What was the biggest business deal here in 2006?
The answer depends on who you ask.

That is more than a way of dodging decision, however. Several major deals impacting the area, such as the $17 billion sale of Harrah’s Casinos, are likely to make few ripples here. On the other hand, anything done by Sprint Nextel is apt to have local impact, including their split of Embarq Corp. as a new local telephone operation.

Completed in early 2006, the Embarq separation was designed to allow Sprint Nextel to better focus on the highly competitive wireless and Internet market, and was the largest move following the $36-million Sprint-Nextel merger of 2005.

A surprising number of the year’s biggest deals involved public-private partnerships and even municipal initiatives. One of the most visible was approval by Jackson County voters of a 3/8th-cent sales tax in April to fund the bulk of $575 million in improvements for Truman Sports Complex. The state of Missouri added $50 million in tax credits, while the Chiefs will pay $75 million and the Royals $25 million. The costs of parking will increase to help create a fund to maintain Kauffman and Arrowhead stadiums.

The significance of the approval was similar to several deals in other ways: it’s full impact is still pending. Although it clears the way to retain the Chiefs and Royals in facilities receiving much needed improvement, it is too early to see whether this action will provide the catalyst for economic development around the Truman Sports Complex or other, longer-range results.

Two other votes represent similar situations. The November stem cell vote by Missourians and Kansas City’s surprising light rail approval could be major steps…
or not. Both have been challenged, either overtly in the case of the stem cell amendment, or less directly in the case of light rail. But even if both proceed, their impact is still questionable or very long-term.

Yet both votes have the potential for significant economic impact. The Amendment 2 stem cell vote at least on paper clears the way for huge investment in the life sciences, including a second center discussed by the Stowers Institute and myriad smaller research and technological facilities.

The impact of light rail may be more speculative, but it could quickly test whether regional employers have been serious with their frequent calls for better mass transit. More immediately, experience in other communities would indicate that property surrounding a route may see development even before the first rail is laid.
The possible affiliation between the University of Kansas Medical Center and several Missouri health systems represented another health issue. The alliance would involve Saint Luke’s Health System and Children’s Mercy Hospitals focusing on research and academic services. Officials in Kansas, especially, have been cool to the proposal, noting fears that the Medical Center could be overburdened with low-profit services.

Business Bent

More traditional business deals have not been lacking. In addition to projects such as Sprint Nextel, one of the more significant was the sale of the area’s premiere office park, Corporate Woods. That deal, which didn’t close until December, 2006, includes 2.2 million square feet of office space purchased by Stoltz Real Estate Partners and Urdang Capital Management Inc., both of suburban Philadelphia. The sale price of approximately $290 million represented the largest real estate deal ever in the metropolitan area.

This transaction arguably represents the area’s most significant business deal of 2006. Beyond the acreage and dollar levels, the purchase reflected a significant outside investment in the local market, and as such was seen by many as an endorsement of demand here.

A nearby move was less popular. Quintiles Transnational Corporation’s new Overland Park facility drew heat over its $15.6 million in incentives. The $50 million office and research complex at 115th and Glenwood will bring some 600 jobs from Kansas City and Lenexa, while creating approximately 250 new jobs. The consolidated facility for Clinical Development Services and Clinical Pharmacology began operation in late 2006.

Several real estate developments continued to represent major deals, although key groundwork often dated to previous years. A good example is the recently announced Riverstone in Platte County, a $320 million multi-use development west of I-29 and north of Highway 152. Development of this scale was virtually impossible there until Kansas City completed work on North Congress Avenue, Tiffany Springs Road and 152. The 296-acre project, which began construction in late 2006, will have 284 single-family homes, 456 apartments, 500 residential row homes and 475,500
square feet of commercial and office space.

Village West and the Legends retail area continued to be a major story throughout 2006. Although early business openings such as Cabella’s indicated the dramatic potential of this area, the 2006 formal opening of some 750,000 square feet of shopping and entertainment represented a new level for the district, for Wyandotte County and even for the region.

The first phase with 35 stores and restaurants in October added J.C. Penney and SuperTarget stores. New announcements for 2007 include beginning of a second phase and a nearby development on the east side of I-435. The Legends generates nearly $248 million annually in sales and creates approximately 2,500 new permanent jobs.

One of 2006’s most significant moves involved Kansas City’s agreement reached with J.E. Dunn Construction and the city of Kansas City, Mo. The arrangement not only sets the stage for a new, $50 million headquarters to house more than 600 top employees, it also provides the long-awaited anchor to the proposed East Village Development. The latter is expected to include a blend of several hundred residential units, retail and commercial construction—including a possible General Services Administration office center. The agreement obligates the city to provide for removal of two vacant buildings. Groundbreaking is planned this spring.