Ingram's May 2024

Flying High: The redesign of Kansas City International Airport, which opened in 2023, and huge new logistics facilities planned nearby are indicators that air freight activity is about to scale significantly.

starting with strategic highway infra structure. That includes Interstates 35 (Mexican border Great Lakes), 70 (con nections from California to the East Coast), 49 (south to the Gulf Coast), and 29 (north to Canada). Rail? How about four Class I railroads running through the region, highlighted by the western hemisphere’s first network completely traversing Canada, the U.S. and Mexico, all the way to ports on either the Gulf of Mexico or the Pacific Ocean. That was made possible by the late 2021 agreement to merge Kansas City Southern Railway into Canadian Pacific, creating Canadian Pacific Kansas City. That will only enhance this region’s status as the nation’s most active rail cen ter, measured by tonnage of freight mov ing in, out and through. Bulk land sites abound, again, un inhibited by geological barriers. That has allowed the explosive growth of spec-built warehouses on a previously unfathomable scale over the past two decades. That movement started with a single 600,000-square-foot facility built on a speculative basis back in 2008, and continues today with million-square-foot (and up) sites attracting the attention of national retailers.

For most of the 21st century, industri al development here has benefitted from outside influences, as well—low interest rates foremost among them. Access to comparatively cheap capital helped drive a monstrous 13 million square feet of new capacity in this market in 2022 alone. But that was the year interest rates began to rise, almost in tandem with inflation. That produced a double whammy, rein ing in new construction to something closer to historical norms—about 3 mil lion square feet a year prior to the boom. Increasing Demand The demand curve reflected that trend. Net absorption dropped to 4.1 mil lion square feet through the third quarter of 2023, compared to the previous year’s 15.6 million square feet. Still, last year’s figure more than doubled the pre-pan demic mark of 1.2 million square feet in 2019. Commercial realty professionals say active inquiries suggest another 14 million square feet could be in play this year. Dashing headlong into that frothy market have been companies like Ace Hardware, Chick-fil-A, Cnano Technol ogy USA, Nuuly, Standard Motor Prod ucts, U.S. Motor Works and Community Wholesale Tire. Combined, they repre

sent the breadth of the emerging logistics ecosystem here, hailing from disparate sectors that include the automotive sup ply chain, e-commerce, manufacturing, and food and beverage. The current market mover for this region is Panasonic Energy’s $4 billion plant for production of electric-vehicle batteries, now just a year away from full operation. The site on the western side of the metro area, in the Kansas suburb of De Soto, is an absolute reflection of the post-pandemic world: Supply chains being strengthened domestically in the wake of the 2020 meltdown. This sector has a “Wow!” element at tached to its breadth. While Panasonic Energy has tilted the playing field a bit, a few miles to its south sits the Gardner-Edgerton corridor, once the sleepiest enclave in the hotbed of economic growth that has been Johnson County since the 1950s. In 2012, a fledg ling concern dubbed NorthPoint Devel opment stepped in to salvage a logistics project that had been languishing in that corner of the county. The results of that agreement alone would prove transfor mative for the regional logistics scene. NorthPoint’s Logistics Park Kan sas City began humbly enough: a single

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May 2024

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