Houston-based SparrowHawk LLC has acquired College and Renner Business Center, a four-building, 226,009-square-foot light industrial portfolio in Lenexa, Kansas, part of Kansas City’s Johnson County industrial submarket.
John Huguenard and Ed Halaburt with JLL Capital Markets team marketed the portfolio on behalf of BentallGreenOak the seller. Financial terms of the transaction were not disclosed.
“We’ve been paying very close attention to the Kansas City marketplace, an area we believe to be a growing industrial market because of its central location, and are glad to expand our national portfolio there,” said Alfredo Gutierrez, SparrowHawk’s Founder. “This four-building asset, in a great location and with a diverse roster of tenants, is prototypical of what we look for when entering and building a presence in a new market.”
College and Renner Business Center, considered one of the highest image business parks in Lenexa, consists of four buildings ranging in size from approximately 44,700 square feet to 76,200 square feet. One of the other key attributes of the asset is the ability to control an additional 13 acres of developable land on which SparrowHawk can expand available space of the business center.
At acquisition, the property was 91% leased to tenants that include GEICO, 55,459 square feet; CVS Caremark, 29,786 square feet; Mortgage Residential Center, 26,552 square feet; SAFC BioSciences, 26,552 square feet; and US Foods 24,785 square feet. There is one vacancy, a space totaling 19,871 square feet, in Building A.
Among the other characteristics that further strengthen the positioning of College and Renner Business Park include the caliber of construction and level of finishes that make it highly sought after in the market. While there are some traditional industrial uses within the center, tenants such as GEICO, Catamaran and CVS Caremark have located call center and related operations there.
“The pandemic and greater attention to easy limited accessibility, social distancing and limiting exposure to common areas, elevators and stairways has further strengthened the appeal and demand for this type of space,” Gutierrez said. “It’s a preferred choice by lots of companies these days.”
The tenancy of the business center is made up of strong credit tenants. A 9% vacancy, which is above the Kansas City vacancy of 5% and the Johnson County vacancy rate of 5.7% provides the opportunity to improve cash flow by leasing up the one vacant space. Further, the WALT (weighted average lease term) of 3.1 provides a certain level of stable cash flow with long term upside potential, whether the tenants renew or replacement tenants are secured.
According to Gutierrez, the acquisition of College and Renner is a great start to the portfolio that SparrowHawk intends to establish. In keeping with its investment history in other markets, SparrowHawk ultimately would like to have a portfolio of Kansas City properties totaling between 2.0 and 3.0 million square feet. In the immediate term, while integrating these buildings into its overall portfolio, Gutierrez and SparrowHawk intend to develop a formal strategy for the 13 acres of developable land which could include speculative or build-to-suit development opportunities.
The Kansas City industrial market totals approximately 283 million square feet of space. Johnson County is the second largest submarket and totals 76 million square feet. In 2020 more than 3.6 million square feet of space was absorbed in Kansas City, with nearly 60% taking place in Johnson County. Other interesting factors include KC’s position as the number one market in the US for rail tonnage and a number three trucking center ranking.
SparrowHawk has chosen JLL to manage the four-building portfolio and the JLL brokerage team of Phil Algrim, Kevin Wilkerson and Erik Lund, as the leasing agents for the property.