Day 5 - Investing - 12 Days of Why It's Great to be in KC

Investment transactions were up in 2013 and this trend will hopefully continue in to 2014. On this

fifth day of the 12 days of why it's great to be in Kansas City, Block Real Estate Services (BRES) will detail in this post what is on the docket for the investment market in 2014 and how this affects the Kansas City area investment market.


Investing in 2014
Increased demand teamed with new sources of capital have continue to make the commercial real estate even more appealing to investors. Since the recession, commercial real estate investors have been favoring top-tier markets and properties with solid cash flows, despite lower yields. As this CCIM article shares, "The maturing primary markets have faced slowing cap rate compression and even rate upticks. Conversely, cap rates in secondary markets have tightened, supported by stronger operational momentum and sales volume. Naturally, investor risk will depend in part upon a market’s position along the arc of the real estate cycle and the investment time horizon." Higher interest rates in 2014 will impact investors across the industry. However, demand for commercial real estate remains solid and hopefully performance rates will work against the rising interest rates.

Why Investors Are Drawn To Kansas City 
Lower returns in major cities have caused some investors to seek alpha in the secondary markets of the Midwest, resulting in increased pricing for multifamily and industrial properties in places like Kansas City to near-peak levels. Conversely, the growing market share of online retailers has given rise to a new class of supersized (imagine 25 acres under one roof) distribution and fulfillment warehouses near transportation hubs. Click here to learn more about intermodal transportation and what it means for KC.  This has brought increased interest to Kansas City as investors outside of the area look to KC for their logistics needs. Click here to read more about Kansas City Investing. Outside investors are not only looking to KC for retail hubs, but also retail centers. For example, the Tiffany Springs MarketPlace closed this year with a $53.5 million acquisition. 

Kansas City is more and more becoming an attractive option for investors. Our team at Block Funds continues to work ahead of the curve and provide investors with strong returns, optimal cash flows and favorable financing terms.

2014 KC Market Report Coming in January.  Click here to sign up now!

Contributor:

Brian Beggs, CFA
Director of Acquisitions
Block Funds
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Grant Reves
Acquisitions & Investment Sales
Block Funds
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Aaron Mesmer
Acquisitions & Investment Sales
Block Funds
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