by Dan Rafter
Ford provided a big boost to the Kansas City region last year when in April it began production of the Transit van at its plant in Claycomo, Missouri, about 10 miles from Kansas City. Claycomo is the only U.S. plant where this van is built.
Ford hired new workers and added new shifts at the plant. But the Transit van is unusual in that it is built to be modified. Different buyers use the van in different ways. Users can trick the Transit out so that it operates like an ambulance, a shuttle bus or even the mobile home base for a fertilizer company.
And that’s where the real benefit to the Kansas City region comes in. Companies that provide the materials needed to customize the Transit van are looking for new locations in the Kansas City area. That means opportunity for commercial real estate developers.
Just ask Ora Reynolds, president and chief executive officer of Kansas City-based developer Hunt Midwest. With more auto-related businesses opening in Kansas City, the company has seen demand increase for space at its Hunt Midwest Business Center, the surface industrial park located above SubTropolis, Hunt Midwest’s sprawling underground industrial park.
Hunt Midwest Business Center is already home to Ford’s North American Vehicle Logistics Outbound Shipping Center, better known as NAVLOS. Ford workers take the Transit vans they manufacture at Claycomo and transport them to NAVLOS. The custom upfitters then pick up the vehicles, trick them out and send them to the Norfolk Southern intermodal about a mile away from Hunt Midwest Business Center.
“Once Ford announced that it was going to retool its Claycomo plant and bring in the Transit, it was a game-changer for the area,” Reynolds said. “The Transit van comes off the plant and it’s like a box. Then you can do whatever you want to it. You can make it into whatever you want it to be. That’s why it’s a game-changer. We have seen so many customization companies coming out. They are looking for space that is close to the new plant.”
That is why Hunt Midwest has big expansion plans in place for the Hunt Midwest Business Center. The company is already expanded the business center by 126 acres. Reynolds said that by the end of the summer, Hunt Midwest should have new sites ready to build on. The 126-acre expansion will allow Hunt Midwest to build 2.1 million square feet of additional building space in the park.
With the new activity that production of Ford’s Transit van has brought, though, that 126-acre expansion isn’t enough. Reynolds said that Hunt Midwest is now looking toward the future at the business center.
And that future includes plenty of new growth.
“The 126 acres is all fine and good, but you have to think about adding even more,” Reynolds said. “We are going aggressively after the automotive industry at Hunt Midwest Business Center. This means that we need to expand even more, past the 126-acre expansion.”
The long-term goal? Hunt Midwest wants to add 5.1 million square feet of new buildings at the center during the next 25 years in addition to the 2.1 million square feet it will add as part of its current 126-acre expansion. That means more than 7 million square feet of new building in total.
Yes, this is the definition of a long-term plan.
“We are talking about, ultimately, the final form of the Hunt Midwest Business Center with this expansion plan,” Reynolds said. “We are looking at $450 million worth of investment over the next 25 years.”
Hunt Midwest certainly believes that the automotive industry will only grow in the area surrounding the Claycomo plant. As proof, Reynolds said that Hunt Midwest is in the earliest stages of building a 200,000-square-foot spec industrial building on 15 acres as part of its 126-acre expansion at Hunt Midwest Business Center.
Reynolds said that Hunt Midwest believes it already has one tenant committed to the multi-tenant space. In all, the building will have space for four 50,000-square-foot users. Reynolds said that construction on the building should start this fall.
Reynolds said that Hunt Midwest has a well-known partner on board for the spec building, but said that she could not yet reveal who that partner is. She did say that the partner already has an inventory of industrial buildings throughout the country.
The spec building is the first stage of an evolution of sorts for Hunt Midwest. Reynolds said that the company expects to become more active in spec industrial construction in the coming years. As Reynolds says, the plan now is that Hunt Midwest will build spec buildings, lease them then build the next spec facility, moving on after leasing out the space in each spec site it develops.
“We don’t have a lot of the state-of-the-art big-box industrial space available here in Kansas City,” Reynolds said. “But demand for that kind of space here is on the rise. It is so strong that people are willing to build spec today. The demand is high enough that this spec space will be absorbed quickly.”
Kansas City’s industrial market has been in boom mode since the end of the Great Recession. Since the recession ended, about 9.5 million square feet of industrial space has hit the Kansas City market, with about 4.4 million more space under contract. Much of that initial 9.5 million square feet has already been absorbed.
“I think people are finally realizing just how strong of a location Kansas City is for industrial,” Reynolds said. “The site selectors are realizing that Kansas City is a good place for companies to do business. What we really needed was to see some larger build-to-suits get built here. That happened. People saw that the industrial space here was getting absorbed, and that proved to them that this was a strong, growing industrial market.”