Kansas City officials might soon shift development rights for a prime downtown site so a new builder can pursue apartments instead of an approved $133 million office tower.
An ordinance filed late last week would assign rights to build in the airspace above existing retail southwest of 13th and Main streets to a new developer. The rights since 2019 have rested with a joint venture of Copaken Brooks, H&R Block Inc. (NYSE: HRB) and Jury & Associates, whose 25-story Strata project was to become Downtown’s first new multitenant office building in 30 years. H&R Block first got the rights in 2004, at which time it contemplated a possible second office building across from its headquarters.
The city ordinance does not name the new developer, but City Manager Brian Platt in March said The Cordish Cos. could instead build a residential tower at the Strata site through a renegotiation of its terms. Stakeholders with Cordish, Copaken Brooks and Jury & Associates have met with the city to discuss the site dating back more than a year, according to a City Hall sign-in sheet the Kansas City Business Journal viewed in June 2022.
Cordish has long eyed the Strata site for prospective development above retail spaces it owns in the Power & Light District. Ahead of Strata’s 2019 incentive approvals, the Baltimore-based developer emailed city officials over what it said were legal issues, including as to whether H&R Block had timely exercised its air rights for the site. City officials that year said amendments to H&R Block’s 2004 agreement would give the company until 2027 to exercise its air rights, after which they would transfer to Cordish.
Now, the city’s ordinance reads, “the market for office space and conditions for financing that space have shifted” since Strata’s 2019 approvals, as have “the needs of the downtown area and the city … such that the need for housing has increased and the need for office space has lessened.”
Earlier this year, Copaken estimated that, to finance a large new downtown office building, about two-thirds of its space probably would need to be preleased. At the same time, many local office tenants with expiring leases have downsized to smaller spaces with more amenities. The downtown office submarket has a 25.7% vacancy rate, the latest data from Cushman & Wakefield’s Kansas City office shows.
According to the city’s measure, parties involved with the Strata site “collectively wish to see the construction of a project … move forward.”
More information on the proposed transfer of development rights, and any future multifamily plans in place of Strata, was not immediately available. Representatives with the city, Cordish, Copaken Brooks and H&R Block did not provide comment ahead of publication.
Beyond assignment of the Strata site rights, the city’s ordinance would authorize Platt to execute an amended master development financing agreement with the officially unnamed new developer and Port Authority of Kansas City. Port KC previously established an onsite Advanced Industrial Manufacturing (AIM) Zone for the office building, through which half of state income taxes from net new office jobs would be captured and redirected to reimburse the tower’s developers.
An apartment development at the Strata site would become Cordish’s fourth Kansas City project, following its One and Two Light luxury high-rises, plus Three Light, which is planned to open Sept. 1. Business entity maneuvers last year also suggested Four Light preparations northwest of Main Street and Truman Road, on a parking lot next to B&B Theatres. Cordish said the project was in “early preliminary stages” as of the fall.
The Power & Light District’s agreement obligates Kansas City to incentivize parking garages at up to six future Cordish projects — or three more projects beyond what is built or under construction. The developer also plans a conversion of the former Midland office building at 1221 Baltimore Ave. for 135 affordable apartments.
The development rights ordinance now is scheduled for review July 12 by the city’s Neighborhood Planning and Development Committee.