industrial broker open house

Hunt Midwest educates KC brokers, links two development worlds

Hunt Midwest educates KC brokers, links two development worlds
Autumn MorningSky – MetroWire Media

For the last five years, it’s been impossible to discuss Kansas City’s development boom without mention of the powerhouse that is Hunt Midwest. The sister company of the Kansas City Chiefs has saturated local real estate news and has even graced a number of major national news outlets this year – from NPR to CNN – who are fascinated with the flourishing underground business world the company has created. Even outside of SubTropolis, Hunt Midwest has grown other segments of its business by leaps and bounds, including its surface industrial park, data center, senior housing projects and more.

But it’s been five years since the company brought in the local brokerage to educate them on the range of Hunt Midwest’s offerings. That changed last week when the company brought in more than 50 brokers and numerous officials from various economic development groups around Kansas City, including a slew of new faces Hunt Midwest CEO Ora Reynolds wanted to educate and get to know.

“Five years ago, we didn’t do as much vertical construction as we do now. We were known as someone who would sell a piece of ground that someone could build on, but now our focus is that we can provide all the options: We can sell you ground, we can sell you ground and build your facility for you, or we can do a build-to-suit and lease it for you. You’ve got a lot of different options to cover the full spectrum of users out there,” Reynolds said. “We also wanted them to understand the strategic niches we’re going after – automotive upfitters and suppliers, e-commerce, fulfillment companies, and government users and tech users – and talk about our strategy, which is the synergy between the underground and the surface.”

SubTropolis - Great Big Story

The Hidden Metropolis Beneath Kansas City

The Hidden Metropolis Beneath Kansas City
Great Big Story

One-hundred-fifty feet below Kansas City, in a 270-million-year-old limestone deposit, more than 1600 people work in the world’s largest business labyrinth. They basically work in the Batcave, and it’s probably more interesting than your office. As seen on CNN — Check out the video essay here.

Hunt Midwest is a full-service real estate development company with a focus on industrial, commercial, retail, mission critical, multifamily, senior living and residential real estate. The Hunt Midwest portfolio is anchored by SubTropolis, the world’s largest underground business complex.

Located in the heart of the Midwest, this Kansas City, Missouri-based company is developer of over 6,200 acres of commercial, retail, industrial and residential property, and owner/developer of SubTropolis, the world’s largest underground business complex.

SubTropolis is a subterranean, 1,150-acre industrial park in Kansas City, Missouri, with over 6 million square feet of leasable space. The complex is home to more than 55 local, national and international businesses with 1,600 employees. SubTropolis is an ENERGY STAR certified warehouse facility. Hunt Midwest’s headquarters is located within SubTropolis.

States competing for data centers extend $1.5B in tax breaks

States competing for data centers extend $1.5B in tax breaks
David Lieb – Associated Press

The former limestone mine seemed perfect for a large computer data center. The air was cool. The rock walls provided a defense against natural disasters. And the tunnels bored into a Kansas City hillside had access to abundant electricity and fiber-optic cables.

But the mine lacked something important: tax breaks. Without them, several companies chose instead to locate their data centers in neighboring Kansas. At least one major project opted for North Carolina.

“There were people who wouldn’t even come and look,” said Ora Reynolds, president and chief executive of Hunt Midwest Enterprises Inc., which has been marketing its SubTropolis caves. Financial incentives, she learned, were “absolutely crucial.”

Similar competitions for business are playing out across the country as states increasingly offer lucrative tax breaks to attract the data centers that function as the brains of the Internet. An Associated Press analysis of state revenue and economic-development records shows that government officials extended nearly $1.5 billion in tax incentives to hundreds of data-center projects nationwide during the past decade.

The actual cost to taxpayers is probably much higher because some states refused to disclose the amount of taxes they waived, citing confidentiality laws. In many cases, cities and counties sweetened the incentives by forgiving millions more in local taxes.

The benefits are debatable. Although they cost hundreds of millions of dollars to build and equip, the centers employ relatively few workers. That means they produce little in the way of new income taxes but could provide a surge in property and sales taxes — if governments don’t waive those taxes, which many do.

Some officials doubt the tax breaks are worth it because they typically benefit a single community while depriving the state budget of money that might otherwise help schools, lower the cost of college tuition or pay for roads and other infrastructure. Go to AP.org for more…

SubTropolis 475,200 SF facility

Kansas City Will Benefit From the Shift to E-commerce

Kansas City Will Benefit From the Shift to E-commerce
Dick Ringer – Assistant General Manager, Hunt Midwest

With its central U.S. location, great labor force and affordable lease rates, Kansas City offers an exciting value proposition for e-commerce companies, and the time is right for deal-making in the industrial market.

Online sales currently comprise about 7 percent of all retail sales and are growing at a rate of 15 percent a year. E-commerce is ultimately expected to account for 50 percent of all retail sales. This shift to e-commerce creates an opportunity for brokers and developers in Kansas City’s industrial market as new fulfillment centers open.

As the online sales industry has matured, so has the consumer’s demand for timely and inexpensive delivery. The fact that 85% of the U.S. is accessible via 2-day shipping by truck from Kansas City is a strong selling point for e-commerce companies scouting fulfillment and distribution sites.

It wasn’t too long ago that customers didn’t mind waiting more than a week to receive online orders, and we didn’t even mind paying for shipping. Now we’ve grown accustomed to free shipping and two-day delivery. Of course, the faster that e-commerce companies can deliver products to the doorstep, the more they sell. And retailers probably don’t need to be reminded of the cost benefits of shipping by truck compared to shipping by air.

A significant advantage for Kansas City—especially when it comes to moving goods manufactured overseas–  is its presence as the largest rail hub in the nation in terms of tonnage, which means lower transportation costs. Products that are produced overseas can be transported across the ocean on a ship, taken by rail from ports on the coast to one of the rail intermodal yards in Kansas City (which is far more economical than trucking on long hauls), then the product is taken from the rail yard to an e-commerce fulfillment center where it can be shipped by truck to online buyers as it is ordered.

Since online sales volume directly correlates to the speed of delivery, proximity to hubs like FedEx and/or UPS, along with the availability of late pickups, is invaluable. Another important consideration is the access to fiber, which is plentiful in the metro area. Robust, redundant fiber is essential for e-commerce companies to process orders quickly for delivery.  Troy Brown the EVP of OmniChannel & Marketing for Zumiez who cater to the younger electronic savvy demographic, said that if their customers don’t get a shipping confirmation within half an hour of placing an order, Zumiez may very well get a phone call asking “what’s up?”

Finally, Kansas City’s labor force is among its strongest selling points. E-commerce fulfillment centers tend to have more employees per 1,000 square feet than typical warehousing operations. And because orders rise during peak seasons and times, fulfillment operations need to be located where there is a good temporary workforce available.

The 126-acre expansion of Hunt Midwest Business Center is complete.

Hunt Midwest announces 126-acre industrial park expansion

Hunt Midwest announces 126-acre industrial park expansion
Rob Roberts – Kansas City Business Journal

Responding to growing demand in the automotive supply, e-commerce and data center markets, Hunt Midwest has completed a 126-acre surface business park expansion.

The Hunt Midwest Business Center now can accommodate as much as 2 million square feet of new Class A warehouse and distribution space, the firm said in a release.

“HMBC is located in Clay County just south of Ford’s Claycomo Assembly Plant and adjacent to both the Norfolk Southern intermodal facility and Kansas City’s FedEx Ground hub,” Hunt Midwest CEO Ora Reynolds said in the release. “This makes HMBC an ideal location for e-commerce fulfillment centers, automotive suppliers and up-fitters.

“With direct access to I-435, companies locating in HMBC can ship to 85 percent of the United States within two days. The availability of multiple fiber carriers and diverse sources of power also make this a great location for data centers.”

Buildings planned in the business park’s new phase are designed for single-tenant and multitenant users and range in size from 200,000 to 875,000 square feet. One of the buildings, including 200,000 square feet, will be built on a speculative basis, meaning before tenants are lined up.

“With buildings divisible to as small as 50,000 square feet, Hunt Midwest Business Center will serve an unmet tenant demand in the industrial market,” Reynolds said in the release, adding that Hunt Midwest will offer tenants land purchase, build-to-suit and lease options. Go to KCBJ.com for more…

KC celebrates sewers that will spawn 14,000 acres of development, 70,000 residents

KC celebrates sewers that will spawn 14,000 acres of development, 70,000 residents

KC celebrates sewers that will spawn 14,000 acres of development, 70,000 residents
Rob Roberts – Kansas City Business Journal

Development and city leaders gathered Monday to celebrate completion of a $43 million sewer expansion project that will open up 14,000 acres of the Northland for development and add 70,000 residents to the city over the next several years.

The ribbon-cutting event was held at the recently completed Benton House at Tiffany Springs, an $8.5 million assisted-living and memory-care facility at 5901 N.W. 88th St. Developed by Hunt Midwest Enterprises, the facility was the first commercial property to be hooked up to the new sewer system, which includes 10.5 miles of lines and two new pump stations.

The system will serve the largely undeveloped First Creek and Second Creek watersheds, which together form a growth territory in Clay and Platte counties that’s become known as the Twin Creeks area.

“Sewers aren’t sexy,” Brenner Holland, Hunt Midwest’s vice president of residential development, said during Monday’s ceremony. “But (as a result of new sewers), you do see buildings like this, which are an immediate return on investment.”

Hunt Midwest, which owns 300 acres in the Twin Creeks area, also is preparing to develop the new Park Place North community east of Platte Purchase Drive between N.W. 100th and N.W. 108th streets. Holland said construction is expected to begin next year on the development’s first phase, which will include about 60 single-family homes priced from $350,000 to the $400,000s. Go to KCBJ.com for more…

Why Ford's suppliers are going underground (literally)

Why Ford suppliers are going underground (literally)

In the shadow of a Ford plant, auto suppliers toil 100 feet down in a former Kansas City limestone mine.

I’ve been to a lot of unusual places in my long career as a journalist, but SubTropolis in Kansas City takes the cake. It’s the world’s largest underground storage facility, 6 million square feet 80 to 150 down in a former limestone mine. The limestone is 270 million years old, but the use of these caves for climate-controlled businesses only dates to 1964.

SubTropolis, owned by the wealthy Hunt family, is like an underground city, with the major benefit in hot-summer, cold-winter Kansas City of being a steady 68 to 70 degrees Fahrenheit. No wonder the place gets a 100 percent Energy Star rating — no heating or air conditioning necessary! The U.S. Post Office stores $6 billion in stamps down here, and LightEdge Solutions maintains a naturally cooled $58 million data center.

I’m down in SubTropolis for Automotive Alley, the newest addition. In 2011, Ford announced a $1.1 billion expansion of its Claycomo assembly plant, which makes the F-150 truck (America’s bestselling vehicle) and the Transit van. SubTropolis borders Ford’s property, so what better location for Ford suppliers?

On the surface here, Ford maintains a 29-acre logistics facility where it stages 1,800 Transits, 80 percent of which get shipped by rail from here. But a lot of them go underground, where three companies, Adrian Steel, Knapheide and Ground Effects, have only recently begun “upfitting” them for customers like Comcast, Duke Energy, Western Pest Control, Geek Squad and Halliburton.

First stop: Canada-based Ground Effects, where plant manager April Adams shows me rows of F-150s that are having bed liners sprayed in (a $475 factory option). Across the way, Transits are getting cargo spray floors, Kicker subwoofers and remote starts. The whole spraying thing gets me concerned about ventilation down here, but President and CEO Ora Reynolds and VP Mike Bell assure me that the place is naturally air conditioned through 17 openings. “We have the EPA down here,” Bell says. “Do you think they’d allow us to have bad air quality?” Go to MNN.com for more…

Doing business 100 feet underground - CNNMoney.com

Doing business 100 feet underground

Here’s a novel way to slash your business expenses in half: Relocate 100 feet underground.
In the Midwest, many businesses have done just that.

In states like Missouri, Kentucky and Pennsylvania, there’s a growing number of firms doing business in subterranean spaces that were once mines. Starting in the 1960s, these spaces were rehabilitated for commercial use.

SubTropolis, in Kansas City, Mo., is a well-known example.

The underground business complex was an active limestone mine in the 1940s, owned by real estate firm Hunt Midwest. As mining started to taper off, it left a vast network of empty caves.

“In the 1960s came the ‘a-ha!’ moment,” said Ora Reynolds, president and CEO of Hunt Midwest. “These spaces could be reused.”

Since then, Hunt Midwest has gradually transformed the defunct spaces.

“Six million square feet of it is ready, and we have room to build out another 8 million square feet based on demand,” said Dick Ringer, SubTropolis’ general manager.

Today, 1,600 people to work at one of the 52 businesses that lease space in SubTropolis’ space, including tech and manufacturing firms, consumer products companies and auto firms.

“Ford at one time used to store its Mavericks here,” said Reynolds. And the U.S. Postal Service currently stores $2 billion worth of stamps in SubTropolis.

“The constant temperature and humidity [it’s 68 to 72 degrees year-round] are ideal for storing stamps and other products,” she said.

Other advantages: There’s underground parking. Construction costs are low since there’s already a natural roof in place — all they need to build are walls.

“We’re a ‘green’ workspace since we’re conserving natural resources,” Ringer said. “And by being deep underground, we’re a pretty secure location for businesses.”

Employees enter SubTropolis through one of 19 entrances that accommodate cars and trucks. This also facilitates cross-ventillation of natural air, although tenants can also add air conditioning and dehumidifiers. Go to CNNMoney.com for more…

As seen in Bloomberg: Welcome to SubTropolis

As seen in Bloomberg Businessweek: Welcome to SubTropolis

Welcome to SubTropolis: The Massive Business Complex Buried Under Kansas City
More than 1,000 people spend their workdays in SubTropolis, an industrial park housed in an excavated mine the size of 140 football fields
By Patrick Clark, February 4, 2015 

About 10 percent of Kansas City’s commercial real estate is underground, says Ora Reynolds, president of SubTropolis landlord Hunt Midwest. Landlords have made a cottage industry out of underground industrial space, thanks to rock formations near the Missouri River that allow trucks to drive into the old mines instead of tenants needing to use elevators to get things in and out.

The underground industrial park known as SubTroplis opened for business in 1964 in an excavated mine below Kansas City, Mo., attracting tenants with the lure of lower energy costs and cheap rents. The walls, carved out of 270-million-year-old limestone deposits, help keep humidity low and temperatures at a constant 68 degrees, eliminating the need for air conditioning or heating. Tenants have reported saving as much as 70 percent on their energy bills, says Ora Reynolds, president of SubTropolis landlord Hunt Midwest. Rents run about $2.25 per square foot, about half the going rate on the surface. “It’s also a question of sustainability,” says Joe Paris, vice president at Paris Brothers, a specialty foods packager that employs about 200 workers underground. In addition to Paris Brothers, 51 tenants have rented nearly 6 million square feet of space. Others include LightEdge Solutions, a cloud computing company that uses the mild climate to help cool servers, and an underground archive that contains the original film reels to Gone with the Wind and Wizard of Oz.  Go to Bloomberg.com for more…

Ora Reynolds

KCBJ Power 100: Ora Reynolds – President & CEO, Hunt Midwest

Power 100: Ora Reynolds – President & CEO, Hunt Midwest
Kansas City Business Journal

Ora Reynolds and Hunt Midwest have been on a roll. Ford Motor Co.’s billion-dollar investment in its Kansas City Assembly Plant has also helped fill “Automotive Alley” at Hunt Midwest’s Subtropolis. Meanwhile, the company’s residential operation has benefited from housing’s bounce-back and the growing need for senior housing.

Reynolds has worked to build up her executive team after a record 2014. That should be a help to an executive who already put in huge efforts with area development organizations and (successfully) lobbying Missouri to offer incentives for data centers. Go to KCBJ.com for more…