Downtown office vacancy

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Ideally 5 Light continues as residential and the lots along 8th between Main/Central develops with hirise office/mixed (with perhaps a pedestrian retail shopping stretch closed to cars and garage access along 7th.). The 5 Light spot would have small floor plates as mentioned, not great for office.

In other news, DST might be sold. Could be bad news or good news for downtown workforce long term, too early to tell.
http://www.kansascity.com/news/business ... 90489.html
User avatar
Critical_Mass
Colonnade
Colonnade
Posts: 994
Joined: Sun Jun 13, 2004 7:56 pm
Location: Union Hill

Re: Downtown office vacancy

Post by Critical_Mass »

This person is saying 100-200K sf Class A being considered:
https://twitter.com/BrianHartleyKC/stat ... 2213676037

For comparison, H&R Block HQ next door is in the 500-600K sf range
https://www.hines.com/properties/hr-blo ... ansas-city
http://www.hok.com/design/region/united ... dquarters/

A lot of variables, but if it's a similar floorplate size to H&R....maybe 4 to 7 stories on top of the existing retail space (more if they are adding parking levels). Probably not in high-rise territory unless they're looking at more space.
horizons82
New York Life
New York Life
Posts: 458
Joined: Thu Mar 17, 2016 8:41 am

Re: Downtown office vacancy

Post by horizons82 »

earthling wrote:Ideally 5 Light continues as residential and the lots along 8th between Main/Central develops with hirise office/mixed (with perhaps a pedestrian retail shopping stretch closed to cars and garage access along 7th.). The 5 Light spot would have small floor plates as mentioned, not great for office.
Based on the piling locations, the H&R 2 spot could have floor plates 38,000 - 43,000 sf. That's larger than One KC Place or TC Pavilion's typical floor. It'll work fine for office, even if it's half that.
User avatar
beautyfromashes
One Park Place
One Park Place
Posts: 7138
Joined: Mon Mar 21, 2005 11:04 am

Re: Downtown office vacancy

Post by beautyfromashes »

It’s 3/4 of a city block: 13th to 14th, Main to Baltimore. Bigger than Block and plenty of space for commercial. Should be cheaper too since footings and piers already existing.
User avatar
DaveKCMO
Ambassador
Posts: 20024
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Downtown office vacancy

Post by DaveKCMO »

ldai_phs wrote:Location West of HR Block being looked at for Class A office building. Guess this means no 5 Light :/
there is such a thing as vertically mixed use...
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

beautyfromashes wrote:It’s 3/4 of a city block: 13th to 14th, Main to Baltimore. Bigger than Block and plenty of space for commercial. Should be cheaper too since footings and piers already existing.
Ah, I had locations mixed up.
User avatar
normalthings
Mark Twain Tower
Mark Twain Tower
Posts: 8018
Joined: Mon Mar 30, 2015 9:52 pm

Re: Downtown office vacancy

Post by normalthings »

DaveKCMO wrote:
ldai_phs wrote:Location West of HR Block being looked at for Class A office building. Guess this means no 5 Light :/
there is such a thing as vertically mixed use...
Such a progressive project did not even come to my mind. Would be exciting to see a vertical mixed-use tower there.
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

So it's official that DST is sold. They own a lot of buildings on W Side of Loop. They are expected to consolidate data centers and corporate functions in near term so likely a hit on jobs and possibly a building or two sold if not more eventually. That would put more space on market so of course decreasing chances of getting new office buildings built. The worst case scenario is most of DST operations in KC folded into the acquiring company, would of course be a major impact on many levels. Can only hope they find it cheaper to operate in KC than NY Metro...

https://www.bizjournals.com/kansascity/ ... stems.html
User avatar
normalthings
Mark Twain Tower
Mark Twain Tower
Posts: 8018
Joined: Mon Mar 30, 2015 9:52 pm

Re: Downtown office vacancy

Post by normalthings »

earthling wrote:So it's official that DST is sold. They own a lot of buildings on W Side of Loop. They are expected to consolidate data centers and corporate functions in near term so likely a hit on jobs and possibly a building or two sold if not more eventually. That would put more space on market so of course decreasing chances of getting new office buildings built. The worst case scenario is most of DST operations in KC folded into the acquiring company, would of course be a major impact on many levels. Can only hope they find it cheaper to operate in KC than NY Metro...

https://www.bizjournals.com/kansascity/news/
2018/01/11/ss-c-technologies-buys-dst-systems.html
Would be ideal if they buy DST and then move here. Maybe city needs to jump on incentives for that ASAP?
tower
Strip mall
Strip mall
Posts: 296
Joined: Tue Sep 05, 2017 8:45 am
Location: Midtown

Re: Downtown office vacancy

Post by tower »

Maybe the CEO really, really, really likes BBQ. Or fountains. Or places that aren't Connecticut. That's a pretty strong combo.

In all seriousness though, that would probably be a first among corporate acquisitions if a company bought a rival and then move the HQ to where the rival was, halfway across the country.
User avatar
Highlander
City Center Square
City Center Square
Posts: 10146
Joined: Mon Jun 28, 2004 1:40 pm
Location: Houston

Re: Downtown office vacancy

Post by Highlander »

earthling wrote:So it's official that DST is sold. They own a lot of buildings on W Side of Loop. They are expected to consolidate data centers and corporate functions in near term so likely a hit on jobs and possibly a building or two sold if not more eventually. That would put more space on market so of course decreasing chances of getting new office buildings built. The worst case scenario is most of DST operations in KC folded into the acquiring company, would of course be a major impact on many levels. Can only hope they find it cheaper to operate in KC than NY Metro...

https://www.bizjournals.com/kansascity/ ... stems.html
Losing these guys would be a huge blow to downtown KC. Mergers and acquisitions have been the bane of KC - we always seem to have the smaller company in mergers. It's a wonder sprint is still in KC after their merger a while back. I really doubt if a company in the line of business that DST is in would ever leave NY to come to KC. Wouldn't make much sense. Best hope is that they are allowed to operate as a separate unit independent of the parent company.
User avatar
LCDSI
New York Life
New York Life
Posts: 418
Joined: Fri Sep 03, 2004 8:47 pm
Location: San Francisco

Re: Downtown office vacancy

Post by LCDSI »

not sure if this was posted but in this latest posting on the cityscenekc site it's mentioned that there are discussions to build a new office building downtown.
In a related matter, Schulte told the Downtowners that H&R Block is teaming up with Copaken Brooks and Cordish to pursue a potential office tower project on the block southwest of 13th and Main
https://cityscenekc.com/three-light-con ... y-manager/
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Missed that, so would that be on top of YardHouse? If so, great that was constructed in a way to allow hirise on top.

BTW, I mentioned to Collison (CityScene) that he should setup PayPal or other form to allow supporting his site. He mentioned he was planning to look for investors after 6 months. Well it's been 6 months. We could help him out by clicking on his site often and leaving comments...
https://cityscenekc.com/
User avatar
normalthings
Mark Twain Tower
Mark Twain Tower
Posts: 8018
Joined: Mon Mar 30, 2015 9:52 pm

Re: Downtown office vacancy

Post by normalthings »

LCDSI wrote:not sure if this was posted but in this latest posting on the cityscenekc site it's mentioned that there are discussions to build a new office building downtown.
In a related matter, Schulte told the Downtowners that H&R Block is teaming up with Copaken Brooks and Cordish to pursue a potential office tower project on the block southwest of 13th and Main
https://cityscenekc.com/three-light-con ... y-manager/
5 Light Site. May be mixed use project
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Highlander wrote:
earthling wrote:So it's official that DST is sold. They own a lot of buildings on W Side of Loop. They are expected to consolidate data centers and corporate functions in near term so likely a hit on jobs and possibly a building or two sold if not more eventually. That would put more space on market so of course decreasing chances of getting new office buildings built. The worst case scenario is most of DST operations in KC folded into the acquiring company, would of course be a major impact on many levels. Can only hope they find it cheaper to operate in KC than NY Metro...

https://www.bizjournals.com/kansascity/ ... stems.html
Losing these guys would be a huge blow to downtown KC. Mergers and acquisitions have been the bane of KC - we always seem to have the smaller company in mergers. It's a wonder sprint is still in KC after their merger a while back. I really doubt if a company in the line of business that DST is in would ever leave NY to come to KC. Wouldn't make much sense. Best hope is that they are allowed to operate as a separate unit independent of the parent company.
Yeah KC is more often on the losing side of M&As. There are some DST divisions that may be divested so some parts may still stay, like the health side. And there could still be some operations on the funds side but from what I understand the buyer is much further along with ETFs. My guess is that more than half of DST presence downtown could be at risk, maybe much higher. But some companies that buy KC companies do find it's cheaper to operate here and grow certain functions/operations. As far as moving acquiring HQ to KC, yeah unlikely.
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Summary of various office transactions in 2017 and major downtown leases...
https://www.bizjournals.com/kansascity/ ... i/10643016

MARC projects near 20K job growth this year, which is more than 2017 but not quite as good as actual 2014/15/16 pace, well over 20K each. KC's pro biz growth in 2017 was way above national avg though, closer to hot markets in % growth, and with a good pace so could help improve office market. KC metro used to be considered overbuilt with office space, not the case anymore with low vacancies - and that could help downtown though DST sale could offset things.
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Colliers hasn't released Q1/2018 office market stats yet but at the end of 2017 KC metro was a top performer with vacancy improvement and absorption for the year, as well as better than avg % vacancy. KC and Seattle had the best vacancy improvement (about 2% drop).

Through all of 2017, Colliers says Downtown to Plaza KC absorbed more space than any Midwest 'downtown' including Chicago/MSP and about same as Denver/Atlanta (page 10). But Nashville is really hot, moreso than Seattle. This Colliers report tends to call greater urban area 'downtown' for most markets - for KC it includes Midtown/Plaza.

KC burbs absorbed nearly 1.4M sqft of office space (page 14, YTD 2017 column), nearly double Chicago burbs and more than most markets, up there with hot markets. Obviously Cerner a factor but this is still pretty substantial considering KC metro has a lot of office space for its size with such low vacancy. Downtown CBD still probably not where it should be for Class A vacancy, will see when Q1/2018 report comes out.

https://www2.colliers.com/-/media/Files ... liers.ashx
earthling
Mark Twain Tower
Mark Twain Tower
Posts: 8514
Joined: Sun Sep 11, 2011 2:27 pm
Location: milky way, orion arm

Re: Downtown office vacancy

Post by earthling »

Collison on the challenges to get spec building and lost opportunity for Starbucks office... lenders want 40%+ pre-lease these days...
https://cityscenekc.com/a-missed-starbu ... velopment/

Last decade lenders typically wanted vacancy below 12% to build spec but they are pickier now. At least downtown KC's vacancy continues to improve according to...
Image
grecobs
Strip mall
Strip mall
Posts: 174
Joined: Fri Apr 25, 2014 11:53 am

Re: Downtown office vacancy

Post by grecobs »

Missing out on 900 Starbucks jobs is such a loss. It’s that kind of attention (from global mega brands) that would really light a fire on the downtown office market. I know 900 jobs isn’t wild, but perhaps it would convince local employers to consider DT (e.g. Cerner). A company like Starbucks would also attract talent from across the country.

Two steps forward, one step back...
User avatar
KC_JAYHAWK
Alameda Tower
Alameda Tower
Posts: 1008
Joined: Tue Oct 08, 2002 10:33 am
Location: Waldo

Re: Downtown office vacancy

Post by KC_JAYHAWK »

Yep saw that article from Kevin Collison. Really need some new Class A space downtown for just this type of opportunity. Most firms adding or re-locating jobs don't want to wait 24 months or so for a new tower to be built. Even a 10-15 story office tower would be a good start, anywhere between the Crossroads to the Rivermarket.

And those 900 jobs could eventually turn into 2,000 jobs, so it is a big loss.
Post Reply