Traders on Grand

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
User avatar
grovester
Hotel President
Hotel President
Posts: 3318
Joined: Thu Mar 13, 2008 7:30 pm
Location: KC Metro

Re: Traders on Grand

Postby grovester » Sun Mar 20, 2016 12:25 pm

I would be curious to know whether the rates of return were only compared to the KC market or whether some other national or regional metric was used.

User avatar
FangKC
City Center Square
City Center Square
Posts: 12050
Joined: Sat Jul 26, 2003 10:02 pm
Location: Old Northeast -- Indian Mound

Re: Traders on Grand

Postby FangKC » Mon Mar 21, 2016 7:32 am

You make good points Pash. Yes, one of the issues at work here is that downtown rents are competing with suburban rents. To justify the expense of fixing up an old building, one has to look to the rents one will get when completed. You are competing with cheaper rents available in the suburbs.

The secondary issue here is that although that is the case, rents in our market are in many ways too low to justify the expense of both new construction, and renovation. In other high-demand cities, rents are much higher, and can justify the expense of building new, or renovating an older building, often without any incentives.

People will pay higher rents though if there is reason to justify it. The building is located in a high quality environment that offers many amenities: good transit, arts, entertainment, lots of walkable retail, and nice aesthetics.

Downtown Kansas City is not there yet. We are moving in that direction, but we have not moved close enough.

People will pay higher rents if they don't need a car. Because they can look at what they pay to buy, operate, and maintain a car, and say "I can afford to pay $300 more a month for this apartment because I can go without a car, which would cost me $600 a month. For this to happen, you need to have a good grocery store, drug store, and other retail services near transit. Even things like living near a public library, and movie theater help, because that is access to amenities.

Even in transit-rich cities, rents can vary a lot within a couple of blocks based on things like this. Rents in an apartment can vary if the building is near a subway station, and a major bus line, and a block from a grocery store. It can also come down to the difference between an elevator building with a doorman versus a walk-up building with no doorman. So people on foot so to speak, make these calculations.

Let's place the market rent distortions aside. The calculation the City is making is one of taking the risk of allowing old buildings to sit empty for years, or decades. It's not only loss of sales and earnings taxes, but tax assessments on that building continuing to diminish--not only on that building, but a well-maintained and well-occupied building on the same block also going down. It's also the building owner of an occupied building not being willing to reinvest in their property, because two buildings on the same block are blighted. The property owner might even want to renovate their building, but no bank will give them enough money to do it based on evaluations of adjacent buildings. It's the same with a block of vacant lots. A company, or developer, might want to erect a new office building, but they might have trouble getting financing to accomplish this because the bank looks at neighboring buildings and calculates that the finished new building would have less value when completed, than it should. If the company would go bankrupt, the bank would be stuck with an office building worth less than it took to build it.

It's the continued loss of retail and restaurants. That what still exists won't be able to hang on.

So the City is taking a gamble that by giving up some revenue now on specific parcels or buildings, they will be able to make it up by preserving the assessed value of other, occupied buildings, and also the sales and earnings taxes of people who move downtown.
Last edited by FangKC on Tue Mar 22, 2016 1:21 am, edited 1 time in total.

flyingember
Oak Tower
Oak Tower
Posts: 5418
Joined: Tue Jul 17, 2012 7:54 am

Re: Traders on Grand

Postby flyingember » Mon Mar 21, 2016 8:53 am

This also is going to help the office market. While residential is in demand we know that downtown's big problem is a need for more notable employers. An office tower with 20-30 brand new 100x person offices would be a big deal for downtown.

To gain notable employers downtown needs modern, amazing office space. We know KC has an excess of lower end office space.
So subsiding the conversion to residential while there's a large amount of demand helps change the structure of the downtown office market.

Look at this image, imagine that age relates to rental rates in offices
https://saylordotorg.github.io/text_wor ... f045f2.jpg
KC ended up far too bottom heavy like item A. So businesses could rent super cheap. This also obviously made it hard for office space owners to renovate and stay competitive if they can't get a return because they cost too much. If they did do the work it was possible for someone to buy a cheap tower, do some work and undercut their price. As a result the high end office market stagnated or dropped as they aged and JoCo took a lot of this market.

So by taking out a lot of low-end buildings with residential conversions KC ends up becoming closer to item B. We want a lot of lower end space but not a growing excess.

What we want is to end up somewhere between items B and C. Two Light (partial), 3rd and Grand and Corrigan Station shows the market is finally supporting the costs needed for new and renovated office space so this method clearly is paying off. The next benchmark will be a new 25-30 story office tower.

Is it great it takes incentives to get there? No. But it's starting to produce results.
And with jobs coming back downtown the demand for downtown space and the increasing rates in new construction will start to raise rates in existing units, producing an upward pressure on all residential rates.

And that's what it's going to take to do away with "can't make enough otherwise" residential incentives.

loftguy
Bryant Building
Bryant Building
Posts: 3746
Joined: Fri Sep 16, 2005 12:12 pm

Re: Traders on Grand

Postby loftguy » Mon Mar 21, 2016 2:14 pm

From my experience, the rates of return being analyzed in considering abatement and other subsidies are taken from regional and national data. I've not seen them look at the building next door or the downtown marketplace specifically.

To me, it's frightening how narrow the profit margins are on some of the projects for which that I have reviewed numbers. Such projects could be devastated by structural, environmental or project carrying cost increase......that happens frequently.

User avatar
FangKC
City Center Square
City Center Square
Posts: 12050
Joined: Sat Jul 26, 2003 10:02 pm
Location: Old Northeast -- Indian Mound

Re: Traders on Grand

Postby FangKC » Tue Mar 22, 2016 1:27 am

I think the sweet spot in new office buildings would be targeting companies that have 50 employees or less. That is where most of the jobs are being created in this economy. Trying to always land the big fish companies has not produced results. IMO, we should be going after the smaller companies that have a lot of growth potential. Ones that will rent one floor of an office building today, but will expand to three floors in 10 years.

The other thing about smaller tenants is that when one of them decides to move out, it doesn't devastate your occupancy rate suddenly. When one tenant takes up half your building, when they leave, it is a big deal and can severely affect your ability to make payments on your loan. If you have a bunch of tenants, then the turnover is spread out more evenly, and you have less vacant space at one time.

User avatar
FangKC
City Center Square
City Center Square
Posts: 12050
Joined: Sat Jul 26, 2003 10:02 pm
Location: Old Northeast -- Indian Mound

Re: Traders on Grand

Postby FangKC » Fri Apr 01, 2016 1:48 am

GRID wrote:Does locking that property up as parking for the traders building affect the potential development of the site into an office tower? Isn't that surface lot where the office tower is proposed? Although I suppose the new office tower would have a parking garage that the traders building could share.

With all these buildings going residential, I can't believe there would not be some demand for new construction office space downtown. Office towers are now going up again in most other cities (downtowns), so hopefully KC will see some action as well.


I noticed on LoopNet that 207 parking spots are up for sale right across the street in the 1112 Grand parking garage (attached to WallStreet Tower). They are selling spaces on levels 1-4 of the 13-story garage. Does anyone know who used these spaces? Was it a company that moved? Were they tenants in Traders on Grand, who because the building emptied out, don't need them any longer?

http://www.loopnet.com/Listing/19623481/1112-Grand-Kansas-City-MO/

If Sunflower were to buy these spaces they would have enough for each apartment to have at least one-space.

flyingember
Oak Tower
Oak Tower
Posts: 5418
Joined: Tue Jul 17, 2012 7:54 am

Re: Traders on Grand

Postby flyingember » Fri Apr 01, 2016 8:13 am

1112 Grand? I know some the Borel Building workers use sit, they don't have dedicated parking.

The Bryant Building doubtless uses it too for the same reason

User avatar
DaveKCMO
Global Moderator
Global Moderator
Posts: 15041
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Traders on Grand

Postby DaveKCMO » Fri Apr 08, 2016 2:44 pm

DaveKCMO wrote:i'm told the "petitioners" are considering legal action on this incentives package.


i guess there are no more council actions, so no lawsuit or challenge.

User avatar
DaveKCMO
Global Moderator
Global Moderator
Posts: 15041
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Traders on Grand

Postby DaveKCMO » Wed Apr 20, 2016 3:03 pm

EDC has posted this job for bidding. really bummed the drive-thru stays, although it appears the entrance to it will be narrowed and gussied up. :roll:

geeman68
Western Auto Lofts
Western Auto Lofts
Posts: 637
Joined: Wed Mar 12, 2008 12:22 am
Location: Kansas City, MO

Re: Traders on Grand

Postby geeman68 » Thu Sep 08, 2016 2:24 pm

Any update on this conversion? I noticed there are large dumpsters in front now.

User avatar
DaveKCMO
Global Moderator
Global Moderator
Posts: 15041
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Traders on Grand

Postby DaveKCMO » Fri Sep 16, 2016 3:53 pm

geeman68 wrote:Any update on this conversion? I noticed there are large dumpsters in front now.


Abatement, interior demo. Looks like Silver Spoon Cafe is out.

User avatar
DaveKCMO
Global Moderator
Global Moderator
Posts: 15041
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Traders on Grand

Postby DaveKCMO » Tue Sep 20, 2016 9:37 pm

Image

User avatar
DaveKCMO
Global Moderator
Global Moderator
Posts: 15041
Joined: Sun Nov 27, 2005 6:22 pm
Location: Crossroads
Contact:

Re: Traders on Grand

Postby DaveKCMO » Sat Apr 15, 2017 8:56 am

http://www.bizjournals.com/kansascity/n ... lower.html

The project, scheduled for completion by October 2018, will include one- and two-bedroom apartments plus a couple of larger penthouse units on the top floor.

Mesmer said all of the apartment tenants will benefit from a smart apartment and property management platform developed by Homebase.ai, a local company incubated at Think Big Partners. The app-based technology will allow tenants to control devices such as locks, lights and thermostats; pay rent; and schedule maintenance and other services.


“We’ll have an electric car share program, where we’ll own or lease a fleet of electric cars our tenants can use,” said Stephen Block, a principal with Block Real Estate Services. “We believe it will allow folks who have been on the cusp of giving up their cars to go ahead and do so."

User avatar
KCPowercat
Power & Light
Power & Light
Posts: 27246
Joined: Mon Oct 07, 2002 12:49 pm
Location: Quality Hill
Contact:

Re: Traders on Grand

Postby KCPowercat » Sat Apr 15, 2017 12:02 pm

reported sidewalks blocked by this construction.

scooterj
Oak Tower
Oak Tower
Posts: 5704
Joined: Sun Oct 12, 2003 1:30 pm
Location: Northmoor
Contact:

Re: Traders on Grand

Postby scooterj » Mon Apr 17, 2017 11:41 am

KCPowercat wrote:reported sidewalks blocked by this construction.


The construction barriers are making it really hard to see to safely cross at 12th & McGee. The Pickwick initially had the same problem at 9th but mitigated it by replacing a section of barrier with fencing and temporarily making that intersection an all-way stop. They need to do the same thing here.

User avatar
KCPowercat
Power & Light
Power & Light
Posts: 27246
Joined: Mon Oct 07, 2002 12:49 pm
Location: Quality Hill
Contact:

Re: Traders on Grand

Postby KCPowercat » Mon Apr 17, 2017 12:25 pm

And make a walkway

WoodDraw
Colonnade
Colonnade
Posts: 739
Joined: Tue Jan 27, 2004 8:53 pm

Re: Traders on Grand

Postby WoodDraw » Thu Apr 20, 2017 8:28 pm

KCPowercat wrote:And make a walkway


Looks like they did!


Return to “Downtown”

Who is online

Users browsing this forum: No registered users and 4 guests