Downtown Loop misses another opportunity to attract jobs

Downtown Kansas City has lost 16,000 jobs from 2001 to 2011. The area, which stretches from the Missouri River to Crown Center, will soon add 900 federal government jobs, although not to where the nexus of Kansas City’s “downtown revitalization” has occurred. 

The General Services Administration announced on Monday that Two Pershing Square near Union Station will become the new home for 900 federal workers in 2015. The GSA will leave the Bannister Federal Complex, and eventually the World War II-era development in south Kansas City will get torn down.

While the GSA move is hailed as a “boost” to downtown Kansas City, it’s another missed opportunity for the Downtown Loop. GSA regional administrator Jason Klumb wouldn’t say which other office buildings were in the running for the coveted GSA lease, but many are thought to have come from the Downtown Loop where buildings like City Center Square (1100 Main) and One Kansas City Place (1200 Main) have ample vacancies.

Inside the loop is where millions, if not billions, have been spent (direct spending and city/state subsidies) replacing seedy storefronts with the types of retail and restaurant businesses one could find in cities like Louisville, Kentucky, that have also gotten the Cordish Co. touch. The jobs aren’t racing to where the redevelopment is happening. If anything, they’re leaving the loop. 

Kansas City’s central business district has one of the highest vacancy rates for office space in the metro area. Real-estate firm Cassidy Turley reports that downtown’s office vacancy stood at nearly 30 percent in the third quarter of 2013; south Johnson County’s vacancy rate is 14.2 percent.

AMC Entertainment famously went to Leawood this year from its downtown digs at 10th Street and Main, and other smaller companies in the central business district have joined the migration to Johnson County, like Marketsphere.

Other big employers that have been on the hunt for big blocks of office space have actively avoided downtown Kansas City. Freightquote had 1,000 jobs on the market when it decided to leave Lenexa and made a point not to relocate to downtown Kansas City, opting instead for a new office building at Interstate 435 and State Line Road.

To be fair, GSA’s move to Two Pershing Square isn’t owing to the Downtown Loop’s characteristics that employers find repellant. The federal government set forth a list of requirements from office landlords and then had to choose the one with the lowest lease rate.

“We had an obligation to protect taxpayer money,” Klumb tells The Pitch.

The GSA signed on to Two Pershing Square for $14.75 per square foot, lower than downtown’s $17.40 average rate set forth by the Cassidy Turley report.

With GSA’s decision to stay out of the Downtown Loop, skyscrapers north of Interstate 670 will keep up their high vacancy rates. The old stock of office buildings inside the loop aren’t appealing to employers (the only meaningful new office building to go up in the Downtown Loop in recent memory is H&R Block’s headquarters). Instead, the Downtown Loop looks to be a place for apartment seekers looking to be close to the Power & Light District’s entertainment but not the type of white-collar jobs vector it was built to be.

Some building owners seem to be getting hip to this reality. The Kansas City Business Journal has reported that Commerce Tower, a building at Ninth St. and Main so besieged by defecting Downtown Loop businesses that its lender reclaimed the skyscraper from its erstwhile owner, has been bought by a new ownership group that may turn parts of the building into apartments.