Selling Kansas City--Market by Market

With two existing shopping centers in the Kansas City area and three more on the way, RED Development sells Kansas City every day to consumers, but even more importantly to our tenants. One thing we've learned, especially as the Kansas City metropolitan area has grown to nearly 2 million people, is the importance of selling each individual market on its own merits. For RED, this ultimately comes down to convincing a tenant that the center we are building is right for them based on the strength of each individual, submarket within the greater Kansas City area.

To do this, RED carefully examines each potential submarket prior to taking on a development project. This includes evaluating demographics like current and projected populations, household income and travel patterns; identifying competing shopping centers and their tenant mix; conducting research to examine consumer preferences in the market; and a host of other factors. If we determine an individual sub- market is underserved, our goal then is to design, build and lease a shopping center that tenants will find appealing and that consumers will want to visit. Examples of this can be seen in each of our Kansas City projects.

Kansas City North is an attractive opportunity for retail development with more than 600,000 people in the trade area, a median age of 36 and rapid housing growth in the late 1990s. When RED built BarryWoods Crossing in the Northland area in 1997, this submarket was underserved in the areas of entertainment and soft goods. We were able to attract a movie theater, several restaurants and traditional power center tenants such as Barnes & Noble and Office Max into a 270,000 square-feet center. Today, as the population has grown and household incomes have increased, that same market can support The Shops at Boardwalk, a smaller (136,000 square feet), open-air lifestyle center with retailers such as Borders, Coldwater Creek, Chico's and Talbot's.

SummitWoods Crossing in Lee's Summit, located in southeast Kansas City, provided RED with a different opportunity based on the area's low retail square feet per capita. Without any traditional malls within 10 miles, Lee's Summit was able to support a larger shopping center (735,000 square feet) that combines traditional “Big Box” retailers such as Super Target and Kohl's with smaller, “lifestyle” tenants like Bath & Body Works, Starbucks and Eddie Bauer Outlet. Demonstrating that this concept has worked, 62% of telephone survey respondents rated SummitWoods Crossing as the number one, ongoing effort within the community that has improved life for citizens of Lee's Summit.

RED's Cornerstone of Leawood project in Johnson County is an example of how a dynamic, high-growth area can make the decision to develop easier. During the next five years within a three-mile radius the population is expected to grow by nearly 20% and the average income is expected to grow by almost 30%. Within the immediate area, more than 5 million square feet of retail space is being developed. And that doesn't include the 12,000-member mega church and the Sprint headquarters with 17,000 employees just blocks away. This 325,000 square-foot mixed-use project will combine upscale retailers, dining, entertainment and office space.

The Legends of Village West, our fifth development in the Kansas City area, located next to the NASCAR Kansas Speedway requires a different perspective. Rather than focus on immediate demographics or whether the market is underserved, The Legends is part of a larger shopping and entertainment destination. The Speedway hosts more than 200 event days each year and Cabela's and Nebraska Furniture Mart are expected to attract up to 10 million shoppers annually. And instead of miles away, we look at drive time: more than 600,000 people live within a 30-minute drive of The Legends. Opening next summer, tenants will be drawn to this 600,000-square-foot outdoor shopping center for its ability to support and enhance any visitor's lifestyle.

These examples demonstrate the importance of examining and selling individual submarkets within Kansas City. While the old adage in retail is that location is everything, RED Development's perspective is that the location within the location is even more important.

Dan Lowe is the Partner – Project Coordination & Financing at RED Development. He may be reached at 816.777.3500 or by e-mail at dlowe@reddevelopment.com.