- Associated Press - Saturday, January 30, 2016

KANSAS CITY, Mo. (AP) - Underused or empty office buildings in downtown Kansas City are being converted to residential space, as demand to live in the once-dormant area continues to grow.

The building transformations are costly and time-consuming, and most of them require tax breaks but supporters say they fill older buildings that are no longer attractive to businesses.

“Not so long ago, I could stand outside the Central Library and see 11 old office buildings that had gone dark,” said Downtown Council vice president Sean O’Byrne. “Today, every one of them is full of apartments.”

O’Bryne said at last two dozen downtown buildings have already been renovated and another dozen are in progress to become housing or hotels. He hopes six to 10 more buildings will eventually be added to the list.

The Kansas City Star reported (https://bit.ly/204TyJG ) about 3,140 residential units downtown were completed or under construction since 2013. The area’s population has doubled since 2000.

“It’s a good thing, this evolution,” said Michael Frisch, program director in the Urban Planning and Design Program at the University of Missouri-Kansas City. “In terms of sustainability and preservation, it’s great to put those buildings to new use.”

Part of the reason is that residential rents are more profitable for landlords than leases.

Ella Shaw Neyland, president of Steadfast Apartments REIT, a real estate investment trust, said building owners can make between 50 percent and 100 percent more in residential rent than office leases.

“But it’s not just those economics that drive conversion,” Neyland said. “It’s that many of the old downtown buildings are simply obsolescent. They don’t work for the open-space offices that people want now.”

Developers said the city’s decision to run a streetcar line through downtown was another redevelopment incentive. And the resurgence of entertainment choice - from the Power & Light District, Crown Center, the Crossroads and River Market - helps attract residents away from the suburbs.

Michael Knight said the streetcar was a major reason developers decided to spend $121 million converting the 30-story Commerce Tower building into 342 market-rate apartments.

Frisch said he has one concern about the rush to residential.

“I wonder how long we can continue to decentralize jobs,” he said. “Now, we have a reconcentration of housing in the center, but what we need are live/work/play places. . You don’t want mass-reverse commutes to the suburbs.”

But O’Byrne said investors are interested because the downtown residential occupancy rate is “an amazing 97 percent.” And those residents have plenty of places to go for entertainment.

In Kansas City and nationally, vacant or nearly empty office towers also are being renovated with the help of federal and state historic tax credits, federal low-income housing tax credits, local property tax breaks and easier access to financing.

Low-income housing tax credits helped make subsidized residential conversions financially feasible in at least eight empty office towers in downtown Kansas City. Many more adaptations in older buildings were possible because of historic preservation programs.

Eventually, the residential conversions will lead to major new office development, said Gib Kerr, a vice president at the Cushman & Wakefield commercial real estate office.

“I think the major investments that have been made downtown - the streetcar, numerous hotels and thousands of residential units - played a vital role in reversing the office vacancy trend,” Kerr said. “We expect to see the downtown office market grow in size and strength over the next five to 10 years.”


Information from: The Kansas City Star, https://www.kcstar.com

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