OP council supports development of first CityPlace office building
By: Rob Roberts, KCBJ
An affiliate of Block Real Estate Services LLC plans to start construction of a $30 million Class A office building in the company's $400 million CityPlace mixed-use development southwest of U.S. Highway 69 and College Boulevard — with or without a tenant or tenants in place.
BRES typically avoids speculative office development, waiting instead for a project to achieve about 40 percent leasing to start construction. But BRES Managing Principal Ken Block said recently that his firm was “working toward moving forward with our first (CityPlace) office building as soon as we finish up the last bit of leasing with our two Nall Corporate Center office buildings” near College and Nall Avenue.
Those buildings, anchored by the headquarters of Teva Pharmaceuticals and Mariner Holdings, each contain 150,000 square feet. The new office building in CityPlace will house 125,912 square feet of the roughly 600,000 square feet that ultimately will be developed in four Class A office buildings within the development. Construction is scheduled to begin in the fourth quarter of this year, with completion following within a year.
To support the project, the Overland Park City Council on Monday directed city staff to prepare a resolution of intent to issue as much as $30.6 million in economic development revenue bonds to give the developer a sales tax exemption on construction materials, equipment and furnishings.
The bonds, which will provide the developer with an estimated $565,000 in savings, will be purchased by the developer or an affiliate and do not represent any risk or liability to the city.
According to the application for the bonds, the new office building they will support will provide new Class A office space that is lacking in the College Boulevard corridor.
According to a second-quarter office market report from Newmark Grubb Zimmer, Class A vacancy in the 7.6 million-square-foot South Johnson County submarket is 11.4 percent. But big blocks of available Class A space are scarce in the thriving College Boulevard/Interstate 435 corridor.
Block, whose firm recently was given the task of leasing and managing a 2.2 million-square-foot Corporate Woods office park portfolio, which is enjoying 92.9 percent occupancy, said demand for space and services in the corridor has prompted a development boom.
“Think about it for a moment,” Block said. “You have the ($100 million) KU Hospital campus going up there on the north side of I-435 at Nall. You have (BRES’ $24 million) Roe Medical Center I office building going up on the south side. You have Creative Planning developing(a new 125,555-square-foot corporate headquarters) on the site at the southeast corner of I-435 and Nall, where (VanTrust Real Estate LLC) has a another building under construction and a third planned for future development.
“You have a deal I expect to hear announced in the near future for a parcel Larry Bridges has had for a long period of time at 110th and Cedar streets, where another new building is planned for (Netsmart). You have the renovation of 6601 College Blvd., (which will be the new headquarters for digital marketing firm DEG).
“You have the Sprint campus ground under contract at 115th and Nall, (where BRES and The Retail Connection LP propose a $182 million mixed-use development). And you have our CityPlace project at College Boulevard and U.S. 69, where we’re working toward moving forward with our first office building.”
All that and the $1.8 billion Brookridge mixed-use project proposed near I-435 and Antioch Road add up to a development bonanza the likes of which South Johnson County has not seen for decades, if ever.
The Brookridge project alone calls for 1.8 million square feet of new Class A office space. Its developers hope to land the new headquarters of Lenexa-based Kiewit Engineering Group Inc. and Kiewit Power Constructors Co. That would allow Brookridge’s developers to break ground on its first office building, a 12-story, 400,000-square-foot tower that the Kiewit entities would fully occupy.