Ken Block considers 2013 to be a very good year, both for the Kansas City region and for his real estate company, Block Real Estate Services.
And no wonder. Kansas City-based Block Real Estate Services recently earned approval for two significant projects, a $64 million multi-family project and a 120-acre logistics center, both in Lenexa. At the same time, the Kansas City region itself has seen a steady rise in commercial activity.
For Block and other developers here, this is good news.
“There is no question that the market is substantially more active now than it was in 2012,” said Block, managing principal of Block Real Estate Services.
What’s behind this steady increase in commercial deals? Block said that investors have been waiting to sink their money into strong projects. Many of these investors are no longer waiting.
“There is a huge amount of money pent up by investors,” Block said. “That is causing a lot of new development here. As the market has strengthened, that money has had a hard time buying properties at cap rates that make sense. There are higher cap rates going on in speculative deals today. So the money is going toward new construction.”
Making an impact
Block’s company is making a mark in the region when it comes to new projects.
In April, the Lenexa City Council approved $103 million in industrial revenue bonds to finance the construction of the Lenexa Logistics Centre in Lenexa. This project will cover 120 acres. And it’s typical of the large distribution centers that are popping up across the Kansas City region. Railroads have long been important for this area, and as the economy continues its slow recovery, intermodal centers are again providing a boost to the Kansas City region.
This fall the new BNSF Intermodal will open in nearby Edgerton, only adding to the region’s strong rail presence. Cassidy Turley found that during the last 10 years, the total square footage offered by bulk warehouses in the region — those warehouses that include more than 200,000 square feet and boast ceiling heights of at least 28 feet — has jumped from 13.1 million square feet to 19.4 million square feet. That’s an increase of 47.5 percent.
At the same time, the multi-family market in Kansas City remains hot. And again, Block provides an example. The company won approval, also in April, to build the Residences at City Center in Lenexa, Kansas. This project, which will include 552 units, is the first large-scale residential development for Block, a company that typically focuses on industrial and office work.
Block considers the apartment project to be a luxury one, and it will include such amenities as pools and clubhouses. It will be a key component of Lenexa’s City Center project, a master-planned mixed-use neighborhood that is supposed, at its completion, to include 3 million square feet of retail, office and residential space on 200 acres.
But as busy as Block has been, he still sees room for improvement.
“For the market here to get really hot again, we need a heck of a lot better economy as a whole,” Block said. “The economy is improving, but it’s still weak. Corporations are doing well because they’ve skinnied themselves down, they’re still producing goods and they’re keeping the belt tight. But our economy won’t really improve unless get more jobs. We still have high unemployment and even higher underemployment. There are too many people who are out of the jobs market completely. For the economy to get completely rolling, that has to change.”