At what point does DT become overbuilt with respect to Apartments

[ThorsteinVeblen]

FWIW, I work in finance which puts me in front of executive management at a lot of companies around town. Inevitably the conversation of DT development comes up and I was actually surprised to find out how many companies are leasing or plan to lease apartments in some of the luxury apts coming up downtown. The main reason being that it was cheaper for them to rent the apartments than pay for hotels rooms when they bring people in. One private company in town leased 3 units in One Light, two of them being penthouse level. That same CEO plans to lease two penthouse units in Two Light once it's constructed and is already on the list to get them. Don't be surprised to see a lot of the high rent units get leased by companies around town to house high level employees, clients, and prospects while they are in town. Hotel demand will certainly still be there but a shift appears to be occurring as it relates to longer term stays now that these luxury apartments are coming up. Also, a lot of high earners out in the suburbs are looking to lease a unit in downtown so they don't have to drive home after events and also as an opportunity to just get out of the burbs. I would expect that type of leaser to rise, especially as development in downtown continues to grow, more restaurants and bars come in, and downtown events get better.

To wrap it all up, there is definitely a lot of demand from younger people who want to move downtown, but the high rents will likely be supported by professional couples, empty nesters, companies, and high income households in the suburbs.

[flyingember]

I'm not surprised, at one job the owner had a condo that I knew they put people in, in addition to their home. They also owned a limo with an on call driver.

[earthling]

Also, a lot of high earners out in the suburbs are looking to lease a unit in downtown so they don't have to drive home after events and also as an opportunity to just get out of the burbs.

Back in the 60's a la Mad Men, it was the place to meet the mistress after work, haha.

To wrap it all up, there is definitely a lot of demand from younger people who want to move downtown, but the high rents will likely be supported by professional couples, empty nesters, companies, and high income households in the suburbs.

Which is an opportunity for Midtown and other areas surrounding central downtown stretch. I would expect the rent within walking distance of streetcar line to skyrocket, especially since it is free to ride.

[KCtoBrooklyn]

I heard Execustay - a corporate relocation/furnished rental business leased an entire floor of One Light.

[DaveKCMO]

FWIW, I work in finance which puts me in front of executive management at a lot of companies around town. Inevitably the conversation of DT development comes up and I was actually surprised to find out how many companies are leasing or plan to lease apartments in some of the luxury apts coming up downtown. The main reason being that it was cheaper for them to rent the apartments than pay for hotels rooms when they bring people in. One private company in town leased 3 units in One Light, two of them being penthouse level. That same CEO plans to lease two penthouse units in Two Light once it's constructed and is already on the list to get them. Don't be surprised to see a lot of the high rent units get leased by companies around town to house high level employees, clients, and prospects while they are in town. Hotel demand will certainly still be there but a shift appears to be occurring as it relates to longer term stays now that these luxury apartments are coming up. Also, a lot of high earners out in the suburbs are looking to lease a unit in downtown so they don't have to drive home after events and also as an opportunity to just get out of the burbs. I would expect that type of leaser to rise, especially as development in downtown continues to grow, more restaurants and bars come in, and downtown events get better.

To wrap it all up, there is definitely a lot of demand from younger people who want to move downtown, but the high rents will likely be supported by professional couples, empty nesters, companies, and high income households in the suburbs.

my company has three apartments in one light just for out-of-town employees to use.

[chrizow]

these corporate leases are interesting - any idea of what % of the market these units represent? kinda like the apartments in manhattan owned by chinese billionaires that are seldom used, is there a risk all these new units in downtown KC don't really add to the vibrance and street life of downtown if they are sporadically used corporate units?

[loftguy]

<5%

[DaveKCMO]

these corporate leases are interesting - any idea of what % of the market these units represent? kinda like the apartments in manhattan owned by chinese billionaires that are seldom used, is there a risk all these new units in downtown KC don't really add to the vibrance and street life of downtown if they are sporadically used corporate units?

i'll take it. it's an investment and allows rents to go higher than normal -- thus enabling new construction with less incentives. making the assumption corporate users will pay more than others. aside from the hefty garage subsidy (which will also enable the 30Ksf of ground-floor retail), the tax abatement for both one and two light is only 50% for 25 years (versus the 100% 10-year/50% 15-year abatements for most previous projects).

i think if someone told you ten years ago that TWO new residential high rises downtown would only need a 50% tax abatement they'd laugh in your face.

[loftguy]

Agree DaveKCMO.

Corporate & luxury 2nd/3rd home rentals are another sign that downtown KC is desirable and is the place to be (along with 'parking problems').

[earthling]

How much $/sqft rent needed to build a new hirise with no/little incentives?

[chrizow]

i'll take it.

agreed. i was just curious b/c i was not familiar with this phenomena in KC.

[kcjak]

Yeah, if you think about it an apartment renting for $2000/month would be comparable to less than $70 night for a hotel room. I'd think a development where apartments/condos mixed with a hotel where residents could used hotel amenities (like room service) would be even more desirable.

[kboish]

Its nice to see Star reporters are still following the rag and following up on our discussions with an article.

This is a pretty good read.

http://www.kansascity.com/news/business ... 20982.html

[beautyfromashes]

^ At least they gave us a picture of some sexy legs to go with it. How come the rag doesn't have that?

[TheBigChuckbowski]

In Overland Park, for example, half of the rentals were higher than that city’s $1,778-a-month median rate.

Umm...

[beautyfromashes]

^^ That's some quality reporting right there!

[taxi]

Hawt dog, cute shoes and faux taxidermy. kcrag needs to step up its game.