Growing Kansas City: From Challenge Comes Strength

Compared to most of the 40 years since the founding of Ingram’s magazine, the period since the so-called Great Recession has not been easy. Yet, despite the challenges, the region’s economic scene is realizing some of the most significant developments of the past four decades. What’s especially significant is the broad range of these deals, from transportation and logistics to high-tech sciences, from higher education to the performing arts.
Kansas City, indeed, is remade itself over the years, and is still doing so.

Midwest Research Triangle
One of the most dramatic developments involves a series of projects in medical research and information technology. Several, including the largest, are near the old Grandview Triangle interchange in south Kansas City, which was renamed Three Trails after a massive upgrade completed in 2010. Given the developments recently announced in that area, it might be worth returning to the “Triangle” label as a nod to research triangles across the country. Though not as large, this Midwestern triangle is significant.
The premiere project is a $4.3 billion office plan by Cerner Corp. on a 237-acre site. An international health-care technology corporation based in North Kansas City, Cerner completed purchase of the former Bannister Mall property in late 2013. Its plans are likely to result in one of the largest developments in Kansas City history.
Cerner’s outline calls for a 4.5 million-square-foot campus that will ultimately employ 15,000 high-tech workers. The project will be developed in phases, with completion planned for 2024. Construction is expected to begin later in 2014 on the first phase, which will include nearly 580,000 square feet of space in two office buildings and a service center. Approximately 2,200 jobs are expected with this initial opening.
The project is significant for reasons other than its size: This area of south Kansas City is also home to the former Kauffman/Marion Merrill Dow complex that Cerner purchased previously and rechristened its Innovation Campus. While that campus will continue to operate, a separate proposal involves the 350-acre Oxford on the Blue development planned by a partnership involving the Stowers Institute for Medical Research, near 87th Street.
Now seeking City Hall approval, the Oxford project has previously been delayed because of everything from the state of the economy to opposition to embryonic stem cell research. Assuming these hurdles can be overcome, south Kansas City would have a research village that would likely draw international attention, within a mile of Cerner’s massive development. Combined with other area projects that include a new police headquarters, an area previously lacking in significant development may soon be among the Midwest’s most dynamic.

Westward Expansion: Cerner Corp. completed construction of its twin-towered campus in Wyandotte County in 2013, setting the stage for infusing more than 4,000 tech-sector jobs into Kansas City, Kan. The company has even bigger plans on the board for south Kansas City.

Scientifically Speaking
Science and technology are surprising Greater Kansas City trends in other areas. Animal and life sciences have brought big deals from Topeka, Kan., to St. Joseph and Columbia, Mo.
One of the first sizable ventures involved the 280,000-square-foot Stowers Institute in the Brush Creek corridor. Later, Kansas and Missouri formed life-sciences organizations, while Missouri voters approved a bill protecting stem-cell research and an influx of public and private funds flowed into the area. Major public centers include the University of Kansas in Lawrence and its academic medical center in Kansas City, Kan.
In 2008, Johnson County voters supported the continued growth of the life sciences movement when they approved a ballot issue establishing the Johnson County Education Research Triangle. The tax generates $15 million a year that is distributed to fund cancer clinical trials,
food safety studies and expended high-tech educational opportunities.
That same year, Imulan BioTherapeutics began a move of its headquarters to
St. Joseph, a city with a long and growing history in the animal sciences. Imulan, which develops immune-regulating compounds
for veterinary medicine, was the first tenant in the Christopher “Kit” Bond Science and Technology Incubator on the St. Joseph campus of Missouri Western University.
Cerner also plays a roll in another series of big deals. Wyandotte County’s Speedway/Legends development was established as one of the most aggressive development efforts in the region’s history. Cerner selected the area for another campus development in 2011 and was also involved in the development of a soccer complex there.
The story actually began in 1997, when voters of Wyandotte County and Kansas City, Kan., merged the two jurisdictions into the Unified Government. Soon after, the governing body of NASCAR selected Wyandotte County for development of the International Speedway Corp. In effect, Wyandotte County became home to a new, major league team.
The result was $200 million in retail and entertainment construction near I-435 and I-70 that soon generated more than $300 million annually. Savvy planning by the Unified Government set the stage for retail and other development. This included Village West, which became home to Cabela’s, the Nebraska Furniture Mart, a minor league baseball team and stadium, as well as several hotels and restaurants.
Then came the addition of “lifestyle” center, Legends at Village West, now Legends Outlets, with upscale shopping. Nearby developments soon included the still-growing Schlitterbahn Waterworks Park and the Hard Rock Hotel & Casino, a 1.5-million-square-foot complex that includes a 300-room luxury hotel and yet more retail space.Cerner’s entry into this dynamic Wyandotte County scene represented its first major campus away from its world headquarters in North Kansas City. The Wyandotte County location, which opened in mid-2013, is already home to 1,000 Cerner associates and is expected to eventually host 4,000 in twin towers with a combined 660,000 square feet.
Cerner’s founders—who literally started their business in a garage—also happen to be soccer fans. Earlier, they purchased Kansas City’s major league soccer team and, in 2012, began building an 18,500-seat, multi-purpose stadium in the Legends area.
There were some challenges. In 2012, Legends Outlets went into foreclosure but, within a few months, a federal judge approved a joint venture’s bid to purchase the property.
While all of these developments are significant, Western Wyandotte County’s recent history is also a good example of economic leveraging that began with a speedway and continues to grow. A goal of this work was developing amenities that would help slow and eventually reverse a population decline that had affected the area for years. Beginning in 2012, that growth began to appear in the Wyandotte population figures, and in single and multi-family residential construction.

Heavy Duty
In another field, the region’s biggest story may involve three huge multi-modal logistics parks, one at Kansas City International Airport and two in southern portions of the metropolitan area, one each in Missouri and Kansas.
All of these developments exploit the metropolitan area’s position in the center of the country and less than three days’ truck travel from more than 80 percent of the nation. With rail lines from California and Mexico, Greater Kansas City is increasingly strategic for an economy of online ordering and international shipping, rising fuel costs and globalization.
The largest and most recently opened of these is Logistics Park near Edgerton, in southwest Johnson County. Owned by BNSF Railway, this $250 million intermodal facility opened in 2013 on 560 acres and will ultimately more than double in size to 1,500 acres. Space under roofing is projected to reach more than 15 million square feet. The master plan calls for the capacity to eventually handle 1.5 million containers annually.
Hunt Midwest Real Estate Enterprises and CenterPoint Properties Trust of Chicago opened the region’s first such park in 2009 on the former Richards-Gebaur Air Force Base. Costing more than $500 million and expected to eventually create 4,000 jobs, this south Kansas City development is located on 1,400 acres and near additional proper-ty owned by Kansas City Southern Railway, which operates rail lines to deep-water ports in Mexico.
A third Kansas City logistics development opened in 2013. Operated by the Kansas City Aviation Department and Dallas-based Trammell Crow Co., the Kansas City Intermodal BusinessCentre is developing a high-tech airfreight center designed to capitalize on the region’s location.
Major employers like Harley-Davidson already operate near the airport, but the airpark anticipates expanding that extensively. The most recent development involved purchase of a formerly empty maintenance base at KCI by Aviation Technical Services of Everett, Wash., which plans to bring 600 jobs to the region.

Big Boxes

Greater Kansas City’s logistics trend has another side as well. Many of the products being shipped to the area pass through one of the region’s growing numbers of distribution centers. Once referred to as “warehouses,” these high-tech, automated centers rely on cutting edge technology and massive size to provide a key link in today’s modern logistics operations.
In recent years, Greater Kansas City has become home to several corporate buildings of several hundred thousand
squ-are feet each. Recently, companies such as Kessinger/Hunter and Co. and NorthPoint Development have built equally large spec buildings, something unheard of in Greater Kansas City in recent years.
One example involves the Riverside Horizons development, where NorthPoint leased a 170,000-square-foot building to W.W. Grainer Inc. in 2013. Shortly before, PFB Vistar moved into a 138,000-square-foot section of Horizons III. These successes led NorthPoint in 2013 to begin construction of the largest spec building in that 300-acre Riverside development, the 341,000-square-foot Horizons IV.
Corporate projects include Freightquote and Teva Pharmaceuticals Industries. Another sign of this market’s strength was the purchase of a huge collection of office and industrial buildings in Lenexa by Hines, an international commercial real estate firm. The purchase, reported at $80 million, involved some 40 buildings in the Southlake Technology Park and Lenexa Industrial Park.
An especially unusual logistics-related development involves Hunt Midwest’s Sub-Tropolis. Begun in the 1960s as reuse of former limestone mines, SubTropolis has millions of square feet of naturally climate controlled, incredibly secure office and warehouse space—essentially large underground office and warehouse space needing only a little finish to utilize. Already home to everything from data centers to printers, it also boasts such unique tenants as the National Archives and Records Administration.

The New Motor City
SubTropolis ties to another big story, one that adds to Kansas City’s booming logistics market and one that also stands on its own merits.
While manufacturing is not an economic strength nationally, Kansas City’s growing manufacturing base adds a significant balance to its technical and science industries. Based largely on the strength of major plants operated by Ford and General Motors, along with scores of suppliers and other ancillary firms, the region employs up to 30,000 in this industry.
Both General Motors’ Fairfax plant in Wyandotte County and Ford’s plant in Clay County began operating shortly af-ter World War II. Since the mid-1980s, the pace and size of investments have risen dramatically.
Ford is in the midst of a $1.1 billion expansion at its plant, while General Motors just announced it would invest $600 million to renovate and expand its Kansas City location. Besides the initial investments, these projects represent thousands of generally high-paying jobs. Ford’s recent expansion alone is estimated to bring approximately $100 million a year in payroll.
Ford’s recent growth also illustrates the broad impact of these investments. Almost before the ink had dried on Ford’s news releases, several suppliers announced they would expand or build new facilities to support Ford’s growing demand. The cities of Liberty and Excelsior Springs, neighbors to the Ford Claycomo plant, had three major announcements within months. Each of these represented millions of dollars in investment and anywhere from 50 to 500 workers each.
Only four miles from the Ford plant, SubTropolis saw impact as well. Several tenants were already doing business with Ford but, after the expansion, three more have located there, including one using more than 100,000 square feet.

Big, Bold Downtown
In the middle of all Greater Kansas City big deals is the increasingly dynamic city center.
Through the 1990s, Downtown Kansas City hit bottom after years of decline. Its most widespread traits were empty parking lots and fleeing tenants. Residential and retail development was almost non-existent.
Things began to change at the beginning of this century. Downtown boosters renovated the old First National Bank building and made it the home to Kansas City Public Library’s Central Branch. Forward-looking entrepreneurs quietly started converting abandoned-but-historic buildings into lofts and apartments, especially in the River Market, near the new library and in the Crossroads Art District. Crossroads also gained a reputation as an artists’ enclave, with lofts and galleries thriving in low-cost buildings.
City leaders seized on this momentum and pushed through two significant projects, the Sprint Center arena and the adjacent Power & Light retail and entertainment district. This two-pronged development gained a stabilizing, third branch in 2006 when H&R Block moved its world headquarters into the district. About the same time, Bartle Hall expanded again with a state-of-the-art ballroom. Several old hotels reopened as boutique operations. The trickle of loft and condo conversions became a torrent. Within a decade, more than $6 billion in development had occurred, while Downtown went from derelict to desirable.
In the past five years, that pace has steadied but not slowed. A crucial corner of the city core has finally started to improve with the development of East Village, a 12-block multi-use development that is addressing some of Downtown’s last major blight. The cornerstone was laid with completion in 2010 of the $50 million headquarters for J.E. Dunn Construction Co. The first residential construction occurred not long after, with an apartment complex.
Additional developments have occur-red throughout Downtown. Crossroads, once known for its low-cost lofts, galleries and office space is seeing increasingly larger projects. Among the most recent is a $46 million hotel and garage planned near 15th and Baltimore Ave. Midtown, long left out of most Downtown redevelopment, is now seeing significant redevelopment and even new construction, primarily in residential projects.
Even bigger deals are still occurring. One of the most dramatic ever was the 2011 opening of the Kauffman Center for the Performing Arts. Located in the Crossroads District immediately south of Bartle Convention Center, the $414-million project that features separate theatre and orchestra facilities is considered one of the best venues in the world. With its glistening domes visible against the downtown skyline, it is both a local landmark and an indisputable sign that Kansas City is a world class city.
Less dramatic but still significant is the General Services Administration announcement in late 2013 that it was leasing five floors of the Two Pershing Square building. The space will house 900 employees from GSA’s former Bannister Federal Complex, which is slated for demolition. Coupled with nearby residential developments connected with Hospital Hill and the University of Missouri-Kansas City medical and dental schools, the GSA move is a significant addition to the Crown Center district, already a Downtown strongpoint.
Another new project is the $79 million One Light, a 311-unit apartment building planned by the Cordish Co., developer of the adjacent Power and Light entertainment district. One of the first new Downtown buildings constructed for residential use in years, it is expected to be complete in 2015 and house approximately 1,700 people.
These new residents and workers are part of a huge surge in Downtown population over the past decade. Another bump will occur with completion of a $71-million renovation for Commerce Tower. The 1960s building was purchased in 2013 and the new owners, Commerce Tower Group, plan to repurpose the 30-story office building into a mix of office, classrooms for Park University and an early education center, restaurants and retail development.

Trolleys and Beer
Though somewhat controversial, Kansas City’s construction of a Downtown streetcar line is already having impact. Approved by voters in 2012, the approximately $100 million line will initially operate from River Market to Crown Center, offering what backers hope is an attractive option for convention goers, area employees and residents, as well as a start for a larger mass transit system.
While critics object to the estimated $100 million cost of the initial two-mile route, supporters note this startup line will not only provide the ability to connect the Northland with the Plaza and, ultimately, farther. Another advantage is that, unlike bus routes, which can be changed at a whim, streetcar lines provide potential developers permanence worthy of investment.
An example may already be under way with a $70 million multi-use Columbus Park development. The project will bring apartments and retail near the northern end of the trolley line in River Market. The Pershing Square/GSA location is also near the southern end of the initial trolley route. Streetcar supporters argue that similar projects will occur near the line along its entire route.
The streetcar line begin construction in January 2014 and will open in 2015.
The route primarily follows Main Street.
A deal of another stripe also made headlines when Duvel Moortgat Brewery of Belgium purchased hometown Boulevard Brewing Co. for an estimated price of more than $100 million. Local beer and ale drinkers hope the acquisition doesn’t threaten the company’s popular products, but the city at large also hopes Boulevard’s outstanding community presence continues after the 2013 purchase. Boulevard officials promise positive results, noting a $20 million expansion will be easier with the new owner.
All of those developments follow a long stretch if steady, if less clustered, successes during the 1970s, ’80s and ’90s. The original opening of Bartle Hall in 1976 was the first major amenity to be located Downtown in years. It instantly raised Kansas City to an upper position among the nation’s convention cities and, while that did not last long, the city did host the Republican National Convention at nearby Kemper Arena.
The city welcomed a convention hotel to complement the convention center in 1985 with the opening of the Vista International. The Vista, now operated by Marriott, was a big deal in the fullest sense. No fewer than 32 banks, insurance companies and charities lent $35 million to pay for its construction. Labeled “Miracle on 12th Street,” the $54-million project gave Downtown much-needed first-class hotel rooms while replacing a block of seedy bars and old strip joints. The deal had some detractors, but the effort may have set a record for collaboration by area civic leaders, bankers and municipal planners.
During the 1980s and ’90s, Downtown Kansas City also saw nearly $300 million with the construction of three major landmarks: One Kansas City Place, the Commerce Bank Building and the AT&T Town Pavilion. Town Pavilion alone involved 1 million square feet, plus a 2,000-car parking structure.
These projects remain significant and are a key backdrop to the major efforts that helped comprise Downtown’s $6 billion rebirth after 2000: the Internal Revenue Service’s 1.1 million square foot regional service center, the Federal Reserve Bank’s new $175 million headquarters, multiple Bartle Hall additions and more.

Downtown and Suburbs
Despite the increasing strength of Downtown, Greater Kansas City remains a region of satellite developments and communities. One of the most dramatic in recent years is Briarcliff Development, which recently entered its third decade with some of Greater Kansas City’s finest office, retail and residential development. Now worth more than $200 million, Briarcliff is especially surprising because it was built on an abandoned rock quarry.
Just in the past year, Briarcliff opened McCrite’s Senior Living Plaza and the Briarcliff Courtyard Hotel by Marriott, which includes its City View Ballroom and Conference Center. The new, luxury Briarcliff Riverfront Apartments will add to the attractions and represents the development’s third and most luxurious multi-family project.
Also near downtown, the Country Club Plaza saw opening of the new Sorella Hotel in 2013. The nearby Brush Creek Corridor, which was upgraded with fountains, walkways and green space in the 1990s, is the setting for the $48 million Kauffman Foundation and the $85 million Stowers Institute, which was the first major project in that area. Kansas City’s larger ring of suburbs saw dramatic growth during this period. Johnson County, Kan., may serve as the region’s most powerful economic engine, a title it has held aruably since Ingram’s first edition 40 years ago. Today, it continues to
see more residential and commercial growth and, as indicated by projects such as Logistics Park, a big share of modern industrial developments, too.
Johnson County’s saga began with post-World War II residential growth, but its powerhouse position went into overdrive in the 1970s with construction of College Boulevard and Corporate Woods, an upscale office center that quickly became the anchor for much of southern Johnson County’s growth. Today, Corporate Woods includes more than two dozen office buildings totaling more than 2 million square feet, with scores of offices and commercial development nearby.
By the early 1980s, Johnson County gained a momentum that has continued to this day. Later highlights included the Sprint campus, one of the region’s largest projects, and retail developments, especially on 119th and 135th streets.
The value of all this was illustrated by the 2006 sale of Corporate Woods. The deal involved 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 at that time represented the largest real estate deal ever in the metropolitan area.
The 1974 opening of Oak Park Mall—just north of College Boulevard—was another major catalyst for growth in central and southern Johnson County. It was anchored by an unheard of four department stores—Macy’s, JC Penney, Montgomery
Ward and Stix, Baer & Fuller—and a number of smaller shops for a total of 1.2 million square feet. With Independence Center, it remains one of only two fully operational, enclosed malls in Greater KC.
Like the rest of the region, Johnson County experienced a slowdown during the 2007 recession, especially in housing and retail. Today, that is being reversed. The $580 million Prairiefire in Overland Park and Lenexa City Center Project are moving forward. Other new or recent developments include Merriam Village with a new Ikea store, Corbin Park and Mission Gateway, although the latter may have hit a speed bump in late 2013.
Office development is also occurring throughout the region. As it does in other areas, Johnson County remains a leader, with recent projects such as Perceptive Software and AMC Entertainment.
A similar picture is evident in suburban residential growth. A rough stretch in 2008 and 2009 is being followed by significant development. Several new areas are beginning to challenge Johnson County’s perennial leadership in this category, however. Eastern Jackson and Clay County are especially active. Throughout the region, both single and multi-family projects are under way or announced.
In eastern Jackson County, a major step involved an initiative by the City of Independence to build a new I-70 interchange, which opened the Little Blue Parkway. Although commercial development is likely to be the area’s real future, some of the first major projects include residential construction in eastern Independence and Blue Springs.
In Clay County, the scene was actually set in 1981 when some 5,300 acres were purchased by the development wing of the Church of Jesus Christ of Latter-day Saints. Located generally west of Liberty, the property included the future Shoal Creek Valley Development. Comprising three residential and several commercial areas, Shoal Creek today is the City of Kansas City’s most active residential location and continues to see extensive retail and commercial development.

Diversity
Much of Greater Kansas City’s story is underlined by a healthy economic diversity. The mega-deal Sprint campus on 119th Street is a good example. When construction began in 1997, the telecommunications center was one of the biggest projects in the region’s history. Although the shine has diminished somewhat because of the corporation battles a competitive market, the $429 million campus price tag and thousands of employees still reflect a surprising strength in this high-tech market for Johnson County and the region. Several related deals are significant as well, including Sprint’s $35 billion Nextel merger in 2004.
In the area of tourism and conventions, Johnson County recently saw approval for two conference centers that combine for nearly $80 million in investment, the Hyatt Place Hotel and Conference Center in Lenexa’s City Center East Village and Embassy Suites Hotel and Conference Center in Olathe. Though not likely to host national conventions, they are part of dynamic slice of the region’s economy that continues to grow.
Across the metro area, the city of Independence hosts a similar success at the Independence Events Center. Opened in 2009, the 5,800-seat, $30 million center today is an active entertainment venue far from Downtown or similar destinations. Yet, with a program of indoor soccer, minor-league hockey, a steady parade of quality performances and other events, the Events Center has become a major addition to what is already a notable retail development in eastern Jackson County.
Still another industry that should be noted involves health-care delivery. Greater Kansas City is a regional hub for medical care, primarily serving parts of four states. As a result, the region’s hospitals are among the area’s largest employers. Their additions and expansion, which sometimes seem almost constant, are another element in the region’s diversity.
A case in point was the recently announced, $60 million, Healthy Living Community by Liberty Hospital. The center will include fitness, education, physical therapy and a short-term-stay, recovery hotel. The project’s initial phase, which may cover 12 to 15 acres, is expected to open by the first half of 2016. Other medical expansion is occurring from the KU Medical Center in Wyandotte County to North Kansas City Hospital. Children’s Mercy Hospitals and Clinics has even added a world-class genome research program.
What may be most dramatic of all is the sheer number of major transactions and developments. A few years ago, the $1.1 billion Ford deal or $4.3-billion Cerner plan would stand alone. Today they are significant, but ultimately, they are just two among many big deals under way in Greater Kansas City.