Timing and Location Yield Investment Opportunities: There has never been a better time to invest in Kansas City's urban core

by Jerry Riffel

For the past year, big names in business and the arts, like the Metropolitan Kansas City Performing Arts Center, H&R Block Inc., Sprint Corp. and The Cordish Co. have been making headlines putting their dollars downtown. Individual real estate investors would be prudent to follow in their footsteps.

There has never been a better time to invest in our city's urban core. For the first time in recent history, the elements are in place for healthy real estate investing:

• The city has a sound development plan with some real projects: According to Mayor Kay Barnes, there is presently $2 billion worth of downtown projects announced or under way, including attractions like the Sprint Center, Kansas City Live and the President Hotel renovation. The arena alone is significant enough to impact investment throughout the loop.

• The downtown housing boom is now more than five years old, and it continues to pick up momentum. More than 15,000 people call the loop home, more than Roeland Park, Merriam or Mission. More than 2,000 additional living units are in the planning or construction stages. As the saying goes, "Retail follows rooftops," and this population will soon start to attract more retail and restaurant development. New housing projects with committed financing include Beacon Hill, the H. D. Lee Building, Liberty Lofts and the long-blighted Law Building and Professional Building.

• Most importantly, there is a true, responsible public/private partnership. The city is engaged in partnership with the private sector and the progressive group of leaders running our companies—a new generation of executives, like Mark Ernst, Gary Forsee and Scott Smith, who value downtown. The city is supporting the private sector with attractive incentive packages and a tremendous influx of investment in public infrastructure.

To be sure, the promise of this new package of development creates a first-rate urban center that will have no metropolitan competitor. Downtown has a dynamic all its own, and this will allow it to exceed returns on suburban investments. It's a good bet that if investors buy and hold downtown property, it will appreciate at least 100 percent.

Though many savvy investors have already snatched up quality properties downtown, good buildings remain, many of which are eligible for federal tax credits. The city has very generous incentives available for those who are willing to invest downtown, including tax increment financing.

• Interested investors should pay parti-cular attention to three downtown "hot spots": Baltimore Avenue from 12th to 14th streets and anywhere near the Cordish/H&R Block area to the east and north of the arena; anywhere in the Crossroads/Freighthouse district, east or west of Main Street; and east of Gillham Road between 31st Street and Crown Center. Flanked by the well-established Union Hill, the Gillham Road corridor is the host to Bob Frye's Cadillac Lofts with mixed-use retail and office, as well as Gillham Row.

As for property types, it's a good time to buy office space, not develop it. Downtown office buildings will become a better and bet- ter investment, as companies consider moves to the new first-rate urban environment.

In the right corridor, such as the trendy River Market and Crossroads/Freighthouse, retail is another smart move. A support system for downtown retail owners soon will be in place: Later this month, the Downtown Council of Kansas City will launch a recruitment drive to fill vacant storefronts in the area and plans to target local, regional and national tenants. The effort will include financing for tenants and assistance with permits, licensing and zoning regulations.

As for property types, it's a good time to buy office space, not develop it. Downtown office buildings will become a better and better investment, as companies consider moves to the new first-rate urban environment.

 

Jerry Riffel is a member of the Downtown Council and a real estate attorney at Lathrop & Gage. He may be reached at 816.292.2000 or at jriffel@lathropgage.com.