A year of change brings reasons for hope.
By Dennis Boone
As we look ahead to the dawn of 2017 and what the turning of that calendar page might mean for business, there’s something different in the air. It smells like . . . optimism. Whether that’s grounded in election outcomes that almost no one anticipated back on Jan. 1, or in a long boom in construction and development, or in the equities’ markets latest spin on the concept of a Santa Claus rally, there’s a growing sense that things might be changing for the better with the national and regional business climates.
For this region, 2016 was a year of some notable achievements: Regardless of where you stand on a streetcar system as a means of public conveyance, we are now numbered among the cities that have one, even if it is just a couple of miles long. As you’ll also see in the following pages, some major business story lines took new directions with the sale of companies that have made a global impact, like Bats Global Trading; regional impact, like Great Plains Energy’s intended buyout of Westar Energy; sector impact like EyeVerify’s potential nine-figure acquisition by a Chinese company and the continuing explosion of logistics and distribution assets regionally; and quality-of-life impact like the continuing boom in luxury apartment construction in this market.
All are markers of things moving forward, in generally positive directions. Perhaps that’s the source of that growing optimism. If so, let’s hope for a lot more of it in the new year to come.
4th: Highwoods Properties announces that it will sell its stake in the iconic Country Club Plaza for $660 million to a partnership involving two real estate investment trusts. With 18 properties, a 95 percent leasing rate and 804,000 square feet of retail space, the Plaza is the nation’s oldest retail center geared to attract vehicle traffic. It also has roughly 468,000 square feet of
11th: Just a week after Burns & McDonnell announces that Greg Graves will retire as chairman and CEO at the end of 2016, employees at the engineering and design firm learn that their new boss will be Ray Kowalik, a 29-year veteran of the company. He’ll take on those duties next month, when he becomes the seventh CEO in 118-years.
1st: Financial Engines, the nation’s largest independent investment adviser, announces that it has completed its acquisition of The Mutual Fund Store for $560 million. Founded by Adam Bold in 1996, TMFS was a groundbreaking effort that democratized investing by serving clients well below the high-
net-worth levels of individuals served by traditional wealth managers.
4th: After years of battling bottom-line losses, YRC Worldwide announces that its turn-around efforts have yielded a profit—$100,000—for 2015, on revenues of more than $4.8 billion. With roughly 1,000 employees in this region and more than 32,000 overall, YRC is the third-largest publicly held company headquartered in the region.
18th: The biggest land development project in Missouri history advances with topping out of the first two buildings at the Cerner Innovation Campus in south Kansas City. The former Bannister Mall site is undergoing a $4.4 billion transformation that is expected to yield nearly 10,000 jobs at the healthcare IT giant when the campus build-out is completed in 2025.
24th: Netsmart Technologies, a behavioral healthcare IT leader and one of the region’s 100 biggest private companies, announces it will be sold for $950 million to a joint venture between GI Partners of San Francisco and Allscripts Healthcare Solutions of Chicago. The sale allows it to expand into other healthcare venues, including home health and hospice care, and remain based in Overland Park.
5th: By an overwhelming majority of more than 3-to-1, voters in Kansas City give additional life to the city’s 1 percent earnings tax, nearly matching the 2011 margin that introduced a system by which residents must reauthorize it every five years.
29th: Kansas City’s Husch Blackwell, a top five law firm in this market, announces that it will merge with Whyte Hirschboeck Dudek, a litigation and business-law specialist based in Milwaukee. The merger would be effective July 1, creating a firm with more than 700 lawyers and 1500 employees in 19 cities, and revenues of nearly $350 million.
25th: After Overland Park shoots down a $320 million plan to revitalize what was once the county’s commercial heartbeat, LANE4 Property Group and the Kroenke Group submit a scaled-down $80 million plan for the Metcalf South mall site. It would include a Lowe’s home-improvement store and other small retail sites, on the southeast corner of 95th Street and Metcalf Avenue, without addressing the northeast corner that was part of the original concept.
27th: A struggling WireCo WorldGroup, one of the region’s largest private companies, gets a financial lifeline as Canada’s Onex Corp. announces it will take a majority stake while recapitalizing the Prairie Village company. WireCo makes steel wire rope, synthetic rope, specialty wire and engineered products for clients worldwide.
11th: Sporting Club, U.S. Soccer and Children’s Mercy break ground on the National Training and Coaching Development Center in Wyandotte County, the latest addition to the burgeoning Village West entertainment district. Once in place, backers say, Kansas City, Kan., will offer a world-class venue for development that will develop players, coaches, and referees in youth, interscholastic and competitive soccer.
15th: Seven local banks operating that had collaborated under the BancAbility branding initiative announced that they’re seek-
ing Federal Deposit Insurance Corp. approval to merge into one entity,
Security Bank of Kansas City. The union of Security with Valley View State Bank, Mission Bank and other community banks in the region would yield a
Top 10 bank by market share, with $3.2 billion in assets.
17th: After a remarkable 10 years of on-again, off-again plans for redevelopment of the Mission Mall site, the City Council rejects the latest proposal that would have made Walmart an anchor tenant—a decision that prompted the world’s largest retailer to cancel its plans to be part of the project. Developers, however, vow to press forward with plans to make the Mission Gateway project a reality.
29th: Garmin International breaks ground on a $200 million expansion at its Olathe headquarters campus, a project designed to position the technology company as a leading innovator well into the future. The two-phase project includes a 720,000-square-foot manufacturing and distribution center, which will be completed in 2018. The second phase entails renovation of the existing Garmin warehouse and manufacturing space into a state-of-the-art research and development facility and supporting office space, and is set to wrap up in 2020.
7th: The University of Kansas Hospital and Hays Medical Center jointly announce their intent to create a new partnership with a goal of expanding an improving patient care across the state. Bob Page, in Kansas City, and John Jeter in Hays will retain their leadership roles, and the Kansas City hospital will fill two seats on the board of the facility in Hays.
23rd: The University of Kansas announces that Chancellor Bernadette Gray-Little, the school’s 17th chancellor, will step down after the current school year. She was the first female and first African American chancellor in KU’s history.
27th: Epiq Systems, one of the region’s largest public companies, anno-unces that its shareholders have approved an acquisition by OMERS Private Equity. Based in Kansas City, Kan., the company provides integrated technology and services for the legal profession.
27th: Four years after achieving national cancer center status, The University of Kansas Cancer Center files its application with the National Cancer Institute to reach the next level— comprehensive cancer center. Officials say that upgraded status could have a $2.6 billion economic impact on the region and create 3,500 jobs at an average wage of $68,000.
26th: The American Royal reaches an agreement with the Unified Government of Wyandotte County and Kansas City, Kan., to bring its equestrian shows, livestock show, rodeos, agricultural education programs—and its famous World Series of Barbecue—to a new location and a new facility in Wyandotte County. The new complex—expected to cost $160 million—will in-clude arena and exhibit space, a new agriculture education center and a museum.
31st: Warren Buffet’s Berkshire Hathaway announces that one of its subsidiaries will acquire Summit Custom Homes, Kansas City’s largest home builder. The acquisition by the Clayton Home-Building Group included approximately 1,200 lots in the Kansas City metropolitan area. Summit, with more than $86 million in 2015 revenue, has put up more than 1,200 homes since its 2002 founding, and won more than 100 awards for construction excellence.
8th: While Missouri enhances its red-state credentials with a GOP sweep of every statewide office on the ballot, the tables seem to be turning to the west. In Kansas, a decade-long buildup in conservative legislative might is being peeled back; following the ouster of about a dozen conservative incumbents in the summer’s primaries, voters add to Democratic totals in both the House and Senate. That leaves the so-called moderates in the role of power broker, capable of working either to the right or left.
9th: Sprint Corp. confirms that it is considering selling some of the buildings on its Overland Park world headquarters campus, space that is essentially unused after years of downsizing. With roughly 900 layoffs since the start of the year, Sprint is down to about 6,000 employees on a campus designed to accommodate 14,500. The staff reductions dropped the company from the
No. 1 spot as the region’s top private employer, a title now held by Cerner Corp.
15th: The Federal Reserve Board approves BOK Financial’s $102.5 million acquisition of Missouri Bank & Trust Co., a deal announced in December 2015. The merger will give the Kansas City region a 15th bank with at least $1 billion in assets. Missouri Bank CEO Grant Burcham became chairman of Bank of Kansas City, a BOK subsidiary, as part of the deal, which ranked among the nation’s biggest bank mergers of the year.
30th: One of the largest development projects of the year breaks ground in Lee’s Summit: The $400 million Paragon Star project, which will blend residential and recreational venues with entertainment, soccer and other athletic fields near Interstate 470 and View High Drive. The project includes 220 multifamily units, a 90,000 square-foot office building and a 120-unit hotel, trails and parks.
1st: Five years ahead of schedule, the Unified Government of Wyandotte County and Kansas City, Kan., makes its final payment on the STAR Bonds used to build the Village West retail and entertainment district a decade ago. Freed from those payments, officials say they expect to reap $12 million in additional sales tax revenue for the county each year, while the state of Kansas earns $40 million a year in sales tax from Village West, home to 116 businesses and 11,000 jobs.
HERE COME THE OUTSIDERS: Many in the media ascribe the electorate’s mood in 2016 to a collective sense of anger; perhaps a more accurate reading might be that of a parent demonstrating to a recalcitrant teenager that enough is, frankly, enough.We saw it on the national level with the ultimate political outsider, Donald Trump, crashing the Beltway party without ever having served a day in public office, then pounding out a lineup of pro-business, pro-growth Cabinet appointments. At first blush, conservative pundits say, the picks appear to set the stage for shattering an eight-year stretch of economic stagnation that most Americans have never witnessed. We saw the same kind of electoral admonishment delivered in Missouri, where Eric Greitens leveraged his criticism of the way things have been in the state to defeat a career-long politician, Attorney General Chris Koster, in the governor’s race. (Noteworthy: Both Greitens and U.S. Sen. Roy Blunt, who turned back a fierce challenge by Democratic Secretary of State Jason Kander, benefitted mightily from a Republican turnout that yielded a 19-point margin for Donald Trump in the presidential race.) We even saw the uprising cross ideological boundaries in deeply red Kansas, where Democrats made up some of the ground lost over the past decade in the Legislature and moderate Republicans unseated harder-line conservatives to rebalance the statehouse.
Will these new leaders succeed where their predecessors, in voters’ eyes, had failed? The vote tallies in 2018 and 2020 will answer that question.
BATS TAKES WING—TO CHICAGO: The entrepreneurial success and growth of Cerner Corp. has long been a source of hometown pride, but no company in the past decade leveraged innovative technology to disrupt a market nearly on the scale of Bats Global Markets, the Lenexa-based equities-trading platform and options exchange that launched in 2005. In less than 10 years, it supplanted NASDAQ as the nation’s second-largest equities platform and became the largest in Europe on the way from zero-to-$1.5 billion in revenue growth. In January, Bats successfully executed an initial public offering that made it a pubic company. But fast-growing innovators in that space are ripe for acquisition, and as Kansas City has seen so often, success won’t be limited by either geography or civic pride. In September, the Chicago Board Options Exchange announced that it would acquire Bats for a stunning $3.2 billion. The headquarters may be moving, but Bats insists that it will retain a presence here because the human capital it gathered in this region will remain foundational to the success of those combined entities.
A HIGH-VOLTAGE MERGER: On May 31, Great Plains Energy, parent of Kansas City Power & Light, announced its intent to acquire Topeka-based Westar Energy in a $12.2 billion deal. If approved by regulators, the union would create a $5 billion company with 1.5 million customers in Kansas and Missouri and 13,000 megawatts of generation capacity. The question now is, how big is the “if”? A lawsuit brought by Westar shareholders opposed to the deal was dismissed in September, and days later, shareholders of both companies signed off on the deal. But the Missouri Public Service Commission questioned the economic benefit to customers in the state, prompting Great Plains to guarantee that the deal would not increase costs or impair service for customers. Kansas regulators, too, are challenging the Westar valuation and the proposed cost savings. Still assessing: the Federal Energy Regulatory Commission and Nuclear Regulatory Commission, but company officials still expect the deal to close in April.
DOWNTOWN LIVING: Just months after the doors open on the market-making One Light luxury apartment tower, ground-breaking ceremonies are held for Downtown’s next high-rise residential building, Two Light, a $105 million project that will add nearly 300 luxury units to the mix of offerings adjacent to the Power & Light District. The Cordish Co.’s strategy, based on the depth of waiting lists for apartments, calls for as many as four towers of more than 20 stories each, totaling roughly 1,200 units. The Cordish projects are rising against a backdrop of a Downtown aching for more residential options, and against a broader boom in luxury-apartment construction that is about to enter its sixth year. For at least two of those years, those in the development sector have questioned how long that boom can continue, but with Millennials still reluctant to dive headlong into home ownership, the prospects seem good to see Three Light and Four Light become realities in the coming years.
THE DOWNTOWN: On May 6, the long-awaited and much-debated Downtown streetcar debuts in Kansas City, with considerable appeal to riders in the early going. The 2.2-mile starter line—the public has already voted against expanding it—is touted by transit officials as a key to continuing redevelopment. They say it logged its 1 millionth rider within six months, arguing in favor or an extension to near UMKC and the Plaza, at a cost of $270 million.”But despite an electorate already on the record with its opposition, Mayor Sly James has consistently stated that a 2-mile line never made sense, and momentum is building for another vote. In October, a judge cleared the way for another three-part vote to set up a transportation district, staff its board and levy taxes for an expanded line that backers hope to have in service by 2022.
FLEXING TECH-INNOVATION MUSCLE: In September 2016, Kansas City-based EyeVerify, the biometrics startup founded by entrepreneur Toby Rush, confirmed that it would be purchased by Ant Financial, a subsidiary of China’s Alibaba Group Holding, Ltd. The company went for an undisclosed price, but one that some start-up experts say could be worth $70-$100 million. EyeVerify developed a blood-vessel-based biometric technology for smart devices, creating what it calls “a password-free mobile experience” for consumers. Rush is one of many who argue that for the regional economy to grow in new directions, it must first focus on creating an entrepreneurial ecosystem that would nurture such growth. Evidence of that, beyond the EyeVerify sale, came when the city was awarded a prestigious Tech Week for the second straight year, an event that brought together thousands of tech entrepreneurs, venture capitalists and other potential funders, and public officials capable of crafting policies that can help lay the foundation for that startup infrastructure.
DISTRIBUTION CENTRAL: In 2016, online-shopping Amazon.com voted with its infrastructure dollars—twice—to reaffirm the Kansas City region’s status as the nation’s premier center for logistics and distribution. In September, it broke ground in Wyandotte County on a huge fulfillment center—855,000 square feet—its fifth such center in Kansas. Once open, it’s expected to employ 1,500 people. That’s in addition to roughly 1,000 who will work for the company in Johnson County, where Amazon committed to operating in a nearly 900,000-square-foot facility near BNSF Railroad’s Logistics Park Kansas City. Moves like those, supplemented with more than 5 million square feet of industrial space added to the market in 2016, are fueling a warehousing-distribution boom unmatched in the region’s history.