How Stressed is KC's Housing Market?

Relatively, not very. Of course, things still aren't exactly rosy, but in this recent analysis by the Wall Street Journal, out of the 49 most populous U.S. metro areas, only three had lower "housing-stress indicators" than Kansas City. Factors considered included percentage of income spent on housing, percentage of population without health insurance, and percentage of population not working. The Miami area was rated as the most stressed, with three California metros close behind. Perhaps this is yet another indicator that much of so-called fly-over country is actually, in the words of urban development scholar/commentator and recent LWREC speaker Joel Kotkin, a "zone of sanity."

A New Way To Present Your Development Projects

I hear they look even better in person. 

Presidents Club: A Powerful New Voice in KC Real Estate

A who's who of Kansas City's commercial real estate elite was recently assembled by LWREC director Walt Clements to address important local economic development and real estate issues. In addition to weighing in on policies of concern to the greater commercial real estate community, the group, known as the Presidents Club, will foster the development of the UMKC Lewis White Real Estate Center, including its intended launch of a new real estate masters program by the fall of 2011. Both the advisory group and the masters program will be invaluable sources of guidance and innovation for the region's real estate sector in the years ahead. Read more...

Infrastructure

Infrastructure (an incredibly broad category) location, capacity, and condition are critical factors in real estate investment decisions. Economic slowdowns and resulting contractions in tax receipts and budgets for local governments tend to lead to particularly pronounced infrastructure deficiencies. Something of a negative feedback loop can emerge in such an environment, given the heavy reliance of many local government revenue streams on real estate activities. In some cases, funding shortfalls and forced resource reallocations lead to reworkings of infrastructure funding channels and project processes (selections, approvals, reviews, etc). For example, recently, federal stimulus funds have trickled through to select infrastructure projects. Private, public-private, and community-based efforts can also offer alternative means of infrastructure provision. But there remain innumerable project wishlists and maintenance backlogs dispersed across our city and beyond in need of creative solutions. Here's a smattering of links to current KC infrastructure-related stories and organizations:

"Chamber: Kansas City infrastructure shortcomings hurt business"

U.S. 71 upgrades coming

Green infrastructure

Christopher S. Bond Bridge project

KC Design Center

City's new infrastructure manager 

Evolving Suburbs

The metropolitan areas that make up our primary real estate markets are complicated places. Yet there are discernible and sometimes predictable interactions among the concentrated technological, ecological, cultural, and economic networks that comprise these places. Interpretations of urban phenomena are also diverse and evolving. To accurately understand these urban dynamics is to hold a critical advantage in the world of real estate. The following two presentations offer different takes on the nature of our cities and their maturing suburbs. The first focuses mainly on what to expect and strive for in the redevelopment of suburban properties. The second is a more general, historically based reinterpretation of the prevailing talking points on urban sprawl (and even mentions KC a bit). There are some complementary strands, but differences prevail between the perspectives and, accordingly, in the implications for real estate professionals.   

LWREC Speaker Series Event

Global real estate expert Gordon Brown will join the LWREC on July 27th to share his insights into the markets of the Middle East. Brown holds a Doctor of Technology degree, is principal of a real estate data firm in Chicago, and has served as dean of a prominent Business School in Abu Dhabi. Having recently stood witness to over 420 high rise building projects stalling in the midst of their development cycles, Dr. Brown will highlight some critical lessons that can be transferred to the U.S. market.

~ July 27, 4:40 PM Kauffman Conference Center, adjacent to the Ewing Marion Kauffman Foundation offices in Kansas City, Missouri.
via W. Clements

Lessee Beware: GAAP Changes and Balance Sheet Impacts

New generally accepted accounting procedures (GAAP) intended to reconcile American and international standards have been put forward that will require all real estate leases to appear on the liability side of a corporate financial statement. Previously, many leases could simply be "footnoted" to avoid a balance sheet impact. The expected results will include lower debt to equity ratios for corporations as well as potential violations in other borrowing arrangements with lenders. This may lead many 'users' of real estate to buy instead of lease. If real estate owners out there are considering a "sale leaseback," they need to consider the impact on their financial statements with these new guidelines! The NYT story. 

Via W. Clements

Fall Courses

The LWREC course lineup just keeps getting stronger. This fall, Real Estate Finance Fundamentals (RL-EST/ENT 421) will be offered to undergraduates. Graduate-level courses will include Real Estate Market Analysis & Feasibility Study (RL-EST/ENT 5573), Legal Context of Real Estate Decision Making (RL-EST/ENT 5578 & LAW 8875L), and What Happens if a Real Estate Deal Goes Bad? (RL-EST/ENT 5587/497). And register now for Real Estate Financial Spreadsheet Analysis in the Professional Education Series.

Join the Club!

The Lewis White Real Estate Center is currently seeking members for the recently launched student Real Estate Club. This club is open to both gradutate and undergraduate students. Contact whitecenter@umkc.edu for more info.

Time is Money

LWREC research from early 2010 examined the ways in which time delays in building permit processing affect overall project costs in several KC area communities. Links here and here provide some coverage of the report by local media. Given the slowdown in new projects, city planning departments may now be able to take pause to evaluate development approval policies in search of improved means of creating the best built environment possible while avoiding unintended consequences in the form of undesirable costs. Research like that by the LWREC is a great place to start to understand the issues. Economists Edward Glaeser of Harvard and Joseph Gyourko of Wharton, among others, have been on the forefront of similar research in recent years. 

Welcome!

As we all know too well, plenty of voices in our industry have been singing the blues recently, even in relatively balanced Kansas City. But this is also a time of opportunity, especially for individuals capable of looking at the real estate landscape with fresh eyes. Let this be a place for fostering that innovative perspective by sharing ideas and staying up to date with your classmates, instructors, city, and beyond. Please send news, articles, or other useful info to lwrecblog@ymail.com com.