Activity in the local commercial real estate market remains spotty, area brokers say.
The effects of the financial crisis in 2008 and a lengthy recession that gutted the area’s workforce has meant a slow comeback in jobs and economic activity, which the commercial real estate industry counts on for new building projects, expansions and renovations.
“Everything on the commercial real estate side is a function of jobs,” said Tom Johnson, president of commercial real estate firm NAI Martens. “And those jobs, given the focus and the types of opportunities, will drive various segments of the market.”
Despite the slow comeback, the area has seen in the past couple of years an influx of new retailers such as Costco, Whole Foods and Academy Sports, which earlier this year opened its second store in Wichita, this one on the east side.
Those additions have helped spur activity in the area’s commercial real estate industry, brokers said, as have an uptick in investment activity in commercial buildings and strip centers and commercial and residential revitalization projects downtown.
“Everybody seems to have work (in the commercial brokerage industry),” said longtime broker Rod Stewart, managing partner of KW Commercial. “I’ve got three new associates I’m training now, a first for me in many years.”
Major downtown projects underway include Occidental Management’s $54 million redevelopment and expansion of Union Station and the $66 million Exchange Place and Bitting Building project, also a redevelopment project that calls for 230 apartments and 30,000 square feet of retail and commercial space.
“I’d say it’s improving,” said Jerry Jones, vice president of commercial development for Slawson Cos. “There’s more activity, more inquiries about properties.
“I think the inquiries from local businesses, a lot of that has been pent-up demand. I think there’s been businesses thinking about doing something, expanding, but because of the economy have been holding back.”
Brokers said the greatest commercial real estate activity is happening in the retail sector, and it’s primarily concentrated along two corridors: Greenwich Road in northeast Wichita and Maize Road in northwest Wichita.
Jones’ company is the developer and owner of the NewMarket Square retail center at 21st and Maize in northwest Wichita, which brokers said is in one of most active areas in the city, primarily in the retail sector.
“One thing we’re working on right now is the plaza phase at NewMarket,” Jones said. “That is the unfinished parcel in the middle of the shopping center, next to the plaza.
“We’re working with some local retailers and restaurants on a phase that would have a distinct, local flavor, smaller scale, kind of the next evolution of design. If everything falls into place, we might be able to get under construction this year.”
Jones said Slawson is also tentatively planning to begin work on its Cadillac Lake commercial development, north of NewMarket at 29th and Maize.
“Hopefully later this summer, we’ll begin grading and getting some sites ready for construction by the end of the year.”
There’s no question, however, that the pace of new real estate projects is strongest at the moment near K-96 and Greenwich, where the Greenwich Place development has been announced.
The 106-acre development will be north of K-96 and Greenwich and will include the Wichita Sports Forum as well as three retail concepts owned by New Jersey-based Bed Bath & Beyond: a 380,000-square-foot Bed Bath & Beyond, a 17,000-square-foot World Market and a 15,000-square-foot Buy Buy Baby.
“It’s an exciting time,” said KW’s Stewart. “There’s things stirring.”
Greenwich Place is the latest project along Greenwich Road and near K-96. In April, Academy Sports and Outdoors opened a 72,000-square-foot store south of K-96 and east of Greenwich. Also in April, work started on a 14,000-square-foot retail strip center on the last undeveloped lot in the 11-year-old Regency Lakes development, across Greenwich from Academy Sports.
“There’s a lot of good things going on in the retail sector, a lot of new activity with things that are happening out east, with Costco, all of the activity with Regency Lakes and the Greenwich and K-96 area,” said Johnson of NAI Martens.
National retailers continue to show interest in expanding in and to the Wichita market, Slawson’s Jones added.
“We’re seeing more activity there, too,” Jones said. “It’s pretty broad based. I think (national) retailers and restaurants that have been looking at Wichita for quite awhile … are looking for the right opportunity.”
Key downtown projects
The largest commercial real estate project downtown is Union Station, which Occidental president Chad Stafford said this week is about midway through its first phase.
The first phase includes renovations at the Grand and Patrick Hotel building on the northeast corner of the 9.5-acre property, as well as the two smaller Rock Island buildings in the center of the property. The plaza area in front of the Union Station terminal is also part of the initial phase of work there.
“We expect to have the majority of those initial tenants in and open somewhere between the end of August and the end of September,” Stafford said.
Those initial tenants include Wells Fargo’s commercial banking unit, State Farm agent David Kemp, Encompas, Regus, Scooter’s coffeehouse, Mumbai Rail Indian Bistro and Smoothie King.
The second phase of the project will include renovation of the 57,000-square-foot Union Station terminal and the 25,000-square-foot operations building connected to it. It also will include construction of two 35,000-square-foot buildings and a 471-space parking garage.
Downtown projects such as Bitting, Exchange Place and Union Station are “going to have a big impact on the image of downtown,” NAI’s Johnson said, and such projects continue “to create an atmosphere over time that will benefit some of the more aggressive office (developers and landlords).”