Destination Northland | Real Estate Values

Nothing describes the magnitude of growth in the Northland better than recent residential real estate data.

To put things into perspective, Clay County accounted for 636 single-family construction permits through March 2005. Platte County also posted impressive numbers at 202.

According to Christy Solego with Reece & Nichols in Liberty, much of the residential growth in the Northland is in new developments centered on golf courses and other amenities. With the average sale price of a new home in Platte County at $272,000, homes in these developments are selling briskly.

For example, at The National, a luxury development and golf course touted as “the best in the Northland,” homes start at $300,000. Tiffany Greens, another planned community focused around its golf course and with around 1,200 lots, markets homes starting at $330,000. If these numbers leave you a little breathless, keep in mind that 59 new homes were sold in Platte County in the first two months of 2005 alone!

Although new home prices in Clay County were slightly lower, with an average sale price of $220,000, nearly 200 new homes were sold by the end of February, based on figures provided by the Kansas City Home Builders Association. The average home price in Clay County is closer to $170,000, but even at that level a total of 527 residential properties were sold by the end of February 2005 in Clay County.

Luxury developments are certainly not the only story for residential growth. South of Platte City, with easy access to I-29 and I-435, home development is exploding in response to job growth on the I-29 corridor. Residential building in this area ranges from multi-family to starter homes and up. This Platte growth continues all the way down I-29 to Parkville, Riverside and into North Kansas City.

Clay County has seen several areas of intense development as well, with Shoal Creek Valley as an example. This planned community encompasses 1,700 acres of residential and retail development, including an 18-hole golf course, parks and public schools. Each neighborhood is organized around one of these public elements, resulting in a design that links neighborhoods and places retail space within walking distance of homes.

This residential development has been accompanied by an explosion of retail activity, especially at I-35 and M-152 near Liberty and at I-29 and Barry Road in Kansas City, North. These areas have grown exponentially in the past five years, offering Northland residents a previously unknown level of access to goods and services.

The newest retail development to open is Zona Rosa at I-29 and Barry Road. Nearby, Boardwalk Square offers a multiplex theatre, retail stores and restaurants. Both developments are easily accessible to surrounding developments and communities.

Commercial space has been impacted by a regionally soft market and local factors, such as the vacant Farmland office space near the Kansas City International Airport. The vacancy rate for commercial office space in Clay and Platte counties is 27.4 percent, with negative absorption of nearly 220,000 square feet. Without the vacant Farmland space, the vacancy rate would drop to 20 percent. The asking price for rents for Class A space is $17.92/sq. foot and Class B at $15.07/sq. foot based on a gross lease.

Retail space and industrial space vacancy rates are significantly lower than office space.

Northland real estate values follow the generally positive outlook of metropolitan Kansas City and were expected to continue a steady demand with few low points. For the most part, the exceptions were upbeat--sometimes dramatically so.

As recently as summer 2003, the Federal Reserve Bank released information painting a positive outlook for the local District, which includes Kansas City and the Northland. In general, the area reflected a typically Midwestern economy with few of the extreme highs and lows seen on the east and west coasts. Even commercial real estate was generally less prevalent in the Northland where local demand and new development were generating momentum.

Overall, residential real estate remained strong throughout metropolitan Kansas City. This eight-county area, including Clay and Platte counties, reached 1,107 housing permits in July, the second highest month on record for the Home Builders Association. For January through July in Kansas City, permits jumped 11 percent over the previous year and were on pace to hit a record 11,000 permits for the year.

This bright picture was especially evident in the Northland, which for several years has accounted for the lion's share of building permits issued within the city of Kansas City. For 2003, single-family housing starts continued at high levels, with strong construction of entry-level homes making up for some weak construction of upper-end homes. Again, exceptions were especially evident in the Northland where luxury home sales were solid in several upper end subdivisions and in the area's large number of rural developments.

Home sales continued to increase throughout the area during the summer and most builders and realtors expect home sales to remain solid in coming months. Mortgage demand increased slightly and was considerably higher than a year ago.

In multi-family housing, the North-land was recently listed as the region's second hottest sector. Since 2001, the decline in investment had curtailed that bright picture significantly, although the Northland remained one of the brighter areas in the region. Construc-tion in prior years was primarily along I-29 but, in recent months, development has shifted to Highway 152 between I-29 and I-35.

The results are obvious. A high percentage of Northland seniors are college bound. Hundreds are recognized each year by prestigious scholarship programs such as National Merit Scholars and Missouri Bright Flight. In recent years, several Northland students have achieved perfect scores on either the ACT or SAT college entrance exams.

Next to single-family housing, the most dramatic real estate market in the Northland was retail. Construction in this category remained solid even during 2001-2002 and now it is accelerating.

The most dramatic areas were located near the intersections of Highway 152 with I-29 on the west and I-35 on the east. The western area exhibited the most advanced development with four separate areas completed and the upper bracket Zona Rosa under construction. In addition, the entire north-south I-29 corridor was seeing development, especially at 64th Street (45 Highway).

Though smaller in scale, the Northland also has successfully developed several historic areas into thriving retail markets. Parkville may have the most varied but Liberty, Weston and to a lesser extent North Kansas City and Excelsior Springs have followed this trend.

Less positive was the outlook for office real estate. As recently as 2001, the Northland saw a substantial increase in vacancy rates to 14.3. However, several large transactions occurred, which helped reduce vacancies: MetLife leased 50,000 square feet, Par Electric leased 20,000 square feet and CRB leased 28,000 square feet.

Kansas City metropolitan and Northland office lease rates are forecast to remain steady. However, the growing attraction of regional and local companies to the Clay and Platte counties is increasing demand. Other factors include the scale of population growth and the increased draw of prime areas such as the I-29 corridor.

Industrial real estate continues to remain solid in the Northland. Despite national economic factors, vacancies within Clay and Platte counties remain relatively low. Major announcements included a new world headquarters in North Kansas City's industrial districts, major additions to Hunt Midwest's SubTroplis and development along the I-29 corridor and in Riverside for Platte County.