Kansas City has emerged as one the leading apartment markets in the Midwest as employment gains continue to fuel a healthy rental demand. For the last six years, greater Kansas City has experienced annual average employment gains of 1.5 percent, led by the technology sector. Thanks to the installation of Google Fiber, the Kansas City Startup Village is an appealing location to start a business and currently hosts more than 25 Internet startups. The increase in rental demand is also due to millenials flocking to the downtown area. From 2010 to 2015, residents aged 18 to 35 increased 20.5 percent. Employment opportunities are a big contributing factor, but so is the revival of downtown social life.
A proposed Kansas City incentive reform ordinance that would place a 75 percent cap on property tax diversions, abatements or exemptions for development projects was roundly supported last week at hearing during the council's Planning, Zoning & Economic Development Committee. The ordinance was written by City Councilman Quinton Lucas in response to the increasing use of citizen petitions to fight incentives on a project-by-project basis. Some say the threat of such petitions has scared development projects away.
While details still need to be sorted out and no action on the ordinance has taken place, the measure will be taken up by the PZED Committee again this week after members have had "time to digest" input provided by 21 citizens, school superintendents, and other civic and business leaders who testified Wednesday.
While the Midwest multifamily market may never experience the headline-grabbing stats that core, coastal cities do, its reliability continues to make the region an immensely attractive environment for private equity and similar investors. Secondary and tertiary metro areas such as Cleveland, Kansas City and Indianapolis are strong, steady, and a solid bet for investment. The higher cap rates and steady rent growth found in the Midwest offer higher returns in asset values than the nation's primary markets, especially as the sector approaches affordability ceilings in places like New York and San Francisco.
Cincinnati is the most cost-friendly city to do business among the 31 largest U.S. metro areas (those with populations of 2 million or more), according to the 2016 Competitive Alternatives study by KPMG LLP. Cincinnati's favorable leasing costs and low property taxes contributed to its first place ranking in the study, which compares key cities across a range of costs and other factors related to doing business. Orlando, Fla., was the second most cost-competitive location in the large-cities category, followed closely by Tampa, Fla., Cleveland, and San Antonio. Other locations ranked among the top 10 large U.S. cities included Atlanta, Charlotte, N.C., Miami, St. Louis and Kansas City, Mo.
There's a boutique hotel boom taking place in downtown Kansas City, which civic leaders say will help the city attract large conventions, as well as business and tourism travel. Nine boutique hotels have been announced or are under construction, which will add more than 1,170 rooms in the downtown and Crossroads area. This inventory count is separate from the planned 800-room Hyatt convention center hotel. Today, there are about 3,450 hotel rooms in Kansas City’s downtown, Crossroads and Crown Center areas.
It's well-known that millennials are flocking to urban cores across the country, causing developers to rush downtown in order to meet the growing demand. Midwest cities are gaining just as much attention, and brokers say it's not just young people that are moving downtown. Consumers of all ages want to live where they can walk to public transportation, grocery stores, shops and restaurants, and the Midwest has plenty of thriving cities to meet those needs. Downtown Chicago, of course, is thriving. But Cleveland, Omaha, Nashville, Minneapolis/St. Paul and Kansas City are all booming, and there’s even a resurgence happening in downtown Detroit. However, one Midwest downtown seems to be leading them all: Louisville.
The Kansas City Council unanimously approved a multifaceted financing package for the proposed $311 million downtown Hyatt convention center hotel, which is expected to allow construction of the long-awaited, 800-room facility to begin early next year. Completion is expected by 2018. Supporters argue the project is crucial to attract large conventions to the city, as several have had to decline in the past due to lack of hotel rooms. Conventions have also left the city due to the same issue. Councilman Scott Wagner said that, according to figures provided to him by Visit KC, 665 groups stopped holding their conventions in Kansas City. That represented a loss of 5.5 million room nights and $3.9 billion in economic impact, he said.
This week, the Tax Increment Financing (TIF) Commission of Kansas City approved TIF assistance for the $138 million Commerce Tower mix-use redevelopment project. The approval was a major relief for the developers, as they lost out on roughly $5 million for hard costs they had anticipated in state brownfield tax credits. While state offices did offer an explanation why that would no be receiving the assistance, some sources assume it is due Missouri's effort to support the new $1 billion riverfront football stadium in St. Louis in hopes of keeping Rams owner Stan Kroenke from moving the NFL team to Los Angeles.
In April, both Missouri (Senate Bill 149) and North Dakota (House Bill 1089) enacted legislation creating sales and use tax exemptions for new and expanding data storage centers. According to CPA Practice Advisor, Missouri S.B. 149 provides several state and local sales and use tax exemption for machinery, equipment, computers, electrical energy, gas, water, and other utilities, including telecommunication and Internet services, for new or expanding data centers. Purchases of tangible personal property for the construction of a new data storage center facility are also exempt. North Dakota HB 1089 provides a sales and use tax exemption for enterprise information technology equipment and computer software purchased for use by a qualifying business in a qualified data center. The exemption is also available to existing data centers that have undergone substantial refurbishment, with at least 16,000 square feet improved through methods including energy efficiency improvements, building improvements, and the installation of enterprise information technology equipment, environmental controls, and computer software.
As the U.S. economy continues to improve and commercial real estate fundamentals strengthen, industrial investors are looking for opportunities for big returns that can come from increased risk and alternative investments. Secondary markets are piquing the interest of such investors this year, as these cities seem to provide the slightly elevated risk and more attractive returns along with many of the demand drivers that attract investments in primary markets. The push to secondary cities is taking place largely because the nation's top-tier industrial cities, such as Los Angeles, Chicago and New Jersey, can no longer meet the demands for large, modern warehouse space because there simply isn't any left. In fact, the overall vacancy rate in Los Angeles was a meager 4.5 percent in the first quarter, down 70 basis points from a year earlier.
Categories: Distribution Centers, Personal Property, Arizona, New Jersey, Industrial, Washington, Real Property, Industrial & Manufacturing, Indiana, Illinois, Missouri, Ohio, California, Florida, Warehouse