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Commercial Department: Spotlight: Kansas: July 2017

 

Spotlight: Kansas

The Sunflower State is capitalizing on its central location.

The Midwest is commonly referred to as the “heartland” of the United States, and Kansas takes that description quite literally. The geographic center of the contiguous 48 states is near Lebanon, Kansas, a spot officially established in 1941 before the additions of Alaska and Hawaii.

After many years of conflict between pro-slavery and abolitionist parties, resulting in the nickname of “Bleeding Kansas,” the territory became the 34th state in January 1861, shortly before the start of the Civil War.

Established as a free state inclusive of African-Americans, Kansas was a central player in a landmark U.S. Supreme Court decision nearly 100 years later. The Brown v. Board of Education case, which included several plaintiffs from Topeka, helped to end legal racial segregation in public schools and ushered in the Civil Rights Movement.

Although it’s sometimes called the Wheat State or Jayhawker State, Kansas earned its official moniker of the Sunflower State because of a prevalence of wild sunflowers. Kansas’ contributions to the nation’s agricultural industry are undeniable as wheat, grain sorghum, beef and dairy products are produced in large quantities.

Through the years, Kansas has influenced culture in myriad ways. Authors Langston Hughes and William Burroughs; musicians Melissa Etheridge and Martina McBride; film stars Buster Keaton and Annette Bening; and college basketball coaching legends James Naismith and Dean Smith all called Kansas home.

The state’s leadership was in turmoil this past spring as Gov. Sam Brownback was rumored to be leaving for an ambassador’s post in the Trump administration. On the economic front, the state Legislature is working on plans to raise $879 million over two years through higher income taxes.

The state’s gross domestic product (GDP) for 2016 was $153.3 billion, ranking 32nd nationally, and grew 0.2 percent from 2015, far below the national average of 1.5 percent, the U.S. Department of Commerce said. Finance, insurance, real estate, rentals and leasing represent the largest industry sector, accounting for about one-sixth of the state’s GDP.

Heading into the legislative session, the state had a $346 million budget shortfall for the remainder of the 2017 fiscal year, a shortfall some blamed on previous income-tax cuts. But Kansas was struggling to keep revenue flowing in oil-and-gas severance taxes, agricultural commodities and aviation production.

skip to 3 Cities to Watch>>   


wichita 7-17

Wichita office market

Wichita, with about 389,000 residents, is the largest city in Kansas by a wide margin, as most of the Kansas City metropolitan area that sits 200 miles to the northeast is in neighboring Missouri. A report from NAI Martens said Wichita’s commercial-construction activity skyrocketed in 2014 and 2015, equaling the total square footage of projects started during the previous five years. Medical-office buildings were a major driver of the growth for the local office market as lease rates for top facilities were going for as much as $24 per square foot.

NAI Martens’ 2017 forecast expects rental and occupancy rates to increase in some areas of the city, but notes that central business district (CBD) spaces have stagnated, recording the same rental rates as 2008. Another real estate company, JP Weigand & Sons, said more businesses will consider relocating to the CBD, with this year’s overall office-vacancy rate at 16 percent and the overall rental rate at $12.86 per square foot.

Focus: Bioscience

State legislation in 2004 helped to create the Kansas Bioscience Authority (KBA), which has made the state a haven for agribusiness and life-science jobs. More than 16,000 people are employed in the industry, the Kansas Department of Commerce said. The state is roughly equidistant to every point in the country, making it advantageous for transporting goods.

Among recent accomplishments, the KBA has funded diagnostic technology to keep livestock healthier and provided startup funding for what is now a major manufacturer of biodegradable and compostable plastics. The Kansas City Animal Health Corridor, which stretches from Manhattan, Kansas, east to Columbia, Missouri, is home to more than 300 companies related to animal health and accounts for 56 percent of worldwide animal health, diagnostics and pet-food sales, according to the corridor’s website.

unemployment 7-17

Unemployment

As of this past March, the Kansas unemployment rate was 3.8 percent, below the national average of 4.5 percent. It was the first time the state had an unemployment rate below 4 percent since January 2001, the U.S. Department of Labor said. The Center for Economic Development and Business Research, based at Wichita State University, estimated Kansas would add more than 12,500 jobs this year, an increase of nearly 1 percent. The fastest-growing sectors were expected to be professional and business services; financial activities; education and health services; and transportation and utilities.

The Kansas City metro area is experiencing an employment-growth rate significantly higher than the statewide figure, with employment rising 2.7 percent year over year as of this past February. Professional and business services seem to be fueling a good share of the expansion, posting a 4.5 percent bump for the period, compared to the national gain of 3 percent, according to labor figures.

Sources: The Associated Press, Center for Economic Development and Business Research, History.com, J.P. Weigand & Sons, Kansas Chamber of Commerce, Kansas City Animal Health Corridor, Kansas City Business Journal, Kansas City Star, Kansas Department of Agriculture, Kansas Department of Commerce, Kansas Heritage Group, Kansas Historical Society, Los Angeles Times, NAI Martens, National Park Service, NPR, Overland Park Chamber of Commerce, University of Kansas Athletics, U.S. Census Bureau, U.S. Department of Labor, Wichita Eagle


3 Cities to Watch

Lenexa

Located in the southwest corner of the greater Kansas City metro area in Johnson County, this city of 52,000 is solidly middle class. The median household income of $76,000 is well above the national average of $53,900, according to the U.S. Census Bureau. And the cost of a home is generally low — some $62,000 less countywide than the national average for a 2,200-square-foot, four-bedroom home, according to the Lenexa Chamber of Commerce.

Spotlight city

Topeka

With a population of about 128,000, the Kansas capital is located an hour’s drive west of downtown Kansas City. It’s the home of Washburn University, a highly regarded college of about 7,000 students. The Kansas Chamber of Commerce is in Topeka and touts the state’s natural resources, economic-development tools, education system and highways. Topeka’s major employers include Blue Cross and Blue Shield of Kansas, BNSF Railway and Goodyear.

Overland Park

With 186,000 residents, Lenexa’s next-door neighbor is the state’s second-largest city. A variety of consumer and trade publications have lauded Overland Park as one of the happiest and healthiest places in America, as well as a good place to work, purchase a first home or retire.

The city grew 20 percent from 2000 to 2015 and is home to large employers like Sprint, Black & Veatch, OptumRx and CenturyLink.

What the locals say

“With regard to the [Wichita] office market, a lot of the rent pressure has been the result of transition within the central business district. Several years ago, a number of the major office users relocated to the east-suburb market. … We’ve had a number of Class B properties that are somewhat noncompetitive today. They’re traditional office-space environments and don’t really allow for today’s trend toward collaboration, open spaces, so rents have been somewhat depressed along those lines. … New technology has allowed for a lot of the [medical] facilities here to do remote diagnostics in some of these smaller communities, and that will drive business from those communities back into Wichita as a regional medical center.”

local 7-17 spotlight


Tom Johnson
President, NAI Martens
Wichita


 

Neil Pierson is editor of Scotsman Guide Commercial Edition. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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