Despite downtown boom, office space sits empty

[KCMax]

While housing and entertainment have boomed, office space in downtown KC sits empty

U.S. Census data shows that from 2001 to 2011, the latest year available, greater downtown lost 19.6 percent of its private employees. That’s 16,237 fewer private jobs.

That 10-year stretch covers the period from shortly before the downtown redevelopment boom began to just after the major redevelopment projects were completed. The greater downtown area runs from Crown Center and the Crossroads Arts District through the central business district to the River Market.

Reflecting the decline in the downtown workforce, the vacancy rate for Class A and B office space, the quality most private tenants seek, was at 26.7 percent in the first quarter of this year, according to real estate firm Cassidy Turley. That’s up from 19 percent during the same quarter 10 years ago.

That’s more than 2.3 million square feet of empty downtown office space, or the size of two Town Pavilions, Kansas City’s second tallest tower at 38 stories.

[maison rustique]

I'm no expert, but as someone who worked for many years (part of them in downtown KC and the Plaza around 40 yrs ago), I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work. Downtown has turned into entertainment central with virtually no shops. You'd have a hard time getting me to work down there these days. I'd love to see it return to a more traditional downtown with stores and small businesses.

I've never been to Wichita, but my sister went recently. She says we absolutely must go--has a great downtown with real stores.

[kcjak]

I'm no expert, but as someone who worked for many years (part of them in downtown KC and the Plaza around 40 yrs ago), I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work. Downtown has turned into entertainment central with virtually no shops. You'd have a hard time getting me to work down there these days. I'd love to see it return to a more traditional downtown with stores and small businesses.

I've never been to Wichita, but my sister went recently. She says we absolutely must go--has a great downtown with real stores.

I'm from Wichita and still go back every couple of months. I'm a huge proponent for downtown Wichita and they've made some strides, but I struggle to think of any 'real stores' there that are worth a trip...and they are all centered in Old Town, which is a Crossroads-type area.

[KCtonic]

I'm no expert, but as someone who worked for many years (part of them in downtown KC and the Plaza around 40 yrs ago), I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work. Downtown has turned into entertainment central with virtually no shops. You'd have a hard time getting me to work down there these days. I'd love to see it return to a more traditional downtown with stores and small businesses.

I've never been to Wichita, but my sister went recently. She says we absolutely must go--has a great downtown with real stores.

Just curious. What kinds of shops are you looking for in this example?

[rxlexi]

thanks for posting KCMax, that is an important article, and sums up very well Grid's ranting about DT's lack of corporate presence elsewhere on the site. DT is still losing large corporate tenants, and while I appreciate that the area should have a greater mix of retail and "convenience" uses, I don't think that is one of the primary drivers of these losses. How does DT compete with AMC's $50m incentive towards a new building in a greenfield? Or a generation that actively dislikes urban office space (where does everyone park?!)?

How do we insure that downtown remains (or becomes again) an attractive office and headquarters hub for the region? It is most certainly an effective arts and entertainment destination, is mostly clean, safe, and very attractive, and sits right square in the middle of the metro. What else needs to be done to encourage private sector commercial development, and to get our business sector to view downtown as it is in say, Minneapolis?

Perhaps a big move by Cerner, or a company like Google buying and transforming an existing skyscraper? No earnings tax plus heftier incentives? Free parking? Ideas?

[KCMax]

I'm no expert, but as someone who worked for many years (part of them in downtown KC and the Plaza around 40 yrs ago), I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work. Downtown has turned into entertainment central with virtually no shops. You'd have a hard time getting me to work down there these days. I'd love to see it return to a more traditional downtown with stores and small businesses.

I've never been to Wichita, but my sister went recently. She says we absolutely must go--has a great downtown with real stores.

I get your point, but its not like DT is in Timbuktu. Its a short drive to get to most shops that you would need to run errands at. I mean, you can cross ther river at be at Target in like 15 minutes. That's not that different from the suburbs.

[earthling]

How do we insure that downtown remains (or becomes again) an attractive office and headquarters hub for the region?

Double the downtown population and the rest will follow w/out (or w/fewer) incentives. There is a real tangible measurable demand for downtown housing - KCMO needs to address that quickly en masse, not one project at a time. Businesses have more options, cheaper construction and free parking in the burbs (and KS incentives in this case) - is harder to compete with. If there are more people living downtown, the businesses (and broader retail) will follow.

While downtown has lower % of metro workers than other cities, there is a report that shows nearly all downtowns are recently losing downtown workforce for the burbs. It's not going to get any better as telecommuting picks up. Better off focusing on downtown population since it has actual demand. At least KCMO has a suburban element to spread out workforce to suburban KCMO areas as well. KC North needs to step up the game and compete with the rest of metro (JoCo being major competitor). KCMO offers two types of choices for businesses, urban for those who want it and suburban for those who want it. While there are disadvantages to KCMO being sprawled out, KCMO needs to exploit it the best it can. Not all core cities can offer this.

[maison rustique]

I'm no expert, but as someone who worked for many years (part of them in downtown KC and the Plaza around 40 yrs ago), I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work. Downtown has turned into entertainment central with virtually no shops. You'd have a hard time getting me to work down there these days. I'd love to see it return to a more traditional downtown with stores and small businesses.

I've never been to Wichita, but my sister went recently. She says we absolutely must go--has a great downtown with real stores.

Just curious. What kinds of shops are you looking for in this example?

Clothing (business attire/for people over 35), shoes, drug store, news stand, shoe repair, dry cleaners, etc. I long for the days of Harzfelds, Macy's, Jones, etc.

I'm not sure what the parking situation is for downtown workers now, but when I worked there, I walked about 8 blocks to/from my car. I wouldn't have time to do that on a lunch hour and go north to a Target. Especially now--I don't walk nearly as fast as I did when I was 18. LOL!

[aknowledgeableperson]

I think that many companies that employee office workers realize that their best location is one where employees have conveniences nearby--so that they can run errands, do shopping, etc. on lunch hour and after work.

Its a short drive to get to most shops that you would need to run errands at. I mean, you can cross ther river at be at Target in like 15 minutes. That's not that different from the suburbs.

1. With the Plaza you can walk, not drive. Thought that was what all the downtown supporters stressed was 'walkability'.
2. The Plaza is not the suburbs.

But I think it is more than shopping. The Plaza is 'the place to be', downtown has no particular attraction to most employers, as evidenced by where businesses are located now.

Double the downtown population and the rest will follow

Some retail will follow but will it be the type that the Plaza has? Will that future population have the disposable income that many retailers look for? What downtown would need is two or three buildings at the higher end to attract the high earners not office drones.

How does DT compete with AMC's $50m incentive towards a new building in a greenfield?

I think it is way more than incentives. Look at Lockton. I am sure if it announced it was on the lookout for office space it would have received a lot more than the $50M. Instead it was quite happy where it is. Probably didn't even contemplate a move. Not sure about the turnover in Crown Center but it seems to hold onto its tenants.

[earthling]

Double the downtown population and the rest will follow

Some retail will follow but will it be the type that the Plaza has? Will that future population have the disposable income that many retailers look for? What downtown would need is two or three buildings at the higher end to attract the high earners not office drones.
.

Downtown income is already well above metro average according to a downtown council report and far more disposable income given nearly all are w/out kids. Downtown doesn't really need Plaza retail stores, just more general retail with a few desirable chains. The bottom line is that the first priority should be more housing as none of the other amenities or business will follow (or survive) w/out more downtown population. The demand is there right under our noses and not fully taken advantage of by developers. Downtown labor force losses are a US trend. If that's the way it's going to be, focus on residential.

[earthling]

Clothing (business attire/for people over 35), shoes, drug store, news stand, shoe repair, dry cleaners, etc. I long for the days of Harzfelds, Macy's, Jones, etc.

Halls in Crown Center. Large scale dept stores are a somewhat dying breed in favor of specialty smaller retailers. Don't count on one investing in very many downtowns unless with significant population density or is already established as a major shopping destination. Downtown KC doesn't need to be a shopping destination, just enough retail to serve residents and errands for workers. And it won't attract even smaller major retailers until the population doubles.

[KC_JAYHAWK]

Not sure what cities outside Chicago, NYC, or DC that are really building big new office towers in their CBD. Most of the construction you see in other local cities like Denver, Indianapolis, Minneapolis or St. Louis have been hotels or condo towers. PnL tower is suppose to break ground soon and will be 23 stories and I know the city is still working towards a new convention hotel, so hopefully we'll see some construction cranes soon. But I agee, a new 30-40 story office tower would be nice.

[KC_JAYHAWK]

Of course Cerner could have reversed this course instead of building out in Wyandotte. 4,000 new employees downtown would have been a boom. But just like Sprint 15 years earlier, they for whatever reason shunned downtown.

[earthling]

^Desire for large floor plates, free parking, cheap to build. These are some of the reasons why downtown workforce is shrinking (or has less of % metro workforce) in nearly all US cities. It's likely happening faster in KC because of KS incentives. I don't think it's transit. STL has better transit yet is in same situation if not worse.

[Eon Blue]

If you look at Google Earth, the approximate per-floor square footage of the Cerner building under construction the Legends is around 30,000. The area of the vacant block south of the old Fed is 90,000 SF. Same goes for vacant blocks in the East Village area. The USDOT building by the Federal Courthouse has a similar floor plate area to the Cerner building. The JE Dunn building has more SF than the Cerner building, albeit it's an eccentric shape.

Building costs may still be cheaper, but if you accounted for all the negative externalities of greenfield development, the gap would narrow.

"Free Parking" is a myth, as well. Just ask Donald Shoup.

[KCMax]

1. With the Plaza you can walk, not drive. Thought that was what all the downtown supporters stressed was 'walkability'.
2. The Plaza is not the suburbs.

But I think it is more than shopping. The Plaza is 'the place to be', downtown has no particular attraction to most employers, as evidenced by where businesses are located now.

Oh I agree, Plaza > downtown. I was just talking about downtown vs. random business park in Lenexa.

[chrizow]

Clothing (business attire/for people over 35), shoes, drug store, news stand, shoe repair, dry cleaners, etc. I long for the days of Harzfelds, Macy's, Jones, etc.

bob jones shoes, joseph a. bank, slabotsky and sons, michaels, and CVS are all downtown, and all within a much closer radius that you'd find in JoCo or anywhere else in the burbs. dry cleaners are there as well, and many office buildings these days have pickup/dropoff laundry services. as previously noted, hall's/crown center is a few minutes away.

so, what else?

[aknowledgeableperson]

"Free Parking" is a myth, as well. Just ask Donald Shoup.

Give it up. Very few look at it his way.

A person could have a $3,000/month job in the suburbs and not pay for parking. Or that person could have an identical $3,000/month job downtown but have less money because of parking costs. That is how just about everyone looks at parking. Knew quite a few people who wouldn't take a downtown job vs an identical job at the airport or maintenance facility because the employee would have to pay for parking. They would consider that to be a pay cut or a lateral transfer to a non-downtown job a pay raise because of the free parking.

From an employer viewpoint parking costs in the suburbs is probably cheaper than downtown with regards to construction costs and ongoing costs. And that is how they will look at it, not Shoup's way.

[pash]

.

[KCtonic]

"Free Parking" is a myth, as well. Just ask Donald Shoup.

Give it up. Very few look at it his way.

except about every developer who includes parking in their building. They may "sell" it as access to free parking, but it ain't free in any sense of the word. From the employer who is looking for a place for their employees, yes they do look at it as parking without cost to them or their employees (aka free) so you are definitely correct from that perspective. But the cost of that parking is there hidden or not.