Downtown office vacancy

Issues concerning Downtown as described by the Downtown Council. River to 31st Street, I-35 to Bruce R. Watkins.
dukuboy1
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Re: Downtown office vacancy

Post by dukuboy1 »

interesting, and it would be great if these companies are looking to utilize our area's lower cost of living as driver of business relocation.

Hope it actually comes into play. There is a lot to offer and many opportunities for companies who are willing to invest in the area. KC poised nicely for this kind of growth
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Re: Downtown office vacancy

Post by earthling »

Is good to hear conversations are happening as there are still some larger markets with decent cost of living (Dallas, Atlanta) relative to income that have huge amount of Class A office space available and far better air service. But if KC conversations are happening at the level implied, that's a notable something.
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Re: Downtown office vacancy

Post by AlkaliAxel »

earthling wrote: Fri Sep 02, 2022 5:11 pm Is good to hear conversations are happening as there are still some larger markets with decent cost of living (Dallas, Atlanta) relative to income that have huge amount of Class A office space available and far better air service. But if KC conversations are happening at the level implied, that's a notable something.
Now that I think about it, I wonder if the company Platt is referring to is the one that's leased to take 1400KC
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Re: Downtown office vacancy

Post by earthling »

Kastle back to work tracker shows a small but notable jump after the post Labor Day push for office return. Probably not what hoped for so far but at least some movement. NYC shows most improvement of large cities (driven by law firms) but still below 50% occupancy compared to pre-pandemic over 95%. Austin shows over 60% return, which I suspect KC metro is closer to. I haven't found any tracking for KC. A downtown indicator is daily streetcar traffic so will be interesting to see if there's a notable jump in Sept report for weekdays.

This measures actual keyfob/badge use to get into buildings, likely more accurate method than general surveys.
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https://www.kastle.com/safety-wellness/ ... k-to-work/
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Re: Downtown office vacancy

Post by earthling »

So much for the post Labor Day office return push, has lost steam. Still below 50% return average in largest cities. Could change dynamics of the more urbane cities more than expected if office return doesn't pick up. With winter coming and weather as an excuse to go in less often, maybe we don't see another pickup till Spring in largest cities?
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earthling
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Re: Downtown office vacancy

Post by earthling »

Some of the Midwest having a problem with office (desk job) employment losses since pandemic started, including KC. Looks to be mostly JoCo losses but MO side has been stagnant too.


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earthling
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Re: Downtown office vacancy

Post by earthling »

KC Q3 office report from JLL. As with most markets, office absorption is still negative, vacancies up. Though a bit of Class A absorption for Midtown/Plaza and S JoCo in Q3. CBD at a not so good 22% Class A vacancy according to JLL. Other agency reports should be coming next couple weeks.

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normalthings
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Re: Downtown office vacancy

Post by normalthings »

Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
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Re: Downtown office vacancy

Post by Cratedigger »

normalthings wrote: Tue Oct 04, 2022 2:08 am Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
Both of those towers are planned for 3,500/4,000 employees. Not a lot of employers in KC that approach that number unfortunately.

Maybe Black & Veach if they consolidated their KCMO and Leawood numbers?

Some the interesting options in the area (For instance, Henderson Engineering if they want to demonstrate a commitment to KCMO and end up working on the baseball stadium) just don’t seem to have the numbers to make even 50% of a 600+ tower work.

That said, I would love to see it happen.
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normalthings
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Re: Downtown office vacancy

Post by normalthings »

Cratedigger wrote: Tue Oct 04, 2022 8:26 am
normalthings wrote: Tue Oct 04, 2022 2:08 am Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
Both of those towers are planned for 3,500/4,000 employees. Not a lot of employers in KC that approach that number unfortunately.

Maybe Black & Veach if they consolidated their KCMO and Leawood numbers?

Some the interesting options in the area (For instance, Henderson Engineering if they want to demonstrate a commitment to KCMO and end up working on the baseball stadium) just don’t seem to have the numbers to make even 50% of a 600+ tower work.

That said, I would love to see it happen.
I also think we should be looking to attract regional employers: Omaha, Des Moines, Columbia, and Wichita.

Koch in Witchita, Union Pacific in Omaha, Wells Fargo in Des Moines all can fit a 600-700' in KC
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Cratedigger
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Re: Downtown office vacancy

Post by Cratedigger »

normalthings wrote: Tue Oct 04, 2022 10:17 am
Cratedigger wrote: Tue Oct 04, 2022 8:26 am
normalthings wrote: Tue Oct 04, 2022 2:08 am Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
Both of those towers are planned for 3,500/4,000 employees. Not a lot of employers in KC that approach that number unfortunately.

Maybe Black & Veach if they consolidated their KCMO and Leawood numbers?

Some the interesting options in the area (For instance, Henderson Engineering if they want to demonstrate a commitment to KCMO and end up working on the baseball stadium) just don’t seem to have the numbers to make even 50% of a 600+ tower work.

That said, I would love to see it happen.
I also think we should be looking to attract regional employers: Omaha, Des Moines, Columbia, and Wichita.

Koch in Wichita, Union Pacific in Omaha, Wells Fargo in Des Moines all can fit a 600-700' in KC
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Re: Downtown office vacancy

Post by GRID »

normalthings wrote: Tue Oct 04, 2022 2:08 am Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
People get mad when you say stuff like that. KC doesn't need new towers. Only infill, even though every other city is also getting at least as much low and mid rise construction as KC.

Honestly pretty sad that Omaha will have built two signature HQ towers. Plus Omaha has the massive BNSF building which could easily be another 50 story building. KC has actually never built a HQ tower in modern times. Only multi tenant mostly spec back in the late 80's (which will never happen now). Just shows KC's companies are just not interested in downtown and now KC has very few large HQs to even locate downtown.

I actually think KC's companies being based in suburban office parks has actually contributed to KC being at the losing end of mergers too where the new larger company choses the more "sexy" location.
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Chris Stritzel
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Re: Downtown office vacancy

Post by Chris Stritzel »

Hints of a new, signature HQ office tower in KC are floating around. Just have to know where to look. Whether or not it happens now because of the economy, I don’t know. We’ll see.
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Re: Downtown office vacancy

Post by earthling »

Newmark KC office report that includes rate of local materials/labor cost rise...
https://nmrkzimmer.com/wp-content/uploa ... _Print.pdf
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Re: Downtown office vacancy

Post by earthling »

Amount of office downsizing by industry in US..
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https://www.us.jll.com/en/trends-and-in ... t-10-05-22
dukuboy1
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Re: Downtown office vacancy

Post by dukuboy1 »

shame that the larger employers in KC all fled to the corporate office park trend in the 80's and 90's. I mean there are some large companies in town but Garmin is way out in south JOCO, who knows what will happen with Cerner Oracle but they are in the burbs (at least old HQ was close to downtown 8) ). Burns & Mac, etc.

JE Dunn Really whiffed on what they built IMO. Really wished they would have gone more vertical to add something. UMD same issue, no vertically just sprawls along for a block or 2.

At any rate fingers crossed maybe with BCBS-KC going into what would have been Waddle & Reed HQ's will help draw some more attention and get some companies looking downtown. Hopefully the added residents, especially younger talent being downtown will make companies rethink the strategy.

I think it will only take 1 or 2 to show a commitment and have it pay off and others will follow. But honestly we need to start going after companies and look to relocate them here. Love the idea of making KC the regional center for places in Omaha, Des Moines, etc.
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Re: Downtown office vacancy

Post by Highlander »

GRID wrote: Tue Oct 04, 2022 12:23 pm
normalthings wrote: Tue Oct 04, 2022 2:08 am Omaha and Cleveland both getting 600-700’ corporate HQ towers. It’s time for a KC employer to do the same.

I don’t think we’ll get any spec built but the FSL model (anchor tenant with additional space for lease) will work.
People get mad when you say stuff like that. KC doesn't need new towers. Only infill, even though every other city is also getting at least as much low and mid rise construction as KC.

Honestly pretty sad that Omaha will have built two signature HQ towers. Plus Omaha has the massive BNSF building which could easily be another 50 story building. KC has actually never built a HQ tower in modern times. Only multi tenant mostly spec back in the late 80's (which will never happen now). Just shows KC's companies are just not interested in downtown and now KC has very few large HQs to even locate downtown.

I actually think KC's companies being based in suburban office parks has actually contributed to KC being at the losing end of mergers too where the new larger company choses the more "sexy" location.
HR Block is the last tower built for a single tenant in downtown. It wasn't that long ago but it's also not that tall. Most of KC's larger companies began outside of downtown and have tended to stay in the burbs (Sprint, Garmin, Cerner) which is the primary reason the larger companies are not downtown. Those are the only companies that could have pulled off a 50 story tower (and not sure if Garmin would require anything that large either). American Century could have combined their 2 towers near the Plaza into a single taller building downtown.

Cerner/Oracle was the greatest missed opportunity in KC history. A local company and large employment base looking for new space and KC's leaders reverts back to the same 1970's urban-killing thinking that led to the demise of downtown in the first place. There's a good chance that the leaders of Cerner may never would have gone for it but that's really sweetening the pot in terms of TIF would have paid great dividends. I doubt if Oracle will invest in downtown KC any time soon; too much investment in SE KC.

I really doubt if suburban offices would have hurt KC on the merger front. KC companies have repeatedly been merged into larger and/or more stable companies (Waddell Reed and Sprint are two examples of that). The real problem is that KC companies don't dominate the market like many other companies and tend to be acquired by the larger fish. The one exception is Cerner which was tech company that dominated its market but also offered a new line of business for an even larger, giant tech company.
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Re: Downtown office vacancy

Post by earthling »

Cerner was the lost opportunity for a downtown tower or two. Sprint and Garmin were founded in KS so no surprises there. Sprint was in One KC Place after it first opened for a while so gave downtown a chance. Parking was a complaint with employees. KC is simply short on Fortune 500 companies as many of the larger get gobbled up at some point. A lot of chicken/egg issues like parking/transit improper balance since the 1950s, a suburban minded metro, KCMO mistakes, etc.
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Re: Downtown office vacancy

Post by beautyfromashes »

Has anyone done a per/ft2 analysis of which brings more activity and $ to any area, residential or office?
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Re: Downtown office vacancy

Post by earthling »

Cushman Q3 KC report. Generally agrees with JLL with amount of metro negative absorption. Even though 1400KC leased out downtown still had significant negative absorption (though lease payments may have not taken effect Q3). Says Northland and Crown Center have highest vacancies. Agrees with JLL that S JoCo had positive absorption this Q but had worst metro negative absorption YTD.

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