Lenexa Logistics Centre Delivers New Business Opportunities

Block Real Estate Services point out 5 noteworthy draws for businesses thinking of setting up shop in the Kansas City metro.

Kansas City has long been considered a prime logistics and transportation hub due in part to its central U.S. location and easy access to four interstate highways, five Class I railroads, air and barge routes. According to Bob Marcusse, president and CEO of the KC Area Development Council, the city consistently ranks among the least expensive markets to move freight by all modes.

“With more Foreign Trade Zone space than any other location in the U.S., expanding transportation infrastructure and a focused effort to strengthen the supply chain workforce pipeline, KC is attracting e-commerce, manufacturing and distribution operations at an increasing pace,” Marcusse wrote in an October column for KC Business.

New intermodal developments such as Logistics Park Kansas City and KC SmartPort are popping up throughout the greater metropolitan area to meet the increased demand. However, “If you’re looking for bulk distribution space in Johnson County, there are virtually no opportunities for you to lease right now,” says Block Real Estate Services Principal Michael Block.

“Developers—ourselves included—are responding to that need by providing larger, more modern facilities commonplace in competitive markets like Indianapolis, Memphis, Dallas and Denver,” Block says. “Only in the last couple of years have they become the norm for KC.”

Block Real Estate Services already has roughly 8 million square feet of industrial space in its expansive project portfolio, but the local real estate powerhouse intends to add another 1.7 million square feet of bulk industrial/warehouse space to its offerings with the Lenexa Logistics Centre, currently under construction at the intersection of College and Renner boulevards.

It is “one of the last developable sites with tremendous access and strong visibility in Lenexa,” according to Block Real Estate Services Executive Vice President and Director of Brokerage Lou Serrone. “And Lenexa is at the heart of all the business/industrial development occurring in Johnson County. So this provides us with an opportunity to deliver the most modern and efficient product in today’s distribution environment.”

Lenexa Logistics Centre was designed by Alan Johnson Design and is being constructed by Merit General Contractors. When all is said and done, it will consist of roughly 10 mid-bulk industrial facilities either built-to-suit or speculative construction, with fit-out to meet each tenant’s needs, whether it’s for industrial distribution or warehouse/office applications. The first building, encompassing 260,707 square feet, will be completed by June and can be divisible from 25,000 square feet and up, allowing it to house multiple tenants.

Although Block Real Estate Services has not yet revealed who these tenants will be, Serrone says the company will start making announcements as early as spring. “Every prospective tenant we talk to wants to see certain things within the building that are important to their business, so we cater each of our proposals to meet those demands,” he says. “It’s like building a house. Every house has four corners and a roof, but what goes inside is up to you. It’s the same way for our tenants.”

Five noteworthy draws of Lenexa Logistics Centre are:

Its massive size. Most distribution facilities built in years past were 50,000-100,000 square feet. Block Real Estate Services’ decision to construct something two to three times the typical size is “more in line with the regional or even national distribution centers,” Serrone says.

Its 32-foot ceiling height and steel-supported roof. “The percentage of buildings in this marketplace that can say that is very small, but that’s how today’s distribution buildings are being built,” Block explains.

Its cross-dock loading capability. This means that goods can enter one side of the building and exit through the back where the loading docks are located, essentially cutting the time and travel distance required for forklifts in half.

Its ample amount of adjacent trailer parking. “Big distributors loading and unloading trailers throughout the course of the day need trailer parking nearby as opposed to a mile or two away because that efficiency translates to dollars,” Block says.

Its 55 percent real estate tax abatement. As an economic incentive to locate there, tenants will receive a generous tax abatement for up to 10 years. “They’ll have lower operating expenses but still have a modern building that provides a more efficient platform for their operations,” Block says.

Lenexa Logistics Centre’s most important benefit, according to Block, is the jobs it will help generate. “I’m not just talking about the construction jobs, but all the people that will work in those facilities and all the related support businesses, whether they’re restaurants or retail establishments,” he says. “You’re going to have people moving into the area and more residential and multifamily development, so it’s a spiral effect going upward.”

“This is a very exciting project for guys like Michael and I who have been in the business for a number of years,” Serrone adds. “We’ve been through at least three of these major real estate cycles; you see them come and go. But when you see a cycle like this—especially in the industrial market—and the fact that we’re right at the beginning of the uptick of the industrial cycle in KC—yes, you can imagine we are extremely excited.”

Story by Kathryn Jones