Visitors to this weekend's Downtown Homes Tour might thank Courtney Hansen and Jerry Schlichter for helping create the cornucopia of apartments and condos that will be on display.
Hansen is an art-lover who moved to Kansas City three years ago from Turkey and prefers her Crossroads loft because the River Market is “getting saturated with normalcy.” Schlichter is a St. Louis trial lawyer who got depressed a decade ago watching fine, old Missouri buildings waste away.
The resulting effort by Schlichter to persuade legislators to approve state tax credits for historic preservation in 1997, and the urban-loving energy of Hansen and thousands of kindred spirits have combined to push downtown housing in Kansas City to a new level, according to developers of the 40 projects that will have open houses Saturday and Sunday.
“We're in the second wave and pretty deep into it,” said Vincent P. Gauthier of Urban Coeur Development. “People no longer feel like they're pioneers. It has become a stable market.”
So stable that Reece & Nichols, the establishment of local real estate firms, soon will open a permanent office at 20th Street and Broadway to house agents specializing in downtown condos. When the Greater Kansas City Home Builders Association offered members a special bus tour of downtown last week, the response was so overwhelming the association added a second bus and still had to turn people away.
The market has evolved into several neighborhoods, each with its own character. The River Market has a small-town feel while the Library Lofts and other projects inside the Loop have a big city ambience. The Crossroads, with its art galleries, is edgier and grittier and places like Gillham Row and Western Auto Lofts near Crown Center will be different yet.
“The depth of the market keeps increasing as the supply grows,” said Chris Sally of Development Initiatives, a company pursuing a pair of smaller condo projects in the River Market. “More people want to come downtown. It's hard to gauge the depth of the market, but nobody's touched bottom.”
There are about 15,100 residents and 7,000 housing units in greater downtown, according to the Downtown Council. The property owner group estimated 2,000 additional apartments and condos are in the works. The council defines greater downtown as the area from the Missouri River to 31st Street, between Bruce R. Watkins Drive and State Line Road.
Tom Trabon, chairman of the Downtown Council housing committee who is developing 52 condos at 21 Ten, said the biggest change that's occurred since the initial open house event four years ago has been the rapid growth of condominiums. That first tour featured 20 projects, all of them apartments. This year, 80 percent of the projects are condos.
“When we did the first tour, almost everybody asked, ‘What can I buy?' ” Trabon said. “That changed the mentality of a lot of developers. For the first time, this year, we'll have more product they can buy.”
Roger Buford has developed hundreds of downtown apartments since the 1980s. Lately, he has shifted gears to meet the changing market. Over the past two years, he's noticed a sharp increase in the number of tenants moving out.
“We attribute about all of that to people taking advantage of low interest rates and buying homes,” he said. “In response, we're beginning to convert some of our properties to condos.”
About 200 of the 1,200 apartments that Buford controls are eligible to be converted into condos. What prevents him from converting more are the rules governing the use of federal historic tax credits. The program provides developers with a tax credit equal to 20 percent of renovation costs, but it's only available for projects used for commercial purposes.
Apartment buildings qualify, but residential condominiums don't. An apartment developer must wait at least five years after a project is completed before converting it to condos. State historic tax incentives, however, which provide a 25 percent tax credit, are available for both commercial and residential projects.
Developers are unanimous in saying those state tax credits were essential to the current transformation of downtown into a burgeoning residential neighborhood. In the late 1980s, changes in federal tax law dried up what had been a budding historic renovation movement here. Throughout much of the 1990s, historic renovation activity in Kansas City and elsewhere went into hibernation.
Enter Schlichter. The St. Louis lawyer estimated historic renovation projects in the state plunged 96 percent after federal tax laws changed in 1986.
“The economics of redeveloping the older buildings didn't work without incentives,” he said. “Historic projects virtually became extinct. It was depressing to see this happen throughout the state.”
Alarmed by the potential loss of older buildings to decay and demolition, Schlichter forged a coalition that included preservationists, developers and labor groups, both rural and urban, to lobby the Missouri General Assembly. Lawmakers listened, and in 1997 approved the current state preservation tax credit program.
“It's been a very big success story,” Schlichter said. “We are now a national model.”
Kansas Citians need look no further than 10th Street between Baltimore and Wyandotte streets to see the fruits of the program. The new Library Lofts development, which was completed in October, used state and federal historic tax credits to convert several vacant early 20th century office buildings into 336 apartments.
What was once a two-block stretch of empty buildings is now a neighborhood anchored by the recently opened public library, a project that benefited from historic tax credits.
“The Library District was 800,000 to 900,000 square feet of blighted buildings that soon will be 100 percent full,” Trabon said. “That's a huge accomplishment and preserves a historic block in our city.”
Schlichter said the program has reduced blight throughout Missouri and contributed to strengthening the core of its cities.
“Personally, it's been extraordinarily gratifying and something I'm pleased to see and proud of,” he said. “It's only going to continue if the law isn't changed and we have a strong coalition to keep it in place.”
Many of the people who have decided to live downtown value its historic buildings and eclectic diversity.
“I really like the environment and the older buildings, it's an exciting time for downtown,” said Dan Askew, 29, a resident at the Safeway Building in the Freight House District. “It's really cool to see people taking an interest in it again. Art galleries are opening and you see more people out.”
That cosmopolitan energy is what drew Hansen downtown. She moved to Kansas City after spending three years abroad in Turkey and India. Her first apartment was in the Soho South building at 16th and Walnut streets, and now she lives in the Safeway lofts. The 30-year-old grew up in Dallas when the urban loft movement was taking hold there.
“I had a dream to be there in the mix of things,” she said. “I love the idea of having everybody around me.”
She works out of her loft as a software technical trainer, would never dream of living in the suburbs and is pretty discriminating about where she wants to live downtown.
“We're in the middle of the art district here, and I like to go to First Fridays with my friends…we like to go places where people are kind of different. The River Market is getting saturated with normalcy.”
Richard Viets, 27, is a high-rise guy. He lives on the 10th floor of one of the new Library Lofts buildings in the central business district.
“The main reason is the views,” he said. “I like being up high and always liked the idea of taking an elevator to my home. I get great sunsets…I grew up in the Northland. Ever since I was in high school, I liked the idea of buildings different than what I grew up with. Everything looked the same.”
Viets, a pharmaceutical sales representative, likes the central location of downtown and the low overhead of the urban lifestyle. His one-bedroom unit covers 900 square feet.
“It's a no-nonsense style of life,” he said. “I don't keep stuff. The life I lead is condensed, and I don't need a lot of space. I do like the amenities. We have a great gym, an indoor lap pool, sauna and a great club room with a TV.”
So how many other people are there like Askew, Hansen and Viets? Nobody is really sure. Not the developers who do the projects or the bankers who loan them money. It's one project at a time, and the results so far have been encouraging.
“Every time somebody buys a condo, they tell friends,” said John Anderson a real estate agent with Prudential Lofts and Condos. “I think the market grows because they create three or four other buyers. When people ask about market depth, we don't know. I'm convinced it's not a finite number.”
Hillcrest Bank has loaned money for several downtown housing projects, the latest being the $14 million renovation of the Stuart Hall Building into apartments by Master Realty and Buford. Mark Parman, chairman and CEO of Overland Park-based Hillcrest, said there is no hard data available on the market. Loans often are based on trusting the judgment of veteran developers and the size of the project.
“It's still a new market and when you look at the number of units, downtown is still a small market,” he said. “What the depth of the market is, is a difficult question but a good one. I think it's expanding.
“It's larger now than three years ago because of the increasing awareness. Across the community there is more knowledge of urban living. There's enough market to absorb the units I know of at reasonable prices. The market may be tighter in the higher-end apartments and condos.”
Grant Burcham of Missouri Bank & Trust Co., which has provided loans to some smaller condo projects, sees the downtown residential market dominated by two categories: young people renting apartments and older people buying condos.
“I think the market is going to continue to strengthen,” he said. “There are a lot of people on the fence and the better the core does, the more it will push them in that direction.”
So what's next? What can help maintain and expand the growing residential market downtown?
When you ask residents, the overwhelming reply is more service retail, particularly a grocery store. That was the answer given when the Downtown Council surveyed residents a couple of years ago, and the results of a new survey are similar.Almost 900 people of the 3,500 who received it have returned the questions.
“The comments are overwhelmingly pro-downtown, they feel strongly about it,” said Bill Dietrich, the executive director of the Downtown Council. “A grocery store is still a strong preference, but they want one that fits an urban context.”
The continued revitalization of downtown also will be a key to attracting new residents. Big public-private endeavors such as the planned redevelopment of the South Loop area have helped spark further interest.
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To reach Kevin Collison, development reporter, call
(816) 234-4289 or send e-mail to kcollison@kcstar.com.