Office Summit: Newer offerings will light Downtown’s way to a ‘bright future’
Commercial real estate analysts joined with area business leaders on Tuesday to align research, data and strategies for driving growth in the Downtown Kansas City office market in the face of the pandemic.
They gathered at the fourth annual Downtown KC Office Summit, presented virtually to more than 400 attendees by the Downtown Council from a live studio in Union Station. Click here to view the hour-long program.
“Investment activity is concentrated in Downtown Kansas City,” said Mayor Quinton Lucas in opening remarks that focused on KC’s response to the pandemic. “So far, the Downtown office market has weathered the downturn and is in a strong position to realize recovery opportunities.”
For a national point of view, the Office Summit looked to its keynote speaker, Spencer Levy, chairman of Americas research and a senior economic adviser at CBRE in Baltimore. Levy’s insights marked the second consecutive year that he has set the stage with his unique brand of marketplace analysis.
“There is no asset class that I spend more time analyzing and discussing than office in the last six months because of the work-from-home phenomenon,” Levy said. “We believe that over the long-term the future of office is still bright… but it will be different” he said, citing flex space, wellness and other environmental changes in the workplace.
To naysayers who suggest some office tenants never will return to their offices or will allow leases to expire, Levy countered, “They are probably saying what they really believe today, but we believe that over the long term, the future of office is still bright.”
In the future, higher-quality, newer offices will outperform older stock in need of significant improvements, such as HVAC system upgrades, to meet modern wellness standards, Levy said.
Levy predicted brighter days ahead for “smaller, secondary” urban markets like Kansas City. He noted KC’s recent ranking of 31st on CBRE’s tech talent report. “One of the great things about Kansas City is your location – centrally located with industrial – but also your highly educated workforce which is showing up in the tech talent report.”
The office marketplace icon devoted the greatest share of his remarks on the growing demand for flexible office space across the country and in Kansas City.
“I love the flex space. A lot of people are saying ‘…flex space is in big trouble.” Ahh no,” Levy said. “One of the durable changes of the (future) office market … is the rising importance of flexible space.” It is the number one amenity people want in office buildings, Levy said, as he gave a shout out to Plexpod, one of the leading flexible space companies in the Downtown area.
Although 90% of the workforce probably will return to their offices, as many as 60% could work flexible schedules, a “welcome and necessary” innovation for many, including working parents navigating an unpredictable education system, said Suzanne Dimmel, director of Cushman & Wakefield’s Kansas City office and chair of the Office Summit. “The true innovation that we will see forthcoming over the next 12 to 18 months will change the way we work in our offices forever.”
The program concluded with a panel discussion featuring representatives of four Downtown businesses, including Vince Bryant, 3D Development; Parag Chitnis, USDA National Institute of Food and Agriculture; Kim McDonald, Spring Venture Group; Shelley White, Swiss Re Group; and moderator Mike Klamm, CBRE.
Attracting new office employees and tenants will mean strategically promoting the city’s developing Downtown as an amenity, said Shelley White, managing director at reinsurance giant Swiss Re, which employs about 400 workers locally in One Kansas City Place.
And keeping Downtown vital will involve city officials approaching development with a district master plan in mind, rather than on a project-by-project basis, and with “the right incentives for the right projects at the right time,” said 3D Development founder and summit panelist Vince Bryant.
“It’s going to get better quickly,” Levy said. “I think the future is bright for Kansas City.”
Click here to view the complete Office Summit program, including the panel discussion.