KC State of the Market - 3rd Quarter 2007

Kansas City- City of Fountains

Perhaps the most encouraging aspect of the Kansas City market is the fact that major shopping center development is occurring in virtually every corner of the metropolitan area. From Barry Road to Belton, from Liberty to Olathe, from Lee's Summit to Wyandotte County and Johnson County to the Country Club Plaza. The balanced disbursement of new retail projects is good news as we continue to build and create a vibrant and healthy environment.

Fueled by robust residential growth around six million square feet of retail development either under construction, planned or proposed. Over two and a half million square feet of retail was added to the metro area over the past 12 months and 17.6 million square feet is planned.

How about Vacancy?

With all of the new development, is vacancy an issue? Only 8.29 percent of the total square feet is vacant. Out of the surveyed areas, Lee's Summit/Raymore/Belton is the lowest area with a 2.57 percent vacancy rate. Other areas with less than 5 percent vacancy rates are Wyandotte County KS and Southern Johnson County. The central Kansas City area has a 9.79 percent vacancy rate.

Retail Projects Keep Rolling!

Throughout every corner of the Kansas City metropolitan market, new shopping centers are opening their doors, with still more in the construction and planning stages. Construction is underway in the Downtown area. Ground broke in 2005 on the new Sprint Arena, which along with H&R Block's new head quarters will anchor over 425,000 square feet of new retail space. They plan a summer 2007 shops opening.

In Wyandotte County, The Legends is enjoying its first year in Village West. The Legends brings a variety of dining, retail and entertainment venues to what is Kansas' largest tourist attraction. This area has exploded in popularity since the opening of Cabela's and Nebraska Furniture Mart in 2003. Other tenants include T-Rex, and Dave and Buster's. The official grand opening of phase II was in spring 2006, thus adding new tenants such as JCPenney and Target in the fall.

Schlitterbahn Vacation Village Resort is also coming to KCK in 2008. There is $225 million in sales tax revenue (STAR) bonds for the construction of the water park near the Kansas Speedway for a total proposed $412 million resort. A spokesman, Mike Taylor said. Schlitterbahn, based in New Braunfels, Texas, would use its own money to buy about $206 million in STAR bonds to help finance the project. Schlitterbahn also will borrow and be responsible for repaying a $205 million construction loan for the project. The project is to be located east of Interstate 435 between State Avenue and Parallel Parkway. Construction is expected to begin in early 2007 with the opening slated for early 2009.

The resort will include a 300-room, full-service hotel, waterfront cabins and a "Treehaus Resort" with elevated rooms in lifelike giant tree structures. All accommodations will be integrated with the water park attractions, which will be linked with miles of interconnected rivers, making it one of the world's largest tubing parks, the Unified Government said in the release. The resort also will have a marine park with indoor and outdoor exhibits of live marine animals, wildlife and other interactive exhibits.

A connected retail development will have 400,000 square feet of destination entertainment and shopping, most of it covered by a retractable roof. Stores and restaurants will line the nearly mile-long artificial river. Officials said they expect 3.3 million visitors annually, of which 1.5 million will come from other states, and first-year sales at the resort of more than $200 million. Schlitterbahn Vacation Village will pay full property taxes, which are expected to exceed $3 million a year, the county said. The resort will add more than 3,800 new jobs with a combined payroll of more than $105 million.

Moving south across the county line to 50th and Roe in northern Johnson County, West Star Companies has completed the $35 million Bella Roe Plaza project that entailed the complete demolition of Venture Plaza in Roeland Park. Opening in spring 2006, the new open-air market features a new Price Chopper, Lowe's, and other retail shops.

An expansive "suburban village" named Olathe Pointe is now open on the corner of 119th and Blackbob just east of I-35. The project contains a mix of entertainment and dining with Granite City, Starbucks, Smokey Bones, On the Border, Johnny Carino's, Marshall's, and Off Broadway Shoes.

In Southern Johnson County at 117th and Nall, a new urbanism, mixed-use development called Park Place, will span over 30 acres. The first phase of this project will add 125,000 feet of retail space to the market as well as 85,000 square feet of office space, a 52-unit condominium, a luxury hotel and a four-acre park. Nearby, an upscale lifestyle center is planned for the southeast corner of 119th and Roe in Leawood. Crate and Barrel has chosen this site for their entry into the Kansas City market. The 160,000 square foot center will feature a variety of high-end restaurants, clothing stores, home furnishing retailers and other specialty shops.

At 135th and Metcalf, Omaha based Cormac Company is planning a one million square foot open-air suburban village called Corbin Park. Grading is underway and a 2007-2008 opening is projected for this blend of upscale retailers, restaurants and entertainment options. Lifetime Fitness and Van Maur have announced their intent to anchor the center, and Cormac will be announcing other retailers soon.

Moving east into Missouri, the former site of the Blue Ridge Mall at I-70 and Blue Ridge Blvd. is in the process of being redeveloped into a new $88.2 million power center. The anchor tenant will be a Wal-Mart Supercenter. Independence is anticipating the 2006 opening of a spacious center at the southwest quadrant of I-70 and I-470. The Falls at Crackerneck will feature a 161,000 square foot Bass Pro Shop and an additional 300,000 square feet of retail space.

Indian Springs, the last enclosed mall to be redeveloped - the Unified Government has proposed tearing it down. The Unified Board of Commissioners scheduled a Dec. 21 2006 hearing to decide whether it should create a tax increment financing (TIF) district that encompasses the mall. If the district is approved, the road would be paved for a new development with a big-box store, smaller retailers, restaurants and office buildings. A TIF district also would give the Unified Government the power to condemn the property in case Indian Spring's owners, Kansas City Mall Associates, aren't willing to sell it. And, judging from a recent meeting, they aren't. Joe Vaught, the mall's broker, said the owners are committed to building a business park to complement the mall. A lease with the Kansas Department of Social Rehabilitation Services is in the works, Vaught said, as is a deal to build a long-term acute care hospital. One would be tempted to cheer these efforts if one hadn't already seen the mall change concepts and names more often than Prince. As early as 1998, management had hopes of creating a business center. It even scored a lease with a national call center that employed 1,000 people

Kansas City Growth and Rankings

With unprecedented growth and the highest national rankings to date, Kansas City's future looks great. As more national companies and associations more to Kansas City, its obvious that the secret is out...Kansas City is a great place to live and do business.

Employment rate consistently ranks higher than the national average. Fortune magazine ranked the Kansas City area's wage rates as the 2nd most attractive in the nation.

• Rated one of the best cities for supporting small business.
• Rated one of the best cities for conducting global business.
• Kansas City consistently has one of the lowest cost of living of all major areas, ranking below national average in cost of housing, transportation, food, utilities and overall cost of doing business.
• Aside from distinct business advantages, Kansas City offers an above average quality of life.
• Of the 30 largest cities in the U.S., Kansas City is one of the most affordable, while offering more recreation and cultural arts than most cities of the same size.
• Professional baseball, football, arena football, soccer and tennis teams. With another sport to be added in 2007, possibly basketball or hockey.
• Over 60 private golf courses, some of which were designed by Kansas City's own, Tom Watson.
• World renowned museums and galleries.
• More than 200 beautiful fountains and water displays and more mile of tree-lined boulevards than Paris.
• Home to more professional theatres than any city its size.
• World renowned ballet, symphony, opera and repertory theatre companies.
• The world's first suburban shopping center, the Country Club Plaza, sometimes known as the Rodeo Drive of the Midwest.

Retailers coming to or expanding in KC-

Recently expanded in KC-

Closing around the market-