Commercial construction is still reasonably good for the Kansas City market.
The Kansas City market isn't one of those high-flying SunBelt cities where business seems to be either incredibly good or disasterously bad. The market, which straddles the Missouri-Kansas state line and is home to approximately 2 million residents, is feeling the pain of the recession like most other markets. But several big-name projects, including the renovation of the Kansas City Royals' Kauffman Stadium and the NFL Chiefs' Arrowhead Stadium, are still going full blast and are keeping electrical contractors busy — for the time being. It's what happens after these projects are done that concerns Kansas City's distributors, reps and their customers.
Tom Isenberg, president, Western Extralite Co., Kansas City, says Johnson County, Kan., a fast-growing suburb south of downtown Kansas City, has proven more resilient than Lee's Summit or Liberty, Mo., on the market's eastern edge, but that no place is really booming right now. “The slowdown in commercial is very mixed,” he says. “There are some large projects, like the stadium remodels and the Performing Art Center that are very large and certainly will continue through 2009. The smaller work is much slower. Some of the announced jobs have now been cancelled or delayed, the most prominent of which is the casino near the racetrack in Wyandotte County.”
“The large commercial/industrial work is pretty good related to Arrowhead Stadium, Kauffman Stadium, Performing Arts and other projects already funded,” adds Doug Carlson and Kevin O'Neill of C&O Electrical Sales, Overland Park, Kan. “West Edge (a $120 million, 2.4-acre development near Kansas City's Country Club Plaza retail district) had some unique problems but is supposed to have a new general contractor and might begin again.
“Strip malls, medical facilities and some commercial buildings were active most of 2008 but several of those projects are coming to an end, and we are hearing now about delays starting during the second quarter of 2009. Large contractors, but not all, have good work and a backlog that would seem to describe a good market, not one that is worried about the immediate future.”
Carlson and O'Neill say Lenexa, Kan., in the western suburbs and Lee's Summit on the eastern edge of the metropolitan area are hopping. “Lenexa is an active area for both light commercial and residential construction. Lee's Summit is ‘moving dirt’ for several projects south of I-470 and east of Highway 50 on Chipman Road.”
Some other major projects still have the green light and are expected to start up in the near future. For instance, the Missouri Development Finance Board approved $30 million in credits for the $1 billion The Three Trails development in southeast Kansas City, which will include a $100-million stadium for the Wizards professional soccer team, retail shops and other commercial development. Honeywell is still planning to build a new facility in the southern part of the metropolitan area, and plans are also moving forward to build a $716 million, 1,000-acre intermodal freight hub in Gardner, Kan., that will help BNSF Railway (Burlington Northern/Sante Fe) transfer freight from its trains to trucks, and vice-versa. The Kansas City freight yard, one of the nation's largest, is running out of capacity and the Gardner facility is located near the busy I-35 corridor, which handles an enormous amount of truck traffic from Texas north through Oklahoma, Kansas, Missouri, Iowa and Minnesota. According to reports in The Kansas City Star, one unidentified industrial tenant wants to lease 1 million square feet of office space at the Gardner facility.
Western Extralite's Isenberg also expects several other area projects to move forward, including the Schlitterbahn water park resort near the NASCAR racetrack at Interstate 435 and State Ave., and the Agri Bio Defense project recently awarded to Manhattan, Kan.
One project in the suburbs that has hit difficult times is Thee Falls in Independence, Mo., says Jay Rains, Rains Electrical Sales, Shawnee, Kan., a manufacturers' rep who has served market for 53 years. A 180,000-square-foot Bass Pro Shop opened in Independence, Mo., in February 2008, but no additional stores have followed. Bass Pro Shop in Olathe, Kan., also has not been generating enough sales tax revenue to cover its tax-increment financing bond payments, according to an article in The Kansas City Star. Another project that has been delayed until 2009 is a $300-million redevelopment project in Mission, Kan., anchored by a 1.5-million-square-foot saltwater aquarium.
Growth in Kansas City's suburbs has taken on a life of its own and long term is expected to be quite healthy. But for the area to continue to thrive, its core will have to get stronger. Downtown redevelopment has been a major focus since the 1990s, and a common political theme for several mayors who have served the city during this time.
Like many cities, Kansas City has wrestled for years with downtown redevelopment issues, after residents and businesses moved to the suburbs during the 1960s-1980s in search of shorter commutes, better schools and the suburban lifestyle. Kansas City's downtown has popular neighborhoods like Country Club Plaza, Westport, Crown Center (built by the Hall family of Hallmark Cards) and the River Market, but these areas are scattered over a large geographic area and are not knit together with an effective mass transit system.
To bring more life back into its downtown, the city has been working hard to reinvent itself. During the past decade, the city has spent millions refurbishing some of its landmarks, such as the Union Station and Liberty Memorial (a monument and museum dedicated to World War I) and rebuilt the 18th and Vine district with the Negro Leagues Baseball Museum, Jazz History Museum, clubs and restaurants.
More recently the city transformed a once-dormant section of town into the Power & Light entertainment district, which includes the state-of-the-art Sprint Center, an 18,000-seat indoor arena; the performing arts center now under construction; and a growing collection of restaurants and lively nightspots.
According to Herm Isenstein, president of DISC Corp., Orange, Conn., the Kansas City MSA is forecast to have total electrical wholesale sales of $500 million in 2009 from distributors in the Kansas City, Mo./Kan. metropolitan area, down 11 percent from 2008. Total sales were up 1 percent in 2008 from 2007. 2009 will be a difficult year, says Isenstein, with double-digit decreases in total electrical wholesale sales expected in the last half of the year.
Most Kansas City area distributors and manufacturers agree that 2009 will be a challenging year. Western Extralite's Isenberg expects 2009 to be flat at best, but longer term he is optimistic. He believes the National Nuclear Security Administration plant north of the former Richards-Gebaur Memorial Airport in Grandview, Mo., and the Gardner intermodal industrial development will go forward.
“The GSA (General Services Administration) building downtown is likely to go,” he says. “The Schlitterbahn water park and some of the other announced projects are likely to go if the economy turns around. The Bioscience tax passed in November will have good long-term impact as will the further afield Agri Bio Defense project recently awarded to Manhattan.”
Duff Greenwood, vice president of Cleaves-Bessmer-Marrietti Inc., a manufacturers' rep that focuses on Kansas City's industrial and roadway lighting markets, believes the first half of 2009 will start out slow but will pick up in the second half. “We're anticipating a slowdown in both industrial and roadway lighting the first half of 2009, but are optimistic that it will come back strong in the second half. We anticipate increased spending on infrastructure projects that will boost opportunities with the Departments of Transportation in both Kansas and Missouri.”
However, C&O Electrical Sales' Carlson and O'Neill see good activity for the Kansas City area “barring financial disaster.” “Reasonable credit should allow construction to continue. 2010 should signal a return of residential to more normal levels. That level is not at 2004-2006 starts. We appear to be in a bubble that many parts of the country are not experiencing and have not for much of the year.”