KCRag Forum

There are big office buildings being proposed all over the country. Things have really ramped up the past few months. Developers seem to be getting more confident.

Developers are taking advantage of low interest rates but would bet new projects slow down if vacancy starts to exceed 25% even in hot markets willing to take more risks. So far every quarter vacancy is getting worse across US and may continue for a while depending on how hybrid WFH plays out in the long term. Lease renewals tend to be less space and/or shorter terms, sub-leasing continues to rise. If strategy is to convert Class B/C buildings to residential or other uses as needed then might justify more new Class A construction.

And for now, office using employment is still down though KC is one of few exceptions. Could explode once dust settles, developers are placing their bets. Markets with developers willing to take most risk will benefit in the long run but KC doesn't have any high risk players.

There are no lenders willing to back a large spec project in downtown KC

normalthings wrote: ↑Mon Jun 28, 2021 11:35 am There are no lenders willing to back a large spec project in downtown KC

I think they're hesitant because there really hasn't been any in the last few decades. This makes it risky in the eyes of lenders. I quick turn of W&R might be just the comparable to make spec feasible.

Tenants are waiting for new office space and developers are waiting for miracle tenants who are willing to wait 2-3 years for completed office space

Is this thing ever gonna get built..?

^Given that W&R is now a spec building Strata devs may wait to see how W&R leases out.

AlkaliAxel wrote: ↑Mon Jul 12, 2021 2:26 pm Is this thing ever gonna get built..?

It’s a Copaken Brooks project so my bet is no

Looking on it now, would you rather have had this Waddell tower or the Strata tower done, if you could only choose one of them? Initially I'd have said Strata, but I think with Waddell's it gives us a greater chance to get the south cap.

AlkaliAxel wrote: ↑Mon Jul 12, 2021 4:37 pm Looking on it now, would you rather have had this Waddell tower or the Strata tower done, if you could only choose one of them? Initially I'd have said Strata, but I think with Waddell's it gives us a greater chance to get the south cap.

Strata would’ve helped to bulk the DT loop, but I agree W&R will probably contribute to providing a cap

AlkaliAxel wrote: ↑Mon Jul 12, 2021 4:37 pm Looking on it now, would you rather have had this Waddell tower or the Strata tower done, if you could only choose one of them? Initially I'd have said Strata, but I think with Waddell's it gives us a greater chance to get the south cap.

WR's floor plates are much better aligned with modern office users.

Personally, I wouldn't mind if Copaken dropped Strata in favor of a residential tower here, or co-develop with Cordish. Depending on the success of 1400/WR, then the 13th and Wyandotte and 13th and Grand office towers could move forward as speculative development. Of course, all office developers would like a tenant signed up but if WR fills up quickly, then more speculative development will show up.

Strata would be a good place for office space based on connectivity to major streets, highways, and the streetcar. But at this point in time, 4 potential speculative office projects in Downtown KC is a stretch. Residential is the way to go. Keep increasing the population to support current and future businesses and to keep/activate the sidewalks. There's still plenty of room to build on down there so losing Strata for residential wont be the end of the world.

So basically, Strata will be built based upon how quickly Waddell fills up? And when will Waddell start filling up?

A friend at Cushman said they had a meeting on this project a few weeks back... sounds like the project is very alive depending on W&R building.

AlkaliAxel wrote: ↑Mon Jul 12, 2021 5:27 pm So basically, Strata will be built based upon how quickly Waddell fills up? And when will Waddell start filling up?

It's not a guarantee Strata gets built at all. I'm saying, along with others, that if Waddell fills up after it opens sometime in 2022, then projects like Strata, 13th and Grand, and 13th and Wyandotte could advance to construction because it would be proven that speculative office development makes some sense to pursue.

As for a timeline on when Waddell will fill up, it could be filled when it opens or it could be a few years. I have a strong hunch that it will open with a tenant or two but we'll see. Speculative office development in Downtown KC hinges on the success of Waddell filling up.

rockchalk56 wrote: ↑Mon Jul 12, 2021 5:32 pm A friend at Cushman said they had a meeting on this project a few weeks back... sounds like the project is very alive depending on W&R building.

Which makes sense. All depends on the WR building

Sheesh, alot riding on this Waddell building then...

AlkaliAxel wrote: ↑Mon Jul 12, 2021 6:20 pm Sheesh, alot riding on this Waddell building then...

With WFH and WFA becoming more prevalent, I can see quite a few relocations in KC’a future, as it would be centralized to the US, meaning, if any company had to bring someone in for whatever work reason, no one in the lower 48 would be much more than 3 hours flight.

Anthony_Hugo98 wrote: ↑Mon Jul 12, 2021 7:41 pm

AlkaliAxel wrote: ↑Mon Jul 12, 2021 6:20 pm Sheesh, alot riding on this Waddell building then...

With WFH and WFA becoming more prevalent, I can see quite a few relocations in KC’a future, as it would be centralized to the US, meaning, if any company had to bring someone in for whatever work reason, no one in the lower 48 would be much more than 3 hours flight.

Hmmm...that would work well in KC's favor right? I thought WFH was coming down too.

Chris Stritzel wrote: ↑Mon Jul 12, 2021 5:15 pm Personally, I wouldn't mind if Copaken dropped Strata in favor of a residential tower here, or co-develop with Cordish. Depending on the success of 1400/WR, then the 13th and Wyandotte and 13th and Grand office towers could move forward as speculative development. Of course, all office developers would like a tenant signed up but if WR fills up quickly, then more speculative development will show up.

Strata would be a good place for office space based on connectivity to major streets, highways, and the streetcar. But at this point in time, 4 potential speculative office projects in Downtown KC is a stretch. Residential is the way to go. Keep increasing the population to support current and future businesses and to keep/activate the sidewalks. There's still plenty of room to build on down there so losing Strata for residential wont be the end of the world.

Or, Copaken just drops the project and HR honors the original agreement.

I agree with Anthony_Hugo98. This may be speculative, but I'm guessing post-COVID that a lot of companies that will continue to have employees working in offices will start looking for cheaper places to operate. The cost-of-living in places like New York, Seattle, Los Angeles, San Francisco, Boston, and San Jose will jump back to high levels putting pressure on incomes and operating costs.

Los Angeles can't build housing fast enough, and lower-income workers, retired, and disabled are being pushed out into the streets from their long-time rental apartments.

Employers see that it's not necessary to operate out of high-cost cities as much. They will look for cheap office space, and housing, in medium-sized cities on the upswing. Ones putting in streetcars, expanding airports, and that have sports, as well as lively art and restaurant scenes.

Another issue that isn't being discussed as much is pressure to provide basic needs like water is going to hurt many larger cities like Los Angeles, San Francisco/Oakland/San Jose, San Diego, Phoenix, Las Vegas, and even Atlanta. I think companies also noticed Texas' problem with their electrical grid, so they might be put off a bit about relocating there.

The only thing that really will hurt us with these relocations is the MO/KS legislatures propossing and passing regressive voting / anti-gay/trans bills, etc.