Downtown office vacancy

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

Post by earthling »

BizJournal has a report about suburban office space outpacing urban for last two decades...
https://www.bizjournals.com/kansascity/ ... urban.html

I did my own analysis based on Colliers data, which lists urban space for most markets as 'downtown'.
Chicago: Urban 155.6M, Burbs 160M - Urban has 96% burb space
Pitt: Urban 47.1M, Burbs 72.6M - 65%
KC: Urban (Mainly RCP Corridor) 34.5M sqft, Burbs 65.9M - 52%
Portland: Urban 25.6M, Burbs 49M - 52%
Columbus: Urban 20.7M, Burbs 47.5M - 44%
Minneapolis: Urban 56.8M, Burbs 129.8M - 43%
Indy: Urban 12.3M, Burbs 29M - 42%
Nashville: Urban 16.2M, Burbs 44.2M - 36%
Denver: Urban 41.4M, Burbs 127M - 32% (I suspect 'urban' is just downtown)

Urban KC represents a decent part of metro office space compared to other metros. Downtown less so but economically speaking the RCP corridor is becoming more and more 'downtown' and when a free streetcar line is running even moreso one solidly accessible stretch. And while Colliers urban bounderies probably inconsistent and questionable for some markets, either way, KC probably not poor with urban representation of office space. It could always use more Class A but incremental is fine, doesn't have to be towers.

https://www.colliers.com/en/research/of ... ok-q3-2021
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Re: Downtown office vacancy

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^ Doesn't urban KC have a ton of class B and C office space (which is typically less utilized) compared to other markets?
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Re: Downtown office vacancy

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^Open last link, it shows Class A separated for each market. Urban KC not great but not poor either.
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Re: Downtown office vacancy

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So by that list, KC seems high and many other markets seems very low. Especially bigger cities like Chicago and Philly, at least when you compare them to KC. I mean Philly only has three times the class A office space as KC? Come on. You can drop the entirety of the RCP office buildings of KC into a city like Chicago or Philly and you would not even notice a difference. I'm just trying to make a point that the numbers don't really make sense to me.

Does KC's include all the government office space? The IRS for example is 1.2 million sq feet and it only seasonally used I think.

I do think you can assume downtown KC is not great, but not terrible either when compared to the suburbs. However I do think the makeup of the tenants does matter to some extent. Much of Downtown KC is government (all levels) and law firms. KCMO seems to be lacking on the corporate side of things which tend to inject more life into a city and be more involved with civic issues in general.

I do agree, KC doesn't "need" towers at least if you question the phrase "towers instead of smaller infill projects", however, I'll say it again, a HQ tower for a local company is pretty independent of the smaller projects that are on the drawing board in KC. If a company wants to go downtown and be in a signature tower, it really doesn't effect smaller spec projects etc. If anything, it helps projects like that get off the ground because they increase the overall attractiveness of downtown for other office users.

There is almost no chance KC gets a large tower in the next 20 years. KC is no longer a HQ town. But you can't tell me that if Cerner or Garmin or Black & Veatch or Burns and McDonnell didn't build a 40 story tower downtown that it would not have triggered more office space, more hotels, more residential and yes, more small office projects like Stratus.

The best thing for KC to do is to continue the urban residential boom even with incentives. Developing the Main St corridor with Class A apartments all along the streetcar line instead of chasing those developers off to the suburbs and other markets is how you eventually bring the jobs back too.
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AlkaliAxel
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Re: Downtown office vacancy

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earthling wrote: Thu Feb 03, 2022 2:03 pm Urban KC represents a decent part of metro office space compared to other metros.
Wait...no way

So we're starting to figure out now that basically every metro in the country has sprawled out into the suburbs for office space. It's not just KC? I can't fathom this. We were supposed to be the worst?!
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Re: Downtown office vacancy

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^And the only person trying to spin it into an issue more than it is (comparing to Philly LOL and other Loud Noises) doesn't even live in KC anymore.
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Re: Downtown office vacancy

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AlkaliAxel wrote: Thu Feb 03, 2022 4:50 pm
earthling wrote: Thu Feb 03, 2022 2:03 pm Urban KC represents a decent part of metro office space compared to other metros.
Wait...no way

So we're starting to figure out now that basically every metro in the country has sprawled out into the suburbs for office space. It's not just KC? I can't fathom this. We were supposed to be the worst?!
There is plenty of proof that shows that downtown KC has been one of the most impacted in the country by suburban flight. KC now has one of the lower percentages of people that work downtown of any large city regardless of whatever office list you find. And one of the main things that keeps KC from being even worse is that KC is one of the largest employers of the federal govt in the country.

I was not comparing KC to Philly. I can't believe I have to actually explain this. I thought I was talking to adults that know this stuff. But I will try to say it in a way that makes sense to a five year old.

There is no way in hell that Center City Philly only has three times as much office space as downtown KCMO. That's not a knock on KC, that's a knock on however in the hell they compiled that list.

But whatever. You both have a pretty obvious underlying affection for Johnson County as it has come out in many posts and that's fine, but that does not just make everything different.

Would you care to answer my questions like an adult about the government office space etc or just go the insult route?
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Re: Downtown office vacancy

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GRID wrote: Thu Feb 03, 2022 8:08 pm There is plenty of proof that shows that downtown KC has been one of the most impacted in the country by suburban flight. KC now has one of the lower percentages of people that work downtown of any large city regardless of whatever office list you find. And one of the main things that keeps KC from being even worse is that KC is one of the largest employers of the federal govt in the country.

But whatever. You both have a pretty obvious underlying affection for Johnson County as it has come out in many posts and that's fine, but that does not just make everything different.
Right, KC was impacted more by suburban flight heavily due to many mistakes KCMO made over last 7 decades, not specifically due to JoCo/KS burbs, though Tokpeka/JoCo did exploit it while Jeff City has been more focused on STL - would be more surprising if they didn't take advantage. Pointing that out is not 'affection' for JoCo (didn't care for working in JoCo and not a burb proponent). Somehow that also got unfairly spun as affection for JoCo when otherwise it's a relatively unbiased assessment as detached observer, not based on emotion that rejects KCMO had a bigger involvement of their own issues over 70+ years. IOW, seems pretty clear KCMO made more mistakes than other core cities that had less urban flight.

On govt space, it's not less relevant whether counted or not, it's what KC has more of and partly defines KC workforce. KC has a higher % of Fed jobs for its size and history of few F500, needs to make the most of that rather than oddly downplaying it. Moving forward, what happens along the RCP stretch is more relevant than just downtown and the free streetcar expansion should really help build up one long 'downtown' economically speaking. And based on Colliers numbers, urban KC appears to be above average with office space relative to burbs. Yes, it's just one measurement that may have some inconsistencies market to market (as I initially mentioned).

Some of the bigger concerns right now... Some anti-development momentum within city and the Oracle/Cerner buyout implications, especially with Cerner posting jobs technically based in KC but over 60% could potentially live elsewhere. Would hope KCMO at least collects local income tax for those jobs.
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Re: Downtown office vacancy

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earthling wrote: Fri Feb 04, 2022 3:17 pm
GRID wrote: Thu Feb 03, 2022 8:08 pm There is plenty of proof that shows that downtown KC has been one of the most impacted in the country by suburban flight. KC now has one of the lower percentages of people that work downtown of any large city regardless of whatever office list you find. And one of the main things that keeps KC from being even worse is that KC is one of the largest employers of the federal govt in the country.

But whatever. You both have a pretty obvious underlying affection for Johnson County as it has come out in many posts and that's fine, but that does not just make everything different.
Right, KC was impacted more by suburban flight heavily due to many mistakes KCMO made over last 7 decades, not specifically due to JoCo/KS burbs, though Tokpeka/JoCo did exploit it while Jeff City has been more focused on STL - would be more surprising if they didn't take advantage. Pointing that out is not 'affection' for JoCo (didn't care for working in JoCo and not a burb proponent). Somehow that also got unfairly spun as affection for JoCo when otherwise it's a relatively unbiased assessment as detached observer, not based on emotion that rejects KCMO had a bigger involvement of their own issues over 70+ years. IOW, seems pretty clear KCMO made more mistakes than other core cities that had less urban flight.

On govt space, it's not less relevant whether counted or not, it's what KC has more of and partly defines KC workforce. KC has a higher % of Fed jobs for its size and history of few F500, needs to make the most of that rather than oddly downplaying it. Moving forward, what happens along the RCP stretch is more relevant than just downtown and the free streetcar expansion should really help build up one long 'downtown' economically speaking. And based on Colliers numbers, urban KC appears to be above average with office space relative to burbs. Yes, it's just one measurement that may have some inconsistencies market to market (as I initially mentioned).

Some of the bigger concerns right now... Some anti-development momentum within city and the Oracle/Cerner buyout implications, especially with Cerner posting jobs technically based in KC but over 60% could potentially live elsewhere. Would hope KCMO at least collects local income tax for those jobs.
I have a feeling they’re gonna amend/repeal that ordinance. Even Bunch said something to that affect.
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Re: Downtown office vacancy

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Big News -- nobody is going back downtown. This shouldn't be a great surprise, but apparently it is. Remote is permanent - that is the Big News of 2022.

White collar peeps will continue to thrive in the "competitive high school" suburbs, and perhaps places even more rural. It is an urban-depopulating trend.

Just throwing it out there for the forum to chew on.
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Re: Downtown office vacancy

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In the near term seems fairly permanent for a high % remote. Will be interesting to see how it plays out over 10+ years. Highly likely it be much higher % than before pandemic but to what degree...


Full return to office is 'dead,' experts say — and remote is only growing
The return to the office once seemed inevitable. Now, it’s remote — forcing employers into a "bend or break" moment.
https://www.nbcnews.com/business/econom ... -rcna11323
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Re: Downtown office vacancy

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herrfrank wrote: Sun Feb 06, 2022 2:23 am Big News -- nobody is going back downtown. This shouldn't be a great surprise, but apparently it is. Remote is permanent - that is the Big News of 2022.

White collar peeps will continue to thrive in the "competitive high school" suburbs, and perhaps places even more rural. It is an urban-depopulating trend.

Just throwing it out there for the forum to chew on.
^^This was a cold-hearted murder.
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Re: Downtown office vacancy

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beautyfromashes wrote: Sun Feb 06, 2022 10:29 am
herrfrank wrote: Sun Feb 06, 2022 2:23 am Big News -- nobody is going back downtown. This shouldn't be a great surprise, but apparently it is. Remote is permanent - that is the Big News of 2022.

White collar peeps will continue to thrive in the "competitive high school" suburbs, and perhaps places even more rural. It is an urban-depopulating trend.

Just throwing it out there for the forum to chew on.
^^This was a cold-hearted murder.
We don’t need the office space anyway, we just need residential. Nobody needs office space downtown to live there either because it’s all remote. WFH probably actually helps downtown get more residents because you can live there now and still work at your Overland Park office on the computer.
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Re: Downtown office vacancy

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Not 'all remote' but seems more likely that even if 30% of office jobs remain remote long term, the impact could drive a paradigm shift in how we use office and the way downtowns are defined. Some office industry analysts already talk about the shift of office from 'places of productivity' as a last century concept to 'places of collaboration' defining office use for this century. It's been two years we've been in this mode and reluctant companies have been forced to find a way to make it work so maybe even higher than 30% long term? A year ago I was thinking 10% to maybe at most 30% remote sticks long term but the plans for permanent trend seem to be picking up more than expected.

Blue collar to service industry workers are seeking a career change just to get a WFH job. Working moms too seek WFH so that they can stay home with kids and not have to pay for child care.

If this sticks. expect more Class B/C office buildings to convert to residential especially for downtowns/urban areas. Population density within a residential building is of course lower than workforce in same building size so if this sticks, many downtowns may never again have as much daytime foot traffic. Maybe, we'll see. It's a very interesting potential for major change in this century on how downtowns function during the day and could become a rough transition for some cities.
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Re: Downtown office vacancy

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AlkaliAxel wrote: Sun Feb 06, 2022 12:35 pm
beautyfromashes wrote: Sun Feb 06, 2022 10:29 am
herrfrank wrote: Sun Feb 06, 2022 2:23 am Big News -- nobody is going back downtown. This shouldn't be a great surprise, but apparently it is. Remote is permanent - that is the Big News of 2022.

White collar peeps will continue to thrive in the "competitive high school" suburbs, and perhaps places even more rural. It is an urban-depopulating trend.

Just throwing it out there for the forum to chew on.
^^This was a cold-hearted murder.
We don’t need the office space anyway, we just need residential. Nobody needs office space downtown to live there either because it’s all remote. WFH probably actually helps downtown get more residents because you can live there now and still work at your Overland Park office on the computer.
Perhaps, for first level corporate jobs. But, the biggest problem with what you're talking about is the education makeup of the city. Sure, you'll get the single professionals or young couples who will live DT and WFH. But, we barely have an accredited school system and there seems to be very little appetite for attracting families DT or even to the core. Sure, some will stay and send their kids to charter or private schools. Some will risk putting their kids into certain public schools. Most, will leave to the Northland or Overland Park and those that leave will either be the highest paid workers or will develop into the highest paid as their kids attend suburban Middle and High Schools. If what you're saying is true and working in a corporate tower DT becomes somewhat obsolete, building a world-class education system in the urban core should become the highest priority, attracting white families (I guarantee this would be heavily attacked) that will likely relocate to the suburbs.
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Re: Downtown office vacancy

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^Didn't you get the memo? Breeding isn't much of a thing anymore. But seriously yeah, building up better schools will be needed if downtowns start converting even more office to residential. How does Crossroads Academy compare to good suburban schools? I've never paid much attention.
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Re: Downtown office vacancy

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I see what he’s saying but that’s already been happening for years, in many different cities, and we should be fine if we getting young professionals, singles- or retirees!

The retiree demo is one I think is underrated. Alot of them don’t need the suburbs anymore because their kids are off to college or whatever, and wanna go back to living urban. I know a few who left JoCo after the kids went to college and moved to River Market (and love living there)
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Re: Downtown office vacancy

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Yeah and Plaza condos seem to attract many empty nesters from the burbs, anecdotally, seems to maybe be over 50% Plaza condo population. Can't ignore that city schools need to be improved but probably not as relevant for filling up hirise living.

Am not yet convinced the remote trend will stick with 30%+ office jobs over 10+ years with high certainty but there sure seems to be enough momentum building for a good chance of lasting long enough resulting in many more Class B/C office buildings converting to residential. That could actually spur more Class A construction as those leaving large Class B/C spaces for smaller/nicer Class A space, some rotating in remote employees as needed. And if after that remote trend subsides some, would probably spur even more new office construction given so much Class B/C office space removed. Lots of 'ifs' but a plausible scenario.
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Re: Downtown office vacancy

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I’m sure some of element of it will remain, but I really feel like the old “you get people here by attracting HQ’s and jobs” isn’t gonna be the way to do things anymore with remote work. Which means…the entire way to get people will be on the desirability of the city. People are gonna have to choose to come on their own, and not because some healthcare company job made them move to Columbus or something.
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Re: Downtown office vacancy

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Colliers' Q4 national report...
https://www.colliers.com/download-artic ... 13ee08f0b0

Nationally, suburbs recovering with positive absorption already but CBDs still showing negative absorption on average though about half of CBDs showing some recovery...
On the demand side, suburban absorption was 9.7 million square feet in Q4 2021, compared to negative 719,525 square feet across the CBD markets. Two-thirds (66%) of suburban markets posted positive absorption in Q4 2021, ahead of 55% of CBD markets.
For KC urban core they claim vacancy is only 8.8%, among lowest/best in US. Given other reports show over 15% for KC and Colliers tracks a broader range of office buildings, it's possibly because smaller offices are doing better and KC has more Fed govt leasing, which some reports may not track.
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