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SEPTEMBER 2023 VOLUME35 ISSUE5 CRE MARKETPLACE PAGE 46: BROKERAGE FIRMS DEVELOPERS MULTIFAMILY FINANCE REAL ESTATE LAW FIRMS FIRMS
Working through the challenging times in Kansas City By Dan Rafter, Editor
The CityPlace Corporate Centre III building in Overland Park, Kansas, is an example of the type of office space that continues to attract tenants
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hallenging months. That’s what two commercial real estate veterans say await the Kansas City CRE market.
Aaron Mesmer, principal with Kansas City, Missouri-based Block Real Estate Services, and Kenneth Block, principal and managing member of the firm, told Midwest Real Estate News that while the fundamentals of most commercial sectors remain strong, high interest rates and construction costs have slowed both development and sales activity in the Kansas City market. When will development and sales activity pick up here? That depends largely on what the Federal Reserve Board does with interest rates, Block and Mesmer said. “There has been a general slowdown in new construction because of the rising expenses of construction and the higher interest rates,” Mesmer said. “In general, there is some reluctance of buyers to make new deals until there is more certainty in the market. We have seen the number of transactions fall off from where it was a year ago.”
This doesn’t mean that the Kansas City commercial real estate market is in freefall mode. As both Block and Mesmer say, leasing activity remains high for most sectors. And if the Fed is near the end of its interest-rate hikes? That would be good news for this market. “We are finding our footing a bit,” Mesmer said. “There are some opportunities out there for decent deals with reasonable returns. As a company, we are trying to get projects teed up and to the starting line for development.” Development challenges Block said that developers today face two challenges. Construction costs have risen, with the cost of labor and materials high today. Then there are the higher interest rates bedeviling the commercial real estate industry. It’s made developing commercial properties, whether industrial, multifamily or retail, far more expensive. KANSAS CITY (continued on page 14)
MIXED-USE The real star in today’s commercial real estate market? Mixed-use developments By Dan Rafter, Editor
These are challenging times in the commercial real estate industry, with high interest rates slowing both the sales of existing commercial properties and the development of new ones. That doesn’t mean, though, that all asset classes are struggling equally. One of the more successful commercial asset types today? Mixed-use developments that
MIXED-USE (continued on page 18)