Q&A with Leah FitzGerald

Q: It’s been a tough year—two, actually, for certain parts of the commercial realty sector in this region. So let’s focus on some positives: What excites you about the future of Kansas City’s recovery?

A: I think in many ways our sports are a bright spot that just might be our best ticket out of this uncertainty. The recently announced Current soccer stadium, the prospect of hosting the FIFA World Cup, Downtown baseball, the Big XII Tournament, KC Monarchs, Urban Youth Academy, and many others I could continue to list, are economic drivers that attract regional and national tourism and shines a positive spotlight on our great city.

Q: What makes this market, in particular, ripe for sports-themed development?

A: In terms of real estate, these inspire creative placemaking with engaging venues and unique architecture that further enhances our identity. We already have an incredibly diverse sporting community; why not build an identity around this that attracts tourism and more economic investment?

Q: What are some of those possibilities?

A: We could become the go-to sports destination for weekend getaways much like Vegas is for gambling, and Nashville is for music. Currently, we compete on price and rely on incentives to stay competitive, but I see the potential for us to build a sports-industry that drives demand in a way that allows us to attract economic growth that recognizes our true value and is willing to pay full freight to be here. I’m proud of our ability to say we have the first women’s soccer complex in the world; how often do we get to say something like that! We need to celebrate these successes, build upon them and support them. It’s an agenda that we must advance one step at a time, recognizing not every project will meet everyone’s needs, but incrementally we can get there if we work together toward one common goal.

Q: Tell us a bit about how workplace design is changing for the office market.

A: Good workplace design is not a one-size fits all approach, rather it must consider numerous factors. Type of work, location, size of company, and philosophy of leadership are all part of the equation and do not result in the same approach for everyone. As more companies articulate their return-to-work plans, they are realizing that thoughtful layouts and desirable amenities which capture the culture and environment of their teams will result in more engaged employees who want to spend more time in the office. The bottom line is creating space that is welcoming and comfortable that facilitates the work that needs to get done.

Q: How did work-from-home change employee attitudes about workplaces?

A: Many people made improvements to their home offices and the bar is set high, and for others they can’t wait to get out of the dining room where one table was shared with their kids and spouse. Regardless of the situation, it’s clear that there is value in working together, not unlike our children who learn better being together, and in school.

Q: So what’s your evaluation of the overall health of the Kansas City office market, and where do you see it headed over the next 6-12 months—assuming it’s reasonable to draw any conclusions yet?

A: I am optimistic about the long-term future of office.  I’ve had the opportunity to speak with various corporate partners and business leaders not only in Kansas City, but also across the country through my involvement with ULI. These conversations are consistent with the research that CBRE has published, all of which point toward the strength of office and its ultimate return. The magic question is when, and that becomes a much more nuanced response. 

Q: Will that be an even recovery?

A: I think certain areas will rebound faster than others, and Class A+ heavily amenitized properties will fare much better than Class B & C space or even Class A space that hasn’t kept up with deferred maintenance, as the flight to quality trend accelerates.  Class A++ is quickly emerging as its own class with unique and creative amenities. I think toward the end of 2022, we will see the vacancy and sub lease space start to normalize and get absorbed, but some of the Class C product will need to be repurposed.

Q: Beyond the brokerage community and owners, who’s feeling this, and in what ways, in the office-space world?

A: Whether it is the tight labor market impacting small businesses, who don’t have enough staff to stay open normal hours, or larger companies faced with the challenges of retention and inability to service clients due to losses in staff. Then there is the supply-chain issue that started with a handful of commodities and has now spread to almost every industry. And finally, the cost of labor and raw materials which continues to feel the effects of inflation, whether it’s short term or long term is for economist to theorize on, but these challenges are affecting almost every industry.  

Q: Anyone else?

A: The developer. Considering the scrutiny on incentives, the increased cost of labor and construction materials, coupled with the uncertainty for rent growth, it gets harder to make the numbers work and get projects off the ground. This has a direct impact on Kansas City and our ability to compete and attract outside investment. Attracting companies to open new offices here or retailers to open new stores is a key driver of our growth and ultimately, our ability to attract and retain our talent.

Q: When you consider the overall health of a local office-space ecosystem, what are the elements needed to produce sustainable growth?

A: In order for us to support a healthy office market, our overall economy needs to be healthy. Cities where all markets are interdependent and support one another, and there is a healthy mix of industries, are generally much more resilient and see sustained growth. I think that healthy growth isn’t top-down or bottom-up; rather it is needed in all areas, from catalytic large projects as well as a healthy mix of smaller infill and incremental developments which support small business.