How Can the Construction Industry Help the Real Estate Industry?

Challenge Status Quo to Support Development Community

By Richard Wetzel, Partner Centric

How can the construction industry help the real estate industry? Many would say just try to keep costs down, get the project done on time, and move on. But that’s not enough…as an industry, contractors need to provide more – more innovation, more ideas, and more creativity – in the face of rising interest rates, potential commodity tariffs, but rents that are steady, not rising. Only by exploring new means and methods and challenging the status quo can builders truly support the development community in a meaningful way. Here are three stories about how innovation in construction helped make the deal happen.

Coury Hospitality Group has owned and operated the Ambassador Hotel in downtown Kansas City since 2007. Due to exceptional service, a strong brand connection as a member of the Autograph Collection of Marriott, and it’s proximity to the Sprint Center and the Power and Light District, it has maintained the highest average daily rate of all hotels in the Kansas City metro area.

When they planned a 60-room expansion to the existing historic hotel, the design was based on a conventional high-rise structural system utilizing cast-in-place concrete. But the construction team’s research into a new system – utilizing light gauge metal studs to create a structural frame that had lower floor-tofloor heights, smaller foundations, and prefabricated exterior skin – resulted in a lower building profile and an additional floor, gaining 10 rooms and banquet facilities for only marginal more capital cost.

Mac Properties has been redeveloping much of the property along Armour Boulevard from Broadway to Rockhill since the early 2000’s. In buying the Interstate Bakeries building at the northwest corner of Armour and Main, they added a mid-century modern building to the mix of mostly turn-of-the-century building

stock slated for redevelopment. But they also picked up a tiny slice of land north of Burger King and were not sure what to do with it, as it was too narrow and isolated to stage a significant construction project.

Then the team looked into constructing apartments – including everything from framing to light fixtures and appliances – remotely in modules and trucking them to the site finished and ready to be placed with a crane. The site went from a concrete podium to finished apartments (and fully  leased) in only three months. Kansas City is notoriously slow to respond to the market with new speculative office space. Unlike the industrial market, where developers have sensed the need for additional square footage and responded by bringing it to the market ahead of demand, the office market hasn’t followed suit, leaving tenants who need space quickly to either wait or settle for compromises in what they need. And while many tenants want the “loft” feel of historic buildings, there’s only so much stock available.

Some builders are responding by exploring heavy timber structural frames for high-rise offices. They are cheaper than steel or concrete, take less time to erect, and result in a beautiful open ceiling system with warm wood tones rather than coldsteel, fireproofing, and concrete.

Minneapolis and Portland have completed wood frame buildings – how far behind is Kansas City? The Kansas City construction industry is responding as quickly as possible to the needs of its partners in real estate. But sometimes responsiveness isn’t enough.

We need to bring our real estate partners new ideas, new means and methodologies, and even entirely new concepts. Whether that is a structural system that saves money while delivering more rent, makes use of a sliver of previously undervalued land, or provides different options to the market by delivering new space that feels more comfortable and welcoming, our industry, notoriously slow to change, is beginning to adapt. Let’s not just be “on time and under budget.” Let’s be true partners to help get the deal done.

To read more articles about SIOR Development Day follow click on this link: SIOR_2018

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