Reflecting on Our Future:

All Under one Roof

SKCA Economic Development SummitJames R. DeLisle, Ph.D.

October 11, 2014

Avila University

Presentation Overview

• Economy and Capital Markets

• Employment and Housing

• Social Entrepreneurship/Social Responsibility

National Economic Scene

• Economics and Housing

• Transactions and Forecast

Kansas City Economic Scene

• Range of Activity, Breadth of Market

• Challenges & Opportunities

• Thinking Bigger is Thinking Better

• An Collaborative Example of Future Engineering: A Co-Op Approach

Kansas City Development: Future Trends

I AM YOUR CLOSER

WHO AM I?

WHO ARE YOU?

I AM NOT YOUR

HOME RUN HITTER

Developer Panel

• Cerner Corporation Wendy Hill

• Oxford on the Blue Bill Crandall

• CenterPoint Intermodal Jim Cross

• Bannister Federal Complex Tanner Banion

• CubeSmart Mark Bryant

• Three Trails Industrial Park NorthPoint

• Burns and McDonnell Mike Talboy

John Sharp…. “Since before dirt…”

Southeast Kansas City: The Future is Now

Three Trails

1.4msf8-10 yrs

1,55-2,000 jobs60% Mfg; $60000 Avg

3,000 – 15,000 emp.290 Acres

Innovation CampusTraining, Health, Fitness, Retail

$4.5 billion;$8m – Schools; $2 m comm

Cerner

Oxford: 350 acres$1.2-$3b; $450/sf cost20 years, 10,000 jobs

4 msf; mixed-use, village, housingVision: Bio-Science, Tech

PI’s Collaborate, CommercializeTenants: National, International

Oxford on the Blue

IntermodalRichards-GeBaur; Air Force Base

Engineers, STEM, Skills, Logistics, Prof$1 billion to date; $800 m, GSA

Bannister Federal Complex300 acres; GSA move; redevelopment500,000 sf bldg., re-use

Bannister Federal Complex

Burns and McDonnell$110+ m rehab/expansion2,100 new emp; tech & STEM5-7 years; 2: 330,000 & 350,000 sfHeavy Landscaping; walking trail

Burns and McDonnell

Former K-mart 5615 E Bannister/Hillcrest

12 acres; Below Grade60% to Climate Controlled PS

40% to retail (restaurant)Master Plan vs. Urban Red.

Vision for South Kansas City

• Targeted Industries Business clustersArts, STEM, Tech

• Real Estate Opportunities Ready to go, accessopportunistic, logistics

• Economic Readiness Just-in-Time Employees, Housing, Infrastructure

• Entrepreneurship Small Business, Advance KC

Audience/BreakoutQuestions & Issues

• Tax incentives? TIF, Incentives

• Labor Force: Union Built? Pick GC, GC picks team

• What workforce? STEM

• With all development, help for minority hiring Yes, contractors,…mentor

• Housing Need for entry level, mid-tear

• College education; $100k debt Is there another path?

ECONOMIC AND KANSAS CITY

OVERVIEW

National Economy

Interest Rates: Treasuries, Bonds and Federal Funds

Sources: Lewis White Real Estate Center, Federal Reserve

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Rate

s (%

)

5-Yr Treasuries 10-Yr Treasuries

Moody's Aaa Corp Bonds Moody's Baa Corp.

Federal Funds Rate

Consumer Confidence and Retail Sales

Sources: Lewis White Real Estate Center, Thomson Reuters & Department of Commerce

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

$140,000

$145,000

$150,000

$155,000

$160,000

$165,000

$170,000

$175,000

$180,000

$185,000

$190,000

UM

Co

nsu

mer

Co

nfi

den

ce

Ret

ail

Sa

les

($ m

ills

ion

s

Retail Sales Consumer Confidence

Domestic Stock Market Indices *

* Closing Values

Sources : Lewis White Real Estate Center, Economagic

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Ind

ex L

evel

s

NASDAQ S&P 100 DJIA DJ Transportation DJ Utility DJ Composite

Duration of Unemployment & Labor Force Participation

Sources : Lewis White Real Estate Center, US Department of Labor

60.0

61.0

62.0

63.0

64.0

65.0

66.0

67.0

68.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Du

rati

on

of

Un

emp

loym

ent

(wee

ks)

Du

rati

on

of

Un

emp

loym

ent

(mo

.)

Duration of Unemployment Labor Force Participation Rate

Institutional Real Estate Returns

KC Economic Scene: By State

Employment Growth: Kansas City MSA

Sources : Lewis White Real Estate Center, Economagic, Bureau of Labor Statis tics

0

50

100

150

200

250

300

600

650

700

750

800

850

900

Go

vern

me

nt

Emp

loym

en

t (0

0s)

Pri

vate

Em

plo

yme

nt

(00

0s)

Private Employment Government Employment

12 per. Mov. Avg. (Private Employment) 12 per. Mov. Avg. (Government Employment)

Unemployment Rate: KC MSA by State Portion

Sources : Lewis White Real Estate Center, Economagic, BLS

0

2

4

6

8

10

12

Un

em

ply

me

nt

Rat

e (

%)

Kansas KC MSA Missouri KC MSA KC MSA All 12 per. Mov. Avg. (KC MSA All)

Private vs. Public EmploymentState Comparisons…

Single Family Permits: Kansas vs. Missouri Multi-Family Permits: Kansas vs. Missouri

(Bi-State)

KC Housing Scene

Single Family vs. Multifamily

Average Prices for Existing Houses by County Average Prices for New Houses by County

Data Keyed from Onl ine Publ ications

Sources: Lewis White Real Estate Center, Kansas City Regional Association of Realtors

Data Keyed from Onl ine Publ ications

Sources: Lewis White Real Estate Center, Kansas City Regional Association of Realtors

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

April May Jun-14 Jun-13

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

April May Jun-14 Jun-13

Average$169,673

Average$324.079Existing $168,673

New $324,079

KC Commercial Real Estate

Sources: Lewis White Real Estate Center, NCREIF

Private Institutional Holdings

KC vs. NPI All Total Returns

Cap Rates: Self-Report Kansas City

Sources: Lewis White Real Estate Center; JR DeLisle Survey-Feb 2014

6.2%6.7%

8.1%

9.7%

6.6%7.1%

8.5%

9.9%

4%

5%

6%

7%

8%

9%

10%

11%

12%

Trophy Core Non-Institutional Distressed

Current Outlook in 3-yrs

Cap Rates: National Market

Sources: Lewis White Real Estate Center; JR DeLisle Survey-Feb 2014

5.7%6.3%

7.9%

9.6%

6.3%6.9%

8.5%

10.0%

4%

5%

6%

7%

8%

9%

10%

11%

12%

Trophy Core Non-Institutional Distressed

Current Outlook in 3-yrs

Higher Yields in KCCap Rates

KC Forecast: External View

Sources: Lewis White Real Estate Center, NCREIF

Private Institutional Holdings

Major Projects in Southeast KCMO:The Future…

Suburban Real Estate Projects

Source: MetroWireMedia.com

Urban/REfill

Source: MetroWireMedia.com

Reflecting on KCs Future

Futuring vs. Pasting:

Lessons Learned

Mayor’s Issues & Answers

• Bring money in from outside Import $s or tax ourselves

• Balance our budget Critical

• Need for infrastructure Deferred and critical

• Transit Bus, streetcar, bicycle

• Street v. Transit 1/3 of KC covered with streets

• Incentives Gradually tighten, phase

• Entrepreneurship Need to train, nurture, incubate, launch pad

Kansas City: Future Issues

Source: MetroWireMedia.com

THE CO-OP: A COLLABORATIVE

APPROACH AS A MODEL

The Co-Op Connections

Neighborhood Transformation:

The Co-Op’s Approach

+Emergency

ReliefIndividual

BettermentNeighborhood Development

Adding “Neighborhood Development” to the

Continuum

= A Place

to Stay

Neighborhood SpecificationWendell Phillips

Hickman Mills

Neighborhood Comparisons

Income

Educational Attainment

Race/Origin

What we mean by…

“Community Development”The phrase “Community Development” is used to mean many things. To the Co-Op it

means bringing together a set of four vital components necessary for holistic

neighborhood revitalization.

Housing

•Transitional Housing

•Project Chaplaincy

•Good Neighbors

•Mixed-Income Development

Economic Development

•Economic opportunity

•Jobs Training

•Business Builder

•Angel Investing

Education

•Schools + Churches Partnerships

•Opportunities to volunteer with Students

Health & Wellness Collaboration

•Facilitating Collective Impact among Service Providers & Churches

•Collaborating to increase access and utilization

Customized solutions to optimize success….

What it MeansWe’re gonna need a

bigger roof!

Key Evaluative Criteria for Biotech/Research Parks

State share 250 acre +

SETTING THE AGENDA:

SOUTH KANSAS CITY ALLIANCE

Kansas City Scorecard: SetupPerformance Very StrongVery Weak

Imp

ort

an

ceV

ery

Low

Ver

y H

igh

Who Cares? Overachiever

On the MoneyRed Zone

Kansas City ScorecardPerformance Very StrongVery Weak

Imp

ort

an

ceV

ery

Low

Ver

y H

igh

Who Cares? Overachiever

On the MoneyRed Zone

The Future is Now…

Presentation Review

• Economy and Capital Markets

• Employment and Housing

• Social Entrepreneurship/Social Responsibility

National Economic Scene

• Economics and Housing

• Transactions and Forecast

Kansas City Economic Scene

• Range of Activity, Breadth of Market

• Challenges & Opportunities

• Thinking Bigger is Thinking Better

• An Collaborative Example of Future Engineering: A Co-Op Approach

Kansas City Development: Future Trends