continue to offer attractive riskadjusted returns. Investors continue to seek safe U.S. commercial product, such as industrial product, due to the relative strength of the economy and property markets. Cap rates will continue to remain compressed, as a result of the strong interest from institutional investors. Transactional activity related to the industrial market will remain limited through the upcoming year, not because of lack of demand, but rather, continued scarcity of quality offerings. As quality product is marketed for sale, sellers will remain in a favorable position, based on current appetite levels for industrial product. Only a few industrial investment offerings hit the market last year, all of which gathered a significant amount of interest. Clarion Partners purchased a Johnson County portfolio from Deutsche Bank RREEF for $55.35 Million. The portfolio includes 24 industrial buildings, totaling 1.08 million SF across five business parks located in Overland Park and Lenexa. Monmouth Real Estate purchased the new FedEx Ground building located at 22525 W 167th Street in Olathe. Jones Development Company sold the building to Monmouth for $31.7 Million at a reported cap rate of 6.33%. Stag Industrial Holdings recently acquired Lone Elm Logistics Center. Odyssey Real Estate Capital recently completed the 496,150 SF building in Olathe.

INDUSTRIAL

CARRINGTON PLACE AT SHOAL CREEK

JOHNSON COUNTY PORTFOLIO KANSAS CITY STREETCAR

LONE ELM LOGISTICS CENTER

STONEBRIAR APARTMENTS

As a result of continued leasing activity, the metro’s occupancy ended the year at 95.4%, its highest reading within the past ten years. As both demand and job growth fuel new apartment product, local demand continues to keep pace with supply that has recently been completed. Several multifamily projects are nearing completion, which may strain the current supply-demand balance in the coming months, where previously, demand has been outpacing supply. Population growth and social trends, such as urbanization, falling homeownership rates, later marriage, and lower birth rates create long-term unique structural advantages to the sustainability of the multifamily sector that remains on a torrid pace. In fact, the homeownership rate in the U.S. tumbled from the historical high of 69.2% in 2004 to 63.5% as of Q3 2016, the lowest level since 1965. The Kansas City metro continues to add development projects to the pipeline, as a result of positive economic growth, healthy commercial real estate fundamentals and demand for new developments packaged with upscale amenities. Job growth around the metro, along with millennials and empty nesters choosing to rent rather than own, have been the largest factors for demand keeping on pace with current construction inventory. Downtown redevelopment projects continue to forge ahead, accelerated by the Kansas City streetcar, which began ridership May 2016. Since the announcement of the streetcar in 2012, there has been nearly $2 Billion of investment within four blocks on either side of the streetcar line. The timing coincides with a growing demand by a younger generation seeking space within the urban core. As more millennials enter the workforce and choose to reside in locations with a live/work/play component, the future remains very bright for Downtown development. The majority of upcoming developments are focused within the urban core and in Johnson County. Last year, and into 2017, record levels of new supply will be added to the Kansas City metro. Currently, there are nearly 7,609 units under active construction, which will continue to test the demand levels of multifamily product around town in the near future. Multifamily investment activity continues to be the most active commercial product type within the metro in terms of both development and transactions. The Overland Park market remains red hot with several large apartments trading throughout 2016. ARIUM Overland Park, a 402-unit

NATIONAL HOUSING FORECA ST Housing Activity (thousands)

2012

2013

2014

2015

2016

2017

2018

784

928

1,001

1,108

1,162

1,239

1,332

Single-Family

537

620

647

713

780

855

961

Multifamily

247

308

355

395

383

384

371

Total Housing Starts

New Single-Family Sales

368

430

440

502

565

630

708

Existing Single-Family Home Sales

4,125

4,475

4,338

4,627

4,832

4,826

4,960

Source: NAHB Housing and Economic Forecast

Data are averages of seasonally adjusted quarterly data and may not match annual data published elsewhere.

39


complex was purchased for $68.7 Million. Carroll Organization purchased the South Overland Park complex from Davis Development. Price Brothers acquired StoneBriar Apartments, a 424-unit apartment complex for $48.8 Million from Resource Real Estate. Landmark Realty purchased The Ridge, a 352-unit complex from Bridge Partners for $42.5 Million. Timberland Partners purchased Arcadia at Overland Park, a 232-unit complex for $19.5 Million. All deals mentioned above traded at cap rates under 6.0%. Additional sales within the submarket include Treetop Lodge, a 149-unit complex that traded for $13.8 Million and StoneBriar Woods for $59 Million.

THE RIDGE

Several Northland properties also sold throughout 2016. Carrington Place at Shoal Creek traded for $46.2 Million, while Haven at Shoal Creek sold for $45.3 Million. Sentinel Real Estate purchased the 275-unit complex from AG Spanos Companies. FPA Multifamily purchased the 622-unit Oakbrook at New Mark from Tower Properties. Additional Northland transactions include Arbor Mist Townhomes, Barclay Club and Bicycle Club.

STONEBRIAR WOODS

The continued strength of apartment activity is based on demand, driven by population growth and evolving social trends that reshape the multifamily landscape. While it is unlikely for investments to maintain the same level of returns the sector has experienced over the past six years, we still expect that fundamentals will remain strong for some time to come. However, investors should temper expectations to reasonable levels and choose among markets like Kansas City that are best suited to maintain a combination of safety, liquidity and prospects for growth.

HAVEN AT SHOAL CREEK

BARCLAY CLUB

U.S. CONSUMER CONFIDENCE INDEX United States Consumer Confidence Index

120 120

100 100

80 80

60 60

40 40

Source: The Conference Source: TheBoard Conference Board

Jul 2016

Jan 2016

Jul 2015

Jul 2014

Jan 2015

Jan 2014

Jul 2013

Jul 2012

Jan 2013

Jan 2012

Jul 2011

Jan 2011

Jul 2010

Jan 2010

Jul 2009

Jan 2009

Jul 2008

Jul 2007

Jan 2008

Jan 2007

Jul 2006

Jul 2005

Jan 2006

Jan 2005

Jul 2004

Jan 2004

Jul 2003

Jan 2003

Jul 2002

0

0

Jan 2002

20 20

RECENTLY DELIVERED PROJECT

1914 Main Argyle on 12th Roasters Block West Hill Newbern Apartments Power & Light Building Residences at New Longview Mission 106 Greenwood Reserve Retreat at Tiffany Woods Domain at City Center Prairie View at Village West Centropolis on Grand Steeplechase Woodside Village North Edgewater at City Center Gillham Plaza Summit Crossing Switzer Lofts Congress Lofts Interstate Bakeries CP Lofts Savannah West Prairie Pines Townhomes Adara Overland Park

DEVELOPER

UNITS SUBMARKET

DELIVERY

DEVELOPER

UNITS SUBMARKET

DELIVERY

Linden Street Partners Homkor O'Reilly Development Dalmark Group Antheus Capital NorthPoint Development NorthPoint Development Weltner Equities, EPC CityScape Residential NorthPoint Development EPC Real Estate Group NorthPoint Development KC Commercial Realty Group Bach Homes Tanner & White Properties Block Real Estate Services Antheus Capital Worcester Investments Foutch Brothers Del Properties Antheus Capital Columbus Park Developers EPC Real Estate Group Hickok-Dible Davis Development

44 117 146 71 108 210 309 139 228 254 200 311 56 324 91 276 56 204 114 53 39 108 201 222 260

Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Lee's Summit/Blue Springs North Overland Park Olathe/Gardner Platte County Shawnee/Lenexa/Mission Wyandotte County Central Kansas City Clay County Shawnee/Lenexa/Mission Shawnee/Lenexa/Mission Central Kansas City South Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Clay County Shawnee/Lenexa/Mission South Overland Park

1Q16 1Q16 1Q16 1Q16 2Q16 2Q16 1Q16 2Q16 2Q16 1Q16 2Q16 1Q16 3Q16 3Q16 3Q16 3Q16 3Q16 3Q16 4Q16 4Q16 4Q16 4Q16 4Q16 4Q16 4Q16

UNDER CONSTRUCTION PROJECT

Commerce Tower East 9 at Pickwick Plaza Summit on Quality Hill Apex on Quality Hill 3435 Main Berlau Paper House 51Oak 911 & 915 Broadway Second and Delaware Crossroads Westside Norman School Lofts 1721 Walnut 531 Grand Milliner Lofts Union | Berkley Riverfront Park Two Light The Belmont 17Madison Kinsley Forest Apartments Forest Avenue Summit Square InterUrban Lofts Avenue 80 The Promontory Meadowbrook Altitude 970 The Denton - Phase II WaterSide Residences on Quivira Mansions at Canyon Creek - Phase II The Royale at CityPlace Metcalf Village

Commerce Tower Group Gold Crown Properties CityScape Residential CityScape Residential Antheus Capital Sunflower Development Group VanTrust Real Estate Yarco Development Co Arnold Development Group CityScape Residential Del Properties Linden Street Partners Cornerstone Associates/Block Andrew Bolton Flaherty & Collins Cordish Companies Brickstone Capital Partners EPC Real Estate Group Taurus Investment Holdings NorthPoint Development Townsend Capital/NorthPoint REAL Property Group EPC Real Estate Group Arbor Development/Launch VanTrust Real Estate AG Spanos NorthPoint Development Block Real Estate Services Hickok-Dible Block Real Estate Services J.A. Murphy Group

342 260 252 138 80 16 170 44 276 221 61 38 140 26 410 296 95 32 328 292 308 41 220 291 280 291 154 377 70 344 270

Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Central Kansas City Clay County Clay County Lee's Summit/Blue Springs North Overland Park North Overland Park North Overland Park North Overland Park Platte County Platte County Shawnee/Lenexa/Mission Shawnee/Lenexa/Mission South Overland Park South Overland Park

1Q17 1Q17 1Q17 1Q17 1Q17 1Q17 2Q17 2Q17 3Q17 3Q17 3Q17 3Q17 4Q17 4Q17 2018 2018 2018 2018 2Q17 4Q17 3Q17 1Q17 3Q17 4Q17 2018 2Q17 2Q17 1Q17 2Q17 1Q17 2Q17

41

investment


KEARNEY


#

PROPERTY

SUBMARKET

SF/ UNITS

PRICE

$/SF/UNIT BUYER $518.87

Taubman Centers/ Highwoods The Macerich Co Properties

685,841

$282.14

Walton Street Capital

KKR & Co/RED Legacy

$94,000,000

806,244

$116.59

Group RMC

Colony Realty Partners

$60,100,000

596

Country Club Plaza

Midtown/Plaza

2

Legends Outlets Kansas City

Wyandotte County

$193,500,000

3

College Boulevard Portfolio


4

Northland Passage Apartments

Kansas City North

5

RREEF Industrial Portfolio

Johnson County

$55,350,000 1,082,380

$51.14

Clarion Partners

6

Colony Industrial Portfolio

Johnson & Platte/NKC

$55,000,000

$46.45

Block Real Estate/ Colony Realty L&B Realty Partners Advisors

7

StoneBriar Johnson Apartments (Regents South County Center)

8

Carrington Place at Shoal Creek

Kansas City North

$46,200,000

270

9

The Ridge


$42,500,000

352

Club 10 Barclay Apartments

Kansas City North

$40,000,000

400

Retreat 11 Equus Portfolio (3)

Johnson County & KCMO

$35,000,000

484

Park 12 Overland Portfolio


$33,250,000

234,016

$142.08

Tower Properties Company

Craig Morris

13 Plaza West

Midtown/Plaza

$32,800,000

261,980

$125.20

Stanton Road Capital

4600 Madison Associates

$48,800,000

1,184,028 424

Hayman $100,838.93 The Company

$115,094.34 Price Brothers $171,111.11

Sentinel Real Estate

$120,738.64 Landmark Realty $100,000

Bridge Partners

Monarch $72,314.05 Investment and Management

LIBERTY

4 CLAYCOMO

NORTH KANSAS CITY

6 KANSAS CITY, KANSAS Downtown Airport

2

Irongate Realty Partners

INDEPENDENCE

17

Bridge Partners Bridge Investment Group Partners

13

Equus Capital Partners

1

BLUE SPRINGS

KANSAS CITY SHAWNEE

313,763

$101.03

Monmouth Real Estate

Jones Development Company

Elm Logistics 15 Lone Center

Johnson County

$23,100,000

496,150

$46.56

Stag Industrial Holdings

Odyssey Real Estate Capital

Depot Center 16 Home (9600 Metcalf)


$20,000,000

113,969

$175.49

Realty Income Corporation

Kimco Realty Corporation

Office 17 Rivergate Center

Downtown

$17,600,000

156,000

$112.82

Price Commercial Realty

DiCarlo Construction Company

INDUSTRIAL

GLADSTONE

Resource Real Estate

$31,700,000

MULTIFAMILY

8

10

Deutsche Bank RREEF

Johnson County

OFFICE

EXCELSIOR SPRINGS

KANSAS CITY


Abacus Capital Group

14 FedEx Ground

RETAIL


SELLER

1

$660,000,000 1,272,000

PLATTE CITY

11A 11B LENEXA

5

OVERLAND PARK 16

9

3

RAYTOWN

12

11C

7 OLATHE LEE’S SUMMIT GRANDVIEW STANLEY


15 14 PECULIAR

43

kansas city

construction market overview The Kansas City metro experienced record levels of development activity throughout 2016, and is expected to continue on a similar pace throughout 2017. Developers, driven by demand for modern space across all commercial sectors added 8.97 million SF of commercial product and delivered 3,046 multifamily units last year. The pipeline for future development activity remains full, as a result of

healthy commercial real estate fundamentals and positive economic growth throughout the metro area. Development activity has not been limited to certain pockets of the metro, reaching both fast growing suburban areas and creating new opportunities within the urban core, which speaks to the health of the Kansas City metro as a whole. Since 2013, the metro has enjoyed a development renaissance that continues to transform and modernize the landscape of Kansas City.

KC METRO CONSTRUCTION INVENTORY BY SQUARE FEET 8,000,000 INDUSTRIAL OFFICE RETAIL

7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0

ACTIVE CONSTRUCTION

PLANNED PROJECTS

DELIVERED IN 2016

Source: Colliers Research, CoStar, Developers, KC Business Journal, KC Star

Active Construction

Planned Projects

Delivered in 2016

Industrial

6,541,136

4,580,550

7,533,449

Office

1,573,830

4,383,000

413,000

Retail

676,112

3,114,547

1,031,950

45

Colliers International | Kansas City-Lawrence | Construction Overview

a new

urban core

suburban growth

The urban core within Kansas City is currently experiencing a tremendous revitalization and resurgence, as a result of several public and private ventures that dramatically transformed the Downtown scene over the past decade. Over the last decade, nearly $6 Billion has been invested in over 260 completed development projects that include The Sprint Center, The Kauffman Center for the Performing Arts, and The Power & Light District. Last year, the Downtown area completed another significant milestone with the delivery of the Kansas City streetcar, which will continue to drive future development and reshape the urban landscape. The Kansas City streetcar opened on May 6th, 2016. The 2.2-mile track serves the urban core with ten stops that connects the urban core of Kansas City between the River Market, Downtown, Crossroads district, Crown Center and Union Station. In the first six months after the grand opening, total ridership has surpassed 1.27 million rides, with a daily average exceeding 6,000. While rides are free, the economic impact of the project has been significant to the urban core, as developers have invested nearly $2 Billion along the streetcar route in terms of multifamily, hotel, mixed-use and office development since 2012, when the streetcar plan was announced. Current appetite for urban living has generated increased demand for residential units within the Downtown area. The timing of the streetcar delivery coincides with a growing demand by a younger generation seeking space within the Kansas City urban core. As more individuals seek live/ work/play options, the Downtown development scene has exploded over the past couple of years. As a result of new amenities and retail options in the immediate area, multifamily occupancy levels constantly remain at 97% or higher, which continues to drive both redevelopment opportunities and new multifamily development to the area. Several multifamily projects were completed throughout 2016, which included the Power & Light Building, 1914 Main, Argyle on 12th, along with Apex and Summit on Quality Hill developments nearing completion. Downtown construction has not been limited to multifamily development, however, based on heavy demand for office space in the Crossroads, the historic Corrigan Building is currently being redeveloped into a $42 Million mixed-use project known as Corrigan Station. The project will add over 132,000 SF of first generation office inventory, 12,000 SF of retail and a 247-car garage along 19th between Walnut and Main. The Crossroads district, completed a new $46 Million hotel complex that opened in June 2016. The Courtyard Marriott/Residence Inn developed by Chartwell Hospitality added 257 rooms to the Downtown area. Additional hotels are in the development pipeline, while the 115-room Hilton Home2 Suites located at 20th and Main has started construction. In early 2017, the much anticipated

convention center hotel is expected to break ground. The plan calls for a $300 Million, 800-room Hyatt. The hotel will be located at 16th and Wyandotte Street, directly across from the Grand Ballroom at the Kansas City Convention Center.

1914 MAIN

APEX ON QUALITY HILL

While the urban core continues to concentrate on redevelopment activity, the suburban submarkets simply continue to add impressive amounts of new construction to the Kansas City inventory. Fast growing suburban areas such as South Johnson County, the Northland, Lee’s Summit, and Wyandotte County near the Kansas Speedway all continue to add multifamily and retail development to keep up with growing population demands. Commercial activity was especially strong in Lee’s Summit in 2016. The total amount of commercial development for Lee’s Summit last year surpassed the combined total of the previous four years for the city. New development includes Cerner investing $500 Million in a new data center at the Summit Technology Campus. Retail developments include Summit Fair and Summit Orchards, along with a $50 Million, Missouri Innovation Campus, while Paragon Star will add a youth sports complex for East Jackson County.

MISSOURI INNOVATION CAMPUS

HYATT CONVENTION CENTER HOTEL

BLUHAWK

Wyandotte County, near the Legends, continues to grow, as the American Royal announced plans for a $160 Million project that will consist of two arenas and a 300,000 SF exhibition space and education center. The announcement adds to a growing list of recent commercial development in the area that includes the new $30 Million, 100,000 SF headquarters office building for Dairy Farmers of America, Sporting KC’s Children’s Mercy Park, Cerner’s Continuous Campus, along with new hotel and multifamily activity. Johnson County continues to experience a tremendous amount of multifamily and retail development to cater to the strong demographics of the submarket. In Overland Park, BluHawk continues its initial phase of construction, while development activity surrounding Lenexa City Center remains strong. Sonoma Plaza, a new $220 Million development located at 87th Street and I-435 near Lenexa City Center, will add apartments and up to 175,000 SF of retail and commercial space in the near future. From an industrial standpoint, a significant amount of current construction remains focused around intermodal facilities, especially near LPKC and the Lone Elm corridor. Last year, nearly 5 million SF of industrial spec construction was delivered in Johnson County alone, with another strong pipeline projected for the upcoming year.

AMERICAN ROYAL

DAIRY FARMERS OF AMERICA

AMAZON - LPKC

47

active construction

in the kansas city metro area

KEARNEY

PROPERTY

1

Cerner Innovations Campus Phase I

805,000

2

Plexpod - Westport

166,650

3

Corrigan Station

160,000

4

Nall Corporate Center II

150,000

5

Missouri Innovation Campus

140,000

6

Dairy Farmers of America

100,000

7

6650 W 110th

77,000

industrial

#

SF

SF

multifamily

office


#

PROPERTY

26

Union Berkley Riverfront Park

410

27

Waterside Residences on Quivira

380

28

Commerce Tower

355

29

The Royale at City Place

336

30

Kinsley Forest Apartments

328

31

Summit Square

320

32

Two Light Apartments

296

33

Forest Avenue

292

34

Altitude 970

291

35

The Promontory

290

PROPERTY

8

Inland Port XXXIII

927,100

36

Meadowbrook

280

9

Amazon Distribution Facility

865,000

37

Second and Delaware

276

10

Central Industrial Park

840,000

38

Metcalf Village Apartments

270

11

Inland Port VIII

783,000

39

East 9 at Pickwick Plaza

260

12

CVS Health

760,000

40

Summit on Quality Hill

256

13

Lenexa Logistics Centre North Building 2

635,800

41

Crossroads Westside

221

14

Sioux Chief HQ Facility

596,000

42

Avenue 80

218

43

51Oak

151

44

Apex on Quality Hill

130

Three Trails Industrial Park Building 3

494,654

16

56 Commerce Center - Building B

205,114

17

Inland Port XL

158,750


UNITS

#

15

PLATTE CITY

KANSAS CITY


12 18

retail

PROPERTY

18

Costco - Northland

155,000

19

Edgewood Farms

191,000

20

BluHawk- Phase I

128,000

21


50,000

22

Whole Foods UMKC (Mixed-Use)

45,000

Dave & Buster’s

40,000

24

Ward Parkway Center Restaurant District

31,000

25

H&M

20,000

GLADSTONE

LIBERTY

34 30

CLAYCOMO

NORTH KANSAS CITY

10

KANSAS CITY, KANSAS

Downtown Airport

6

37 9

26

INDEPENDENCE

41 3

28 32 39 40 44

2 BLUE SPRINGS

43 22 KANSAS CITY SHAWNEE

42 24

35

SF

23

33

19

27

#

EXCELSIOR SPRINGS

OVERLAND PARK

LENEXA

13

15

36

RAYTOWN

1 5 31 21 25

7 4

29

OLATHE

23

16

STANLEY

20 8 11 17

LEE’S SUMMIT GRANDVIEW

38

14


PECULIAR

49

l aw r e n c e , k a n s a s

market overview The Lawrence commercial real estate market was arguably the strongest it has ever been in 2016. Based on solid market fundamentals and a positive economic outlook, Lawrence is well-positioned for another banner year in 2017. Vacancy rates reached historic lows in both the office and industrial sectors, while the retail sector, despite a slight uptick, remains well-below the national average. The recent completion of the South Lawrence Trafficway “SLT” continues to change the market dynamics, as businesses and retailers seek new opportunities along K-10 and South Iowa. As the business climate outlook remains strong and there is continued appetite for future development, the commercial real estate market in Lawrence is poised for another solid performance in 2017.

l aw r e n c e m a r k e t va c a n c y r at e s

INDUSTRIAL OFFICE RETAIL

16%

14% 12% 10% 8% 6% 4% 2% 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Source: Colliers Research

OFFICE

The Lawrence office market experienced a significant amount of activity throughout 2016. By year-end, the Lawrence vacancy rate reached a historic low of 7.5%, a solid decline from the 2015 year-end figure of 8.79%, and well-below the current national office average of 12.4%. The decline in vacancy can be attributed to two main factors; lack of new office construction and business growth. Many new businesses, including several new medical and financial practices, entered the marketplace in 2016 and absorbed much of the existing vacancy. Also, for the first time in years, multiple office users sought larger options in the 3,000-6,000 SF range, compared to most activity, which historically in Lawrence, has been below 2,500 SF or less. This is a positive sign that office users continue to expand and grow their business within the Lawrence market.

51

Colliers International | Kansas City-Lawrence | Lawrence Market Overview

For office spaces under 3,500 SF, demand outweighed the current supply of available space. As new construction projects remained virtually nonexistent, several companies elected to place expansions or moves on hold as they wait for larger or better quality space to become available. Much of the existing office inventory that does remain vacant will require renovation to be able to compete and make more appealing to users in today’s marketplace. Looking ahead to 2017, demand for Class A and Class B office space of all sizes will continue with stabilized lease rates. Based on elevated demand levels, lease rates will begin to creep upward and concessions will lessen, except for the outdated spaces needing renovation. Demand for space in the Downtown and the West submarkets remains particularly strong with limited inventory. As a result of the limited availability, the upcoming year is expected to see some new and redeveloped projects move forward to create more opportunity in these two submarkets. The two largest projects include the 2nd floor conversion of the former M & M Office Supply building into new office space, and the new owner-occupied project at 6th and Folks Road offering available spec space. With a limited number of quality space options, the new office construction is well-timed for the market.

JAYHAWK BOOKSTORE

HERE PROJECT

QUOTED OFFICE RATES

PER SQUARE FOOT

Class A Class B Class C Medical $6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

The overall vacancy rate will lower by an additional 23,000 SF in January as API Foils elected to lease a vacant space within the Peaslee Center. The Downtown area continues to report a vacancy rate over 15%, as a result of 85,000 SF of inventory between the former Allen Press properties and the former USA Today building sitting vacant. While these buildings are still classified as industrial product, redevelopment opportunities of those sites could potentially drop the Downtown industrial vacancy to zero in the near future. Out of the almost 300 industrial properties in Lawrence, many of which are multi-tenant buildings, there are only 14 total vacancies, some in freestanding buildings and some within multi-tenant properties. Discounting the Peaslee and Downtown properties, of those 14, none is larger than 20,000 SF, and three of those spaces have been sold or leased and will be occupied shortly after the first of the year. Removing the Peaslee space and the Downtown space would take the industrial vacancy rate to 1.1%. A vacancy rate that low will present challenges for both new prospects and existing businesses looking to expand within the Lawrence market. A lack of available inventory is creating the need for additional buildings and space opportunities to retain and attract new jobs throughout Douglas County. Two major Lawrence industrial employers with expansion needs had to meet those needs outside of the Lawrence market in 2016; one added space in Shawnee County and the other in Johnson County. These expansions totaled nearly 130,000 SF of industrial product, and based on average rents, those losses represented close to $3.5 Million of lease revenue and more than 60 jobs. The Lawrence market will continue to experience these kinds of revenue and job losses if we are not able to add new product to our industrial inventory. The companies that leased outside of Lawrence also had the flexibility to choose from new buildings that came with tax abatements, typically ranging between 100% for 5 years to 50% for 10 years. Neighboring communities successfully granted incentives to developers who invested private equity in speculative space that is attracting industrial users, and those communities are thus reaping the income benefits and job creation.

Looking ahead to the new year, based on the very limited amount of current inventory levels and lack of speculative development, the upcoming year may be relatively stagnant, as a result of limited viable options for industrial users to occupy within the market. Based on the limited options, there is a potential for developer interest in spec development, although the level of interest will depend on identifying appropriately priced and sized lots, and the level of willingness the Lawrence community has to incentivize industrial development.

ALLEN PRESS

GRANDSTAND GLASSWARE AND APPAREL


QUOTED INDUSTRIAL RATES Following a similar trajectory to the office market, the Lawrence industrial market recorded an all-time low vacancy rate of 2.3% by year-end 2016. The Lawrence vacancy rate dropped more than a full percentage point since year-end 2015, and remains well-below the national industrial average of 5.7%. The East 23rd submarket once again remained one of the most active areas of Lawrence throughout 2016. Vacancy within the submarket dropped 4 percentage points, from 6.8% at year-end 2015 to 2.8% by year-end 2016. Two major projects were a contributing factor to the submarket’s success. A division of ProSoCo purchased and occupied the 40,000 SF former Kinedyne building, while Grandstand Glassware and Apparel leased 73,000 SF within the Big Industrial building. The lease now boosts occupancy of that property to 100%.

INDUSTRIAL

PROSOCO

PER SQUARE FOOT (NNN)

Office Warehouse

Warehouse & Distribution $4.00

$5.00

$6.00

$7.00

$8.00


53

Colliers International | Kansas City-Lawrence | Lawrence Market Overview

units and plans of a grocery store coming in 2017. As a result of the completion of the SLT in November, retailers will continue to seek additional opportunities along South Iowa. Based on a normal rate of business turnover occurring, limited inventory will continue to drive rental rate increases, creating a very competitive retail market throughout the upcoming year. With consumers continuing to eat out more often, restaurants will continue to lead the Lawrence retail sector with fast casual, health-oriented and more unique, chef-driven dining concepts. These new concepts will create market corrections for restaurateurs who need to rebrand, create higher levels of service or deliver better products. As more concepts are introduced to Lawrence, chicken-based concepts will extend into 2017, with the expansion of Slim Chickens and Zaxby’s into the market as well. As retail is a dynamic segment in real estate, technology will continue to change shopping patterns and expectations of consumers, such as ordering ahead and paying online to pick up with no waiting, which may create demand for smaller restaurant and service locations.

SLIM CHICKEN’S

ZAXBY’S

The recent opening of the South Lawrence Trafficway will create new opportunities along K-10 and South Iowa.

QUOTED RETAIL RATES

PER SQUARE FOOT (NNN)

West 23rd University

The Lawrence retail market continues to remain healthy and the most active sector, despite a slight increase in vacancy rates relative to 2015. The Lawrence market closed 2016 with a 5.2% vacancy rate, compared to 4.3% at year-end 2015. The vacancy rate still remains below the national retail vacancy rate of 5.3%. A lack of available inventory limited retail expansion in the market to some degree, but also created quality redevelopment projects in the process. The Downtown vacancy rate remained virtually unchanged from 2015 to 2016, with an increase of only two basis points. Changes in the Downtown mix saw an increase in general merchandise leasing relative to previous years. The South Iowa submarket experienced a slight decrease in vacancy with the opening of Planet Fitness and some new retail additions within the Tower Plaza Shopping Center. Sixth and North continued to grow new retail opportunities with the additions of Spin! Pizza, Mid-American Credit Union, and Small Cakes. 2016 also proved to be the year of the chicken, with several new chicken restaurant concepts, such as Popeye’s and Raising Cane’s, entering the market, providing consumers with alternatives to burgers. Looking ahead to the upcoming year, Downtown Lawrence will continue to attract boutique shops, while national retailers will primarily seek space within the remaining Lawrence submarkets. Expect Downtown vacancy to decrease, despite an expanding footprint, with the addition of residential

South Iowa

RETAIL

North Lawrence East 23rd Downtown Alvamar & West 6th & North $5.00

PLANET FITNESS

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00


RAISING CANE’S

825 MASSACHUSETTS

525 WAKARUSA

55

lawrence

WILLIAMSTOWN


sales

N #

PROPERTY

TYPE

SF

1

1312 W 6th

Retail

2

3310 Clinton Parkway Court

3 4 5

BUYER

SELLER

19,905

6th & North

Thomas J. Dobski Trust

Anderson Enterprises

Office

6,932

West 23rd

Evans Acquisitions

Lawrence Internal Medicine Associates

1217 Biltmore

Office

7,711

Alvamar & West

Rooker Properties

KnowJack

2400 W 31st

Retail

7,280

South Iowa

JTR

William & Mary Beth Swenson

6th & North

Five for Five

545 Building Ventures George R. Learned Estate

545 Columbia

Office

10,784

401 Arkansas

Office

1,691

6th & North

7

701 Wakarusa

Retail

3,173

Alvamar & West

CFKS Investments

Auric Enterprises

Blue Cypress

Robert T. & Katharine J. McElroy

8

2412 Iowa

Office Retail

6,278 6,487

6th & North South Iowa

CFKS Investments

N 1800 Road 9

Peterson Road

GATEWAY

LEASED SF

1

2351 W 31st Street

Retail

2,859

2

734 Massachusetts

3

732 Massachusetts

4

910 E 29th

Retail

2,460

SUBMARKET

TENANT

TRANSACTION TYPE

South Iowa

Spring Creek Ventures

Direct Lease

Ad Astra Running

Direct Lease

Downtown

Retail

2,488

Downtown

Delaney & Leow

Direct Lease

Industrial

71,300

East 23rd

Grandstand Glassware & Apparel

Direct Lease

Alvamar & West

Multiple Tenants

Direct Lease

8

W 6th Street 7

5 7

3

Good Golly

8 6 1 6 W 6th Street

MONTEREY

W 9th Street SUNSET HILLS

Bob Billings Parkway

S La

Clinton Parkway

T ce en wr

leases

TYPE

d

N 1800 Road

r aﬃ

Kasold Drive

PROPERTY

oa

Lawrence Municipal Airport

5 #

gR

Iowa Street

9

4106 W 6th

Dia

2

LAWRENCE

E 19th Street

NORTH LAWRENCE

Massachusetts Street

6

Brett Stoppel and Holly Krebs

41

MIDLAND

E 1000 Road

SUBMARKET

19

3 2 BROOK CREEK

E 23th Street 9

cwa y

4

PRAIRIE PARK

4 1

N 1200 Road

1112 W 6th

Office

2,263

6th & North

Pelvic Health Specialists

Direct Lease

7

4205 W 6th

Office

1,510

Alvamar & West

Solomon and Associates

Direct Lease

8

346 Maine

Office

9,495 (Total)

6th & North

Multiple Tenants

Direct Lease

9

411 N Iowa

Office/ Industrial

5,630 (total)

6th & North

Multiple Tenants

Direct Lease

N 1000 Road

N 1000 Road

E 1900 Road

6

Haskell Road

Office

E 1300 Road

5020 Bob Billings

E 1000 Road

5

4,500 (Total)

SIBLEYVILLE

57

c o r p o r at e s e r v i c e s a n d

local departments The foundation of our service is the strength and depth of our specialists. Our clients can depend on our ability to draw on years of direct experience in the local market. Our professionals know their communities and the industry inside and out. Colliers International | Kansas City - Lawrence offers a comprehensive portfolio of real estate services to occupiers, owners and investors on a local, regional, national and international basis. A commercial real estate lease or sale is often a

Whether you are a local firm or a global organization, we PROVIDE

CREATIVE

SOLUTIONS for all your real estate needs.

landmark event for a company—representing a new office, new facility or new opportunity to generate business. We don’t approach these landmarks simply as transactions; we see them as opportunities to further advance our clients’ overall business goals, whether it’s their first time dealing with a property asset or the management of a large portfolio.

OUR LOCAL SERVICES INCLUDE: >> Brokerage Sales and Leasing

>> Development Services

>> Tenant / Buyer Representation

>> Receivership Services

>> Landlord / Seller Representation

>> Project Management

>> Property Management Services

>> Move Management

>> Corporate Services

>> Research Services

>> Investment Services

>> Marketing Services

>> Construction Services

UNION STATION

59

Colliers International | Kansas City-Lawrence | Corporate Services and Local Departments

brokerage

sales and leasing

>> Facility relocations and acquisitions We recognize that exceptional results require more than just transactional expertise. That’s why we’ve >> Build-to-suit built an integrated platform of complimentary services >> Lease renegotiations and renewals to achieve your business goals. >> Dispositions and subleases

Our teams take into consideration your complete spectrum of requirements and connect you with strong, accountable specialists who can maximize the value of your property assets. In addition to the comprehensive services we provide to our office, industrial, retail and investment clients, we also offer customized solutions for a wide range of niche industries.

>> Space expansion and consolidation >> In-depth location analysis

corporate

services

When it comes to real estate management, we adhere to two key operating philosophies: putting our clients’ interests first and providing value-added expertise. We care to understand your ownership goals, and your short- and long-term plans for the property. Our team connects with specialists throughout our enterprise to build a management strategy to directly address your needs.

>> Supplier / employee mapping >> Business unit analysis / workplace design >> Employee surveys >> Lease and operating cost audits >> Construction and maintenance supervision >> Asset resolution

We EXAMINE THE COMPLETE PICTURE to ensure the project best suits the client’s needs and goals.

property management

>> Sustainable building practices

Colliers International | Kansas City - Lawrence’s approach to institutional asset and property management is unique in our industry. We have identified the subtle drivers that enable us to manage properties at a higher standard and maximize asset value. While most firms just quantify asset value on a balance sheet, we take into account factors such as tenant loyalty, the relationship and regular contact between managers and tenants, top tenant service requests and new opportunities for mutually beneficial tenant collaboration. These factors are proven to add asset value over time by reducing turnover and operational costs and improving a building’s reputation in the market. We empower our teams to create memorable tenant experiences that ultimately benefit the owner’s and the building’s bottom line. Our full-service team of professionals assigned to a client’s property typically includes a property manager, a credit manager, a manager of maintenance services and a service technician or building engineer.

>> Property management >> Building operations and maintenance >> Facilities management >> Lease administration >> Property accounting and financial reporting >> Contract management and lease administration >> Product marketing and leasing >> Project move management >> Construction management

services

>> Integrated client services >> Transaction management >> Project management >> Lease administration >> Facilities management >> Corporate finance >> Advisory services:

Our professionals specialize in understanding your unique needs as an extension of your corporate real estate organization, or as a total outsourced solution. You have the benefit of our knowledge and commitment to provide you with exceptional service, whether it’s to compliment your core business strategy, bring expertise in your industry, or assist with a new market or special asset type.

>> Workplace consulting >> Sustainability consulting >> Corporate real estate strategy >> Portfolio optimization >> Merger and acquisition support and consulting

PROPERTY MANAGEMENT TEAM

61


investment

services

move

management

Colliers International | Kansas City - Lawrence’s elite team of institutional investment sales specialists sees beyond the bricks and mortar to analyze how property acquisition, ownership and disposition can accelerate the success of your financial portfolio.

Colliers International | Kansas City - Lawrence is able to provide transition and move management services. These services allow you to focus on your core business while we take care of your relocation - not only saving you time and money, but also eliminate stress and minimizing downtime.

>> Relocation management

We work with national and global institutions and investors to identify, evaluate and select assets that best compliment their portfolio, property performance, income goals, and risk profile. This often requires complex analysis and innovative thinking to provide a defensible, well-researched strategy for asset acquisition.

Our successful team of move managers work for you. Whether you’re moving across the street or across town, we can organize and execute your workplace transition. We have experienced knowledge in the moving industry, as well as problem solving and management skills.

>> Reorganization

When the time is right for disposition, we provide a clear competitive analysis and transaction history of comparable assets to maximize the property’s momentum in the market. Through our best-in-class marketing technology and our creative approach, we drive strong investor interest in properties. At the same time, we work with you to preserve confidentiality, minimize disruption to tenants and prevent surprises in the due diligence process. KANSAS CITY STREETCAR

services

Colliers International | Kansas City Lawrence maintains a construction department of highly qualified tenant finish experts. This service is utilized on a number of the buildings we currently lease or manage, as well as on a third-party basis. Since 1986, the firm has completed more than $114.5 Million of work and 6.1 million SF of commercial space. Essentially, the firm acts as general contractor to perform the tenant finish work. We coordinate architectural drawings and will bid each subcontract component of the tenant finish plan to be constructed. Several benefits occur by using in-house tenant finish contracting.

development services

Since 1984, the firm has developed more than 1.8 million SF of office, industrial, and retail space in the Kansas City area. By adhering to strict principles in design, construction, execution, and a well-orchestrated series of checks and balances, our goal is to ensure each project is completed on time and well within budget. We also work with owners on rehabilitating existing projects to improve their potential for return. We offer our clients a complete range of services, including market analysis, site selection, feasibility study, financing alternatives, project costs, architectural services, site inspections, and construction management.

>> Technology transition >> Communications management >> Consolidation management >> Physical move oversight

Our move management team members handle the organization, communication with, and delivery of movers, furniture installers, electricians, technology and communication specialists.

project

management

>> Site study and selection

construction

>> Furniture planning

>> Planning and design oversight >> Contractor selection >> Price and contract negotiations >> Building construction management >> Quality control >> Cost management

Colliers International | Kansas City - Lawrence provides a single point of accountability and leadership in every project, large and small, and a culture that takes initiative and embraces the responsibility to get it done right, on time and on budget. Our accomplished team of engineers, architects, and cost managers are working for you. Whether you are planning a new office, constructing an industrial project, renovating an outdated space or retrofitting a historic property, our well-rounded team of experts can fit your needs. We take the responsibility for managing your entire project from conception to completion, and we are committed to keeping your project on-time and under budget. Our project managers, developers, and facility operators understand the significant depth each project entails. Our team has what it takes to help guide you through all of the critical decisions along the way. We work with you to integrate the best architects, contractors, subcontractors and suppliers to accomplish your goals and surpass your expectations.

63


receivership

colliers international k a n s a s c i t y a n d l aw r e n c e

services

The time period before a foreclosure is finalized through an action of the courts which can drastically affect the financial viability of a commercial property.

>> Oversight of leasing and management >> Ensure that monthly accounting of all income and expense items takes place

OFFICE SERVICES ADVISORS

>> Maintain all property records, including books, leases, and bank accounts

We have the resources necessary to act as a court-appointed >> Open and maintain new bank accounts receiver in order to help protect the property’s value during >> Execute leases and vendor contracts this time frame. Whether the need is for receivership, >> Report to lender (plaintiff) and the court on a property management, leasing, disposition, or accounting, monthly basis regarding all activity Colliers International has the capacity to perform. >> Secure the sale of the property

research and marketing

services

Knowledge is a critical part of the service we offer our clients, and research is a key component of this knowledge.

>> Quarterly market trends and annual report >> Economic overviews

Our research team works in partnership with our service professionals to provide clients with the market intelligence required to support practical business decisions and provide multi-level support across all property types.

>> Sale and lease comparable reports

Our expansive databases house detailed information on properties nationwide and globally, including historical supply, demand, and absorption data, and transaction comparables. From this data, our research department produces quarterly reports on products and market conditions. We combine this information with forward-thinking expertise to deliver more than what is readily available in terms of market data, including custom reports based on your specific needs. This approach helps you respond to current conditions and plan for the future.

>> Demographic reports

Colliers International | Kansas City - Lawrence offers comprehensive marketing services to our clients.

Patrick T. Coppinger

Rollie D. Fors

[email protected]

[email protected]

+1 816 556 1110

+1 816 556 1128

Jim A. Gates

Phillip L. James

[email protected]

[email protected]

+1 816 556 1138

+1 816 556 1125

Bryan W. Johnson

Reagan M. O’Toole

[email protected]

[email protected]

+1 816 556 1140

+1 816 556 1120

Grover “Ross” Simpson

Matthew V. Stover

>> Data integrity on property databases >> Signage >> Ad-Hoc research information >> Property research information

[email protected]

+1 816 556 1157

[email protected]

+1 816 556 1116

>> Local market deal tracking >> Direct target mail campaigns >> Brochures and flyers >> Advertising campaigns >> Public relations efforts

From conceptualization to design to publishing, we do every step in-house to maximize efficiency, minimize costs, and control every message sent to the public. We develop entire strategic marketing campaigns for properties we represent. Our marketing department offers a wide range of value-add products and services related to property marketing.

>> Graphic design and layout

We pride ourselves on looking beyond the obvious to develop a unique, creative marketing strategy that speaks to the benefits of your specific asset and its value.

>> Brokerage community email blasts

Sven S. Sykes [email protected]

+1 816 556 1177

Adam L. Tilton [email protected]

+1 816 556 1149

>> Aerial overlay creation >> Special events >> Open houses >> Event planning

Thomas I. Volini

Evan J. Warwick

[email protected]

[email protected]

+1 816 556 1106

+1 816 556 1137

Click on photos to view professional profiles.

65


INDUSTRIAL SERVICES ADVISORS

RETAIL SERVICES ADVISORS

Mark C. Arensberg

Anita P. Bates

[email protected]

[email protected]

+1 816 556 1105

+1 816 556 1107

+1 816 556 1123

Douglas M. Hedrick

John W. Stafford

Jeff R. Berg

Daniel J. Bourk

[email protected]

[email protected]

[email protected]

[email protected]

+1 816 556 1136

+1 816 556 1184

+1 816 556 1181

+1 816 556 1126

Coleby L. Henzlik

Kimberly D. Tranbarger

[email protected]

[email protected]

+1 816 556 1180

+1 816 556 1183

D. Edward Elder

Thomas D. Haverty

[email protected]

[email protected]

+1 816 556 1135

Thomas J. Kennedy [email protected]

+1 816 556 1118

Jerry M. White

LAWRENCE SERVICES ADVISORS

Marilyn S. Bittenbender

Kirsten L. Flory

[email protected]

[email protected]

+1 785 865 5100

+1 785 865 5100

Allison Vance Moore [email protected]

+1 785 865 5100

[email protected]

+1 816 556 1158

COLUMBIA, MO SERVICES ADVISOR

Jay R. Lindner [email protected]

+1 573 446 5500


67


INVESTMENT SERVICES ADVISORS

Robert S. Galamba

Rodney L. Jones

[email protected]

[email protected]

+1 816 556 1152

+1 816 556 1129

Drew M. Quinn

Gabe A. Tovar

[email protected]

+1 816 556 1108

[email protected]

+1 816 556 1161

HEALTHCARE SERVICES ADVISOR

Colleen McPherson-Roble [email protected]

+1 816 556 1132

CONSTRUCTION MANAGEMENT SERVICES ADVISOR

Michael J. Yeggy [email protected]

Wayne A. Greenlee

+1 816 556 1148

[email protected]

+1 816 556 1139

DEVELOPMENT SERVICES ADVISORS FINANCE AND ADMINISTRATION

Ted A. Murray

Douglas E. Weltner

[email protected]

[email protected]

+1 816 556 1114

+1 816 556 1131

Patrick S. May

Judith A. Peery

[email protected]

[email protected]

+1 816 556 1119

+1 816 556 1115

Stephanie L. King [email protected]

+1 816 556 1153


69


PROPERTY MANAGEMENT

Steve L. Batterton

Michelle M. Corum

[email protected]

[email protected]

+1 816 556 1156

+1 816 556 1109

Roxane Curtis

Thomas F. Garvey

[email protected]

[email protected]

+1 816 556 1178

+1 816 556 1151

Christie W. Montague

Kaci Nowak

[email protected]

[email protected]

+1 816 556 1141

+1 816 556 1178

T. Scott Padon

Caitlin M. Patrick

[email protected]

RESEARCH AND MARKETING

Martin C. Maguire

Mary B. Leek

[email protected] +1 816 556 1102


Michelle S. Palmer

Abby L. Eickhorst [email protected] +1 816 556 1159


Allison N. Dike [email protected] +1 816 556 1143

[email protected]

+1 816 556 1150

+1 816 556 1185

Paul R. Roebuck

Becky D. Sims

[email protected]

[email protected]

+1 816 561 6161

+1 816 753 5576

James D. Unruh

Janet L. Woodward

[email protected]

[email protected]

+1 816 556 1121

+1 816 556 1155

COLLIERS INTERNATIONAL | KANSAS CITY

COLLIERS INTERNATIONAL | LAWRENCE

4520 Main Street, Suite 1000 Kansas City, Missouri 64111

805 New Hampshire, Suite C Lawrence, Kansas 66044

main +1 816 531 5303

main +1 785 865 5100

fax

fax

+1 816 531 5409

+1 785 865 3842

www.colliers.com This 2017 Commercial Real Estate Forecast is a report published by Colliers International | Kansas City Research and Marketing Services. To obtain other publications, contact Martin Maguire at +1 816 556 1102 or [email protected]. Some of the data and photography in this report has been gathered from third-party sources and has not been independently verified by Colliers International | Kansas City. Colliers International makes no warranties or representations to the completeness or accuracy thereof. © 2017 Colliers International | Kansas City

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colliers international