Market Study of Redevelopment Opportunities Old Town Study Area Master Plan Lee's Summit, Missouri
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MARKET STUDY OF REDEVELOPMENT OPPORTUNITIES OLD TOWN STUDY AREA MASTER PLAN LEE’S SUMMIT, MISSOURI May 2003 CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS MARKET STUDY OF REDEVELOPMENT OPPORTUNITIES OLD TOWN STUDY AREA MASTER PLAN LEE’S SUMMIT, MISSOURI May 2003 Prepared for: EDAW Inc. 1809 Blake Street, Suite 200 Denver, CO 80202 Prepared by: Canyon Research Southwest, Inc. 220 South River Drive Tempe, Arizona 85281 PR# 03-02-06 200 SOUTH RIVER DRIVE / TEMPE, AZ 85281 / (480) 966-0994 CANYON RESEARCH SOUTHWEST, INC. COMMERCIAL REAL ESTATE RESEARCH AND ANALYSIS May 30, 2003 Cales Givens EDAW Inc. 1809 Blake Street, Suite 200 Denver, CO 80202 RE: Market Study – Old Town Master Plan Lee’s Summit, Missouri Dear Cales: Per our agreement, attached are the Market Study findings identifying commercial and residential development opportunities within the Old Town Study Area of Lee’s Summit, Missouri. Potential land uses evaluated included residential, retail, office and hotel. Based on the study findings, the following conclusions and recommendations have been drawn: • Old Town Study Area’s most suitable market positioning and what could be done to enhance its marketability; • Quantify the supportable inventory of new commercial space and residential dwelling units in the Old Town Study Area through 2020; and • Identify potential short- and long-term redevelopment opportunities for the Old Town Study Area, as well as specific redevelopment sites. Upon review of the report, should any questions arise or additional information requested, contact me directly at (480) 966-0994. Respectfully submitted, CANYON RESEARCH SOUTHWEST, INC. Eric S. Lander, Principal ESL:dld Enclosure 200 SOUTH RIVER DRIVE / TEMPE, AZ 85281 / (480) 966-0994 T A B L E O F C O N T E N T S Page # Tab # EXECUTIVE SUMMARY .................................................................... iii 1.0 INTRODUCTION ............................................................................ 1 1 1.1 Study Objective and Organization .................................................. 1 1.2 Old Town Study Area Overview .................................................... 2 2.0 LEE’S SUMMIT ECONOMIC OVERVIEW ...................... 8 2 2.1 Historical Population Growth ........................................................ 8 2.2 Employment and Business Conditions .......................................... 9 2.3 New Construction Activity ............................................................ 10 2.4 Population Demographics .............................................................. 11 2.5 Conclusions ................................................................................... 12 3.0 RETAIL MARKETABILITY ANALYSIS ............................ 13 3 3.1 Metropolitan Kansas City Retail Market ........................................ 13 o Historical Market Trends ......................................................... 13 o Retail Sub-markets.................................................................... 16 3.2 Lee’s Summit Retail Market .......................................................... 19 3.2.1 Existing Inventory of Space ............................................... 19 3.2.2 Forecast Retail Space Demand .......................................... 26 3.3 Retail Site Evaluation Criteria ....................................................... 27 3.4 Conclusions .................................................................................... 31 4.0 OFFICE MARKETABILITY ANALYSIS ............................ 33 4 4.1 Metropolitan Kansas City Office Market ....................................... 33 4.2 Competitive Office Market Conditions .......................................... 35 4.2.1 Existing Inventory .............................................................. 35 4.2.2 Forecast Office Space Demand .......................................... 41 4.3 Office Site Evaluation Criteria ....................................................... 42 4.4 Conclusions .................................................................................... 44 5.0 HOTEL MARKETABILITY ANALYSIS ............................. 46 5 5.1 Metropolitan Kansas City Hotel Market ........................................ 46 5.2 Competitive Hotel Market Conditions ........................................... 48 o Missouri Outlying Areas Sub-Market ...................................... 48 o Competitive Hotel Properties ................................................... 49 5.3 Forecast Hotel Room Demand ....................................................... 51 5.4 Hotel Site Evaluation Criteria ........................................................ 51 5.5 Conclusions .................................................................................... 52 i T A B L E O F C O N T E N T S (Continued) Page # Tab # 6.0 RESIDENTIAL MARKETABILITY ANALYSIS ............. 55 6 6.1 Lee’s Summit Housing Market Overview ..................................... 55 • Historical Construction Activity ........................................ 55 • Housing Inventory ............................................................. 56 • Housing Values .................................................................. 57 • Conclusions ........................................................................ 59 6.2 Competitive Housing Market ......................................................... 60 • For-Sale Housing ............................................................... 60 • Competitive Apartment Properties .................................... 60 • Senior Housing ................................................................... 66 6.3 Forecast Housing Demand ............................................................. 68 6.4 Residential Housing Site Evaluation ............................................. 70 6.5 Conclusions .................................................................................... 72 7.0 STUDY RECOMMENDATIONS .............................................. 74 7 7.1 Market Positioning ......................................................................... 74 7.2 Forecast Real Estate Demand ......................................................... 75 7.3 Redevelopment Opportunities and Potential Sites ......................... 76 7.4 Measures to Improve Old Town’s Marketability ........................... 82 ii EXECUTIVE SUMMARY The City of Lee’s Summit, Missouri has contracted with EDAW Inc. to prepare a Master Plan for the Old Town section of the city, consisting of both the “Downtown Core” and surrounding neighborhoods bound by Chipman Road, U.S. 50 and Missouri Highway 291. As a team member with EDAW Inc., Canyon Research Southwest, Inc. has prepared a Market Study designed to quantify the demand for various types of real estate in the Old Town Study Area. This “Executive Summary” outlines the report’s major findings and recommendations. Lee’s Summit Economic Environment Lee’s Summit is the fastest growing community on the Missouri side of the metropolitan Kansas City area. The resident population base has increased from 28,856 in 1980 to 77,437 by July 1, 2002. Population growth is forecast to continue, reaching 93,000 by 2010 and 116,000 by 2020. The Lee’s Summit employment base of nearly 27,000 jobs is lead by the services (41%); construction (16%); manufacturing (9%) and FIRE (9%) sectors. By 2020, Eastern Jackson County is forecast to add 11,900 new jobs, with a shift away from industrial-related employment towards more office-related employment. From 1995 to 2002 a reported 8,171 residential dwelling units were permitted for construction in Lee’s Summit, with the single family housing sector accounted for 83 percent of all residential construction. During this same period over 6.1 million square feet of commercial space was permitted for construction. Lee’s Summit’s high quality of life has attracted a young, educated and affluent population. The real estate sector has benefited from the city’s economic expansion, posting accelerated residential, commercial and industrial construction activity. Lee’s Summit is forecast to remain an urban growth leader which will create continued opportunities for residential, commercial and industrial development. Marketability of Retail Development Since 1995 over 3.1 million square feet of retail space (includes freestanding, strip and anchored centers) has been constructed in Lee’s Summit. Despite this construction boom, over the past four years the overall vacancy rate has remained well below 6.0 percent. Retail sales in Lee’s Summit increased from $648 million in 1998 to $838 million for 2002, resulting from new development and increasing population and high income levels. Prior to the recent construction boom Lee’s Summit was considered under retailed, suffering from considerable retail leakage due primarily to a shortage of retail space and a narrow tenant mix. Retail leakage can be best illustrated through a comparison of per capita retail sales levels and supportable retail space. In 1998, Lee’s Summit’s per capita sales rate of $9,672 lagged behind the metro average of $10,675 and the 18 square feet of occupied retail space compared to the metro average of 23 square feet per capita. The recent construction boom has closed the gaps considerably, yielding per capita retail sales close to the state average and per capita occupied shopping center space comparable to the Kansas City area average. Canyon Research Southwest, Inc. iii Approximately a decade ago the Downtown Core of Lee’s