Urban Sprawl to Urban Small: Mixed-Use Projects Reshape KC

Rob Roberts
Kansas City Business Journal

Prairiefire celebrated its grand opening earlier this month with new shops and restaurants, office space, residential units and entertainment options that include a natural history museum. The 60-acre hot spot in Overland Park hits the market exactly 10 years after Zona Rosa burst onto the Northland scene as the metro area's first large, mixed-use development in decades.

Like the Country Club Plaza and Brookside developments of the 1920s, Zona Rosa and Prairiefire blend high-density residential and commercial uses, public gathering spots and pedestrian-friendly design to create vibrant environs where residents can live, work, eat, shop and play.

Zona Rosa and Prairiefire also serve as bookends for a decadelong, multibillion-dollar blitz of mixed-use projects at urban and suburban locations throughout the Kansas City area.

Tim Schaffer of RED Brokerage LLC said the new genre of mixed-use developments includes the same types of elements that have allowed the Plaza to boast Kansas City's highest land prices and rents for more than 80 years.

"I think the future is the past, and the past looks pretty good," he said.

Schaffer and others said Kansas City's return to mixed-use development has had less to do with copying Zona Rosa than with zoning and the new zeitgeist that's altered it.

"Zona Rosa was really a retail play," said Doug Weltner, a developer of the 1 million-square-foot Mission Farms project launched in Leawood two years after Zona Rosa's opening.

Zona Rosa includes just 73 residential units amid 125,000 square feet of office and 1.1 million square feet of retail/restaurants. In contrast, Mission Farms has taken advantage of a new zoning paradigm in which "density" no longer is a dirty word when it comes to residential development.

Started in 2010, The Village at Mission Farms includes 215 apartments at a density of more than 60 units an acre, compared with a previous suburban average of 13. Another high-density apartment project, the 132-unit Mission 106, is being added to the Mission Farms mix.

"Sixty years ago, everything was mixed," said Keith Copaken of Copaken Brooks, which is developing a 70-acre portion of the Lenexa City Center mixed-use project. "It was a novel idea not to mix uses."

Zoning remix

In 1927, the U.S. Supreme Court upheld the use of "Euclidian zoning" to segregate land uses. This form of zoning took its name not from the Greek mathematician but from Euclid, Ohio — the defendant in a case brought by a plaintiff whose land lost value due to rezoning.

Copaken said increasingly rigorous separation of land uses in the suburbs was driven by "the automobile and the post-World War II explosion of retail and consumerism, which required putting together 100-acre sites for regional malls."

All of that, plus cheaper land prices at the suburban fringe, led to a pattern of sprawl, low-density development and expansive surface parking lots, Schaffer said.

But sprawl proved costly in terms of gasoline consumption, infrastructure extension, air quality and other factors. And it wasn't satisfying a growing public appetite for developments with walkability, social interaction and a sense of place.

Turning to infill development

One answer to that confluence of lifestyle demands and community concerns was infill mixed-use development, said Marlene Nagel, community development director for the Mid-America Regional Council.

"It creates reinvestment in those parts of the community that are already served by infrastructure, whether it be water and sewers or transportation systems," Nagel said. "It also creates an environment where public transit might be able to flourish."

To gain those advantages, and more tax dollars per acre, cities have offered incentives and high-density mixed-use zoning to help infill developers offset expensive land assembly and, in some cases, demolition and infrastructure-replacement costs.

"We're hearing about communities all around the region modifying their zoning ordinances to make it easier for these kinds of developments to be proposed," Nagel said.

Neighboring residents have embraced most of the resulting projects, she said, because they've been of high quality and, thus, have increased surrounding property values.

"Park Place in Leawood is an excellent example of a quality mixed-use development," Nagel said.

Risks vs. higher rents

Park Place developers Jeff Alpert and Melanie Mann started the million-square-foot project late in 2005. It now includes 125,000 square feet of retail/restaurants; 350,000 square feet of office, including the headquarters of AMC Entertainment Holdings Inc. and SCOR (formerly Generali USA); an 85,000-square-foot Aloft hotel; 1,600 structured parking places; and a soon-to-open apartment component that will cover 450,000 square feet.

Getting the project off the ground was challenging, Mann said, because "mixing and stacking uses was something new, and that created a challenge in terms of both equity and debt financing."

"Leasing is another challenge," she said. "Retail leasing, especially when you're dealing with nationals, is often done a year ahead (of occupancy). But with office, people typically want to see it built before they'll lease."

Mixing those uses in a high-density infill development with the structured parking necessary to make it all work also necessitates higher development costs, Alpert said.

But after studying mixed-use developments throughout the country and in Europe, Alpert and Mann decided that the drawbacks were outweighed by potential rewards: higher rents and occupancy, a hedge against down cycles in individual real estate classes and the satisfaction of creating a cool destination.

Added to those are newer mixed-use drivers. One is the emergence of renters by choice — a mix of young professionals and empty nesters that is driving construction of luxury apartments throughout the metro area. Another relates to the 24/7 buzz generated by residents, shoppers, workers and late-night revelers.

Recent studies have shown that such around-the-clock activity makes mixed-use projects safer than single-use developments, Copaken said. The mixed-use experience also helps brick-and-mortar retailers compete with Internet shopping.

"There's an evolution of what 'mixed use' means," Copaken added. "While it used to mean stacking mixed uses vertically, we're beginning to see more horizontal mixing. Either way, all these uses feed off each other and ultimately provide the developer with a stronger project. So I think we'll see the trend continue."

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