Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study

Transcription

1 Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study Prepared for The Leavenworth County Port Authority July 2011 By Garnet Consulting Services, Inc. In Association With Keller Consulting LLC.

2 Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study Master Contents List Section Title 1 Market Analysis 2 City of Leavenworth Site - Site and Infrastructure Analysis 3 Rail Potential Analysis 4 City of Leavenworth Site Economic Impact and Benefits Analysis 5 City of Tonganoxie Business Park Site and Infrastructure Analysis 6 City of Tonganoxie Business Park Economic Impact and Benefits Analysis 7 Marketing and Implementation Recommendations

3 Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study Section 1 Market Analysis Prepared for The Leavenworth County Port Authority May 2011 By Garnet Consulting Services, Inc. In Association With Keller Consulting LLC.

4 Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study Section 1 Market Analysis Table of Contents Introduction... 1 Demand Side Data... 2 Larger Projects in Kansas and the United States... 2 Current and Historical Project Demand in Leavenworth County... 4 Space Needs Survey of Local Companies... 6 Kansas City Metro Data... 7 State of Kansas Project Activity... 9 Demand Side Summary...12 Supply Side Data...14 Available Buildings in Leavenworth County...14 Leavenworth County Virtual Speculative Buildings...16 Leavenworth County Available Building Summary...16 Available Building Space in the Kansas City Metroplex...16 Available Land in Leavenworth County...17 Available Land in the Kansas City Metroplex...21 Major Intermodal Complexes Under Development...22 Supply Side Summary...24 Other Research Findings...24 Rail Potential...26 Summary of Market Analysis Key Findings...28 Demand Side Findings...28 Supply Side Findings...30 Key Questions and Answers...32

5 Introduction Leavenworth County, Kansas Industrial Parks Marketing and Feasibility Study Section 1 Market Analysis The overall purpose of this project the preparation of an Industrial Parks Marketing and Feasibility Study for Leavenworth County, Kansas is to provide guidance to the Leavenworth County Port Authority as part of their consideration of whether it is an appropriate time to begin development of one or more new business parks in the County. The Port Authority has a long history of careful involvement in such projects. As a result of a detailed research process, two sites were identified for consideration in this Feasibility Study: A acre area in the City of Leavenworth (frequently called the Abeles site because it is the current location of Abeles Field). Because of its proximity to the active Union Pacific rail line, this site has the possibility of development as a rail-served property. Preliminary engineering work prepared in November 2009 by TranSystems shows a possible use of the site for a 133,000 square foot industrial building. There would be no direct rail service to the building but the building could serve as a rail hub, available for one large or multiple small businesses that needed access to a rail siding. Because of Union Pacific s design requirements, the main siding would be 9,000 feet long, thereby providing potential service to other properties in the corridor associated with the rail line, including the possibility of sites in the City of Lansing. The Tonganoxie Site, a 237± acre tract proposed for development of a business park without rail service. Preliminary engineering work by TranSystems indicates this site is suitable for one or more larger-footprint industrial and distribution facilities, although the site could also be developed with a larger number of smaller footprint buildings, and the use is not limited to industrial plants. This site has the benefit of being located less than three miles from a new access point to Interstate 70, the only such access in Leavenworth County. TranSystem s preliminary concept plan includes a 600,000 square foot building with 15 additional buildings of 20,000 square feet or larger and an aggregate of more than 1,900,000 square feet. This portion of the Industrial Parks Marketing and Feasibility Study for Leavenworth County, Kansas presents and assesses information collected between November 2010 and May 2011 related to current and potential demand for non-retail business space in the County, with a specific emphasis on demand that would support development of one or more new business parks.

6 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 2 This assessment considers two important elements: 1. Demand side activity and data that demonstrates the strength and characteristics of business demand for land for development, or space in existing buildings (that would obviously require an underlying lot) in the County. 2. Supply side data that provides an understanding of the existing inventory of available land and buildings that would be competition for a new business park. It should be noted that the data collected comes from a time period in which the United States was in, or was struggling to emerge from, one of the worst recessions in its history. As would be expected, economic development activity, particularly for larger projects, was lower than at prior times, and Kansas and Leavenworth County were not immune from this condition. Nonetheless, there are companies that need space, and there are places developing new business parks to meet some of those space needs. The remainder of this Market Analysis is intended to provide an informed answer as to whether Leavenworth County should be one of those places. Demand Side Data Larger Projects in Kansas and the United States Business parks tend to be the location of larger projects that need big blocks of space. This translates into single or multiple occupants of larger buildings on separate lots. Conway Data, publisher of Site Selection magazine, maintains a New Plant Database that includes many types of commercial construction projects (manufacturing, warehouse/ distribution, office, research & development, mixed use facilities, speculative buildings) that meet any of three criteria: 1. They have a capital investment of $1 million or more; or 2. They cover 20,000 square feet or more; or 3. They employ 50 or more people. These projects can be either new construction or an addition to an existing building. The table on the next page shows the number of projects nationwide and in Kansas since the year Two things are readily apparent: First, the level of projects nationally has been on a consistent decline through most of the past decade. Second, Kansas share of the projects is modest, averaging about one percent of the national total, but higher than that for the past five years.

7 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 3 Year Table 1 Conway Data s New Corporate Facilities and Expansions Scorecard U.S. and Kansas Projects National Projects in US Manufacturing- New Kansas Manufacturing- Expansion Other * Total KS Projects KS % of US , % , % , % , % , % , % , % , % , % , % , % Total 73, % (Source: Conway Data Inc. s New Plant Database published annually in the March issue of Site Selection Magazine) * Other facilities include offices, headquarters, distribution centers, research & development facilities and mixed-use facilities

8 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 4 As one of 105 counties in Kansas, Leavenworth County competes for a very limited number of larger projects that occur in the state. Because it is part of the greater Kansas City marketplace, Leavenworth County was likely in the competition for projects that located on the Missouri side of the border. However, in 2010, the entire state of Missouri only had 92 projects (29 new manufacturing, 37 manufacturing expansions, 26 other). The bottom line here is that to increase the likelihood of success, states and locations within those states must do everything they can to be more competitive. The number of places trying to attract investment has remained the same, or perhaps even increased, while the number of projects of medium to larger size has decreased by 63% over the past 11 years. One of the most critical competitive variables is real estate. Without adequate, shovel-ready sites on which to build or buildings to move into, the chances of attracting the interest of a company looking for a new location are very low. A key question, addressed in the Supply Side portion of this Market Analysis, is whether Leavenworth County has an adequate real estate inventory to be competitive. Current and Historical Project Demand in Leavenworth County The Leavenworth County Development Corporation (LCDC) is the primary agency responsible for economic development efforts in the County. LCDC is supported by local economic development programs in the primary communities in the County, but as the economic development focal point, LCDC is aware of nearly all the potential projects considering the County. The local economic development agencies concentrate more on retail development because this is a major source of municipal revenues. 1. Due to changes in staff and operating procedures, it was not possible to obtain several years of prospect data that provides comparable information. In recent years and during a noticeably slow economy nationwide LCDC has maintained a fairly stable list of 20 to 30 active projects, some of which are carry-overs from prior years. The most recent Status Report on LCDC Leads and Prospects (dated May 17, 2011) contains 28 prospects; of the 26 that were non-retail and suitable for a business park location, the following facts are germane to this Market Analysis: 16 of the projects were looking for an existing building, while 10 were looking for land. Table 2 on the following page summarizes details on the space needs of these projects. The requests for land span a broad range of sizes, with noticeable clusters in the smaller range (5 to 15 acres) balanced with another cluster of larger site needs (65 to 100 acres), with some mid-size sites as well. A conversion of the requested building size to a lot area, using the assumptions of a future doubling of the building size with a maximum one-third land coverage by the building footprint suggests the majority of sites would be small (less than 1 to 15 acres) with a smaller demand for larger sites (25 to 70 acres).

9 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 5 Table 2 Space Needs of LCDC Active Prospects May 2011 Buildings Land Size Range 6, ,000 Square Feet Acres Sizes (Square Feet or Acres) 6,000 10,000 6,500 10,000 12,000 20,000 35,000 47,000 65,000 75,000 75, ,000 80,000 80, , , , , Average Size 106,808 Square Feet 56.4 Acres Most Common Size Less than 50,000 Square Feet 5 15 Acres Acres Source: Leavenworth County Development Corporation Detailed information on use type is not provided in LCDC s Leads and Prospects list for all projects. However, the information that is available shows a broad array of business types including call centers, warehouses, manufacturing plants, and office uses. LCDC was not able to respond to nine of the prospect inquiries because of a lack of a suitable building. While LCDC submits the proposed Tonganoxie business park site for appropriate projects, particularly larger ones, the current lack of utilities is a limiting factor unless the prospect has an extended timeframe to allow simultaneous construction of a building and support infrastructure. 2. LCDC also provided a Status Report on LCDC Leads and Prospects for 2010 through November 15, LCDC typically averages 3 6 new prospect inquiries each month. These represent a wide variety of project types and sizes. Of the total 51 prospects on the list, LCDC was unable to respond to 22 because of a lack of a suitable building, 7 because of a lack of rail-served sites, and 2 because of a lack of a suitable site for construction. The majority of inquires for rail served sites are for larger lots from 20 to 150 acres in size. 3. Table 3 on the following page shows a breakdown of LCDC business attraction targets by type for the year The most common lot size request is in the acre range. The most common building space request is for less than 26,000 square feet.

10 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 6 Table 3 LCDC Prospects by Type (1 Jan 15 Nov 2010) Project Type % of Total Project Type % of Total Manufacturing 35.0% Bioscience/Animal Health 8.33% Retail & Commercial 13.3% Warehouse/Distribution 5.0% Heavy Industry 10.0% Food Processing 5.0% Administrative Offices 10.0% Data Center 3.33% Customer Service Centers 8.33% Education 1.67% Source: Leavenworth County Development Corporation LCDC appears to be losing a large number of potential projects because of an inadequate inventory of available buildings and land for non-retail business construction. Prospects represent a wide range of business types, with no discernable cluster of particularly strong demand. While there is some demand for rail-served properties, these projects generally require large lots. A mixed use park providing sites for a range of site needs appears to have market support. The current lack of utilities for the Tonganoxie business park further limits the County s competitiveness. Space Needs Survey of Local Companies A rule of thumb in the economic development business, verified by national research paid for by the U.S. Economic Development Administration a number of years ago, is that as much as 70% of economic growth in a community comes from the businesses already located there or very close by. As part of the research to support this project, LCDC undertook a survey of the major employers in Leavenworth County on their space needs and plans. The survey form (see Exhibit 1) was sent directly to approximately 20 companies in the County. The availability of the survey was also publicized in the Leavenworth Times to provide an opportunity for companies who had not received the survey form directly from LCDC to respond. Only seven responses were received, approximately a 33% response rate, which is considered about normal for an ed survey form. Studies of survey response rates show typical response rates of 26 36%, with salience of the survey topic to the recipient a key factor in responses. Although a guess, it is likely more responses were not received because the recipients did not have plans to change their space in the foreseeable future. The following summarizes the responses that were received: None of the respondents indicated a need or plans to move from their current location. - Five reported they would stay in their current space with no plans to expand or reduce space. - Two reported plans to expand at their current location within 1 2 years. One of those foresaw additional expansion need at the current location in 3 5 years.

11 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 7 - One of those reporting no near-term needs to change their space, foresaw a need to expand at their current location in 6 10 years. The five companies reporting their current facility size totaled 117,000 square feet, with a range of 2,000 80,000 square feet. Three of the respondents were in the 10,000 13,000 square foot range; if representative of Leavenworth County s economic base, this indicates that many of the companies in the County are small to medium size. Only two of the companies quantified the need for additional space, one at 40,000 square feet of additional space and one at 10,000 square feet. The majority of the additional space would be needed for manufacturing, with smaller amounts of distribution and office space. All seven of the respondents reported their current employment, which totaled 354 and ranged from 4 to 225. Again, if these are representative of the County s economic base, it means Leavenworth County is populated by small and midsize companies. Only three companies reported plans to increase employment and only two provided a number, which totaled only 5 9. The company with the largest expansion plans will add employment but did not state how many jobs. Six of the respondents currently own their facility while one leases. Two of the current owners report a preference to lease in the future. As these two also reported planning to stay in their same facility, this would require a sale-leaseback, or may indicate a possible relocation potential if this cannot be arranged. The current tenant planned to continue leasing. Only one of the respondents indicated a need for a rail served facility. This has a bearing on the proposed rail served area associated with the City of Leavenworth site. The results of this space needs survey of companies already in Leavenworth County do not provide strong justification for development of a new business park. However, as noted in the Introduction to this Market Analysis, we are still in an economy where businesses are very hesitant to think seriously about undertaking major capital expenditures unless it is absolutely necessary. Kansas City Metro Data Leavenworth County is part of an 18 county region in both Kansas and Missouri served by the Kansas City Area Development Council (KCADC). As part of its responsibilities, KCADC brands and promotes the region for economic growth and assists companies in finding suitable locations in the region. During our interview with them, KCADC reported the following market trends and conditions for the region: 1. Leavenworth County Lack of fully served and available sites is the biggest challenge for Leavenworth County.

12 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 8 The majority of future growth in Leavenworth County will come from the greater Kansas City area. Biggest assets are location in the regional market, access via I-70, the openness and business friendliness of the community, an available labor supply from military spouses and retirees, good choice in housing, a small town feel in the Kansas City metro area, and the major presences of the prisons and Fort Leavenworth. Biggest challenges are intra-county transportation access, the perception that local schools are below average (particularly in the City of Leavenworth), a widespread preference to live in Kansas City or Shawnee, and the negative image perceived by some because of the prisons. Tonganoxie will derive some benefit from its proximity to Lawrence and the University of Kansas. 2. Market Trends The Kansas City metroplex is an area where manufacturing never went away An increase in size of distribution centers An increase in interest by big box distribution operations needing intermodal road-rail capability 75-80% of prospects are looking for an existing building 3. Real Estate Considerations A constraint on converting prospect interest into projects because of a lack of certified or shovel-ready sites A particular lack of Class A sites for larger users An increasing demand for rail-served properties with sites as small as 5 acres, but most larger than that Competition for projects with rail needs will come from existing projects such as in Shawnee and Edgerton (a 1200 acre site being developed by BNSF) Any speculative building construction should be relatively small (50,000 square feet or less) with high ceilings (minimum foot clear) Leavenworth County s location in the Kansas City metroplex is an advantage that the County is currently not able to capitalize on fully because of its lack of ready-to-go business sites and buildings. Sites with good highway access that can serve larger prospect needs are increasingly desirable. While there is an increasing need for rail served sites, there is also a strong inventory in the region. 4. KCADC also provided a list of prospect types and sizes they have handled during the first four and a half months of Table 4 provides summary information.

13 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 9 Table 4 KCADC Propspect Data (through May 18,2011) Project Type Number Building Size Range (SF) Average Building Size (SF) Lot Size Range (Acres)* Manufacturing 16 12,500 1,080, , Distribution 10 17,500 1,000, , Customer Service Centers 9 6,000 70,000 35, Biosciences 8 1, ,000 54, Information Technology 2 12, , , Other 2 2,500 47,000 24, * Only 11 of the total 47 prospects specified a site size. We have calculated the lot sizes that would be required for the other building sizes based on enough land to double the building size in the future with an assumed maximum one-third coverage of the lot. Table 4 demonstrates that the greater Kansas City region is attracting interest from a crosssection of project types, with an emphasis on manufacturing, but strength in distribution, call centers and biosciences as well. Prospect building size demands also cover a wide range, resulting in a need for a wide range of site sizes. Of the 10 projects listed as KCADC Led Successes in the first and second quarter (to datae) of 2011, 8 were in Kansas. State of Kansas Project Activity 1. The Kansas Department of Commerce provided reports showing the following activity in the state for the past two Fiscal Years: Table 5 Kansas Department of Commerce Business Recruitment Activity FY 2010 FY 2009 Projects Opened (Including International) Total Projects Completed Jobs 13,900 9,100 Capital Investment $838,000,000 $900,000,000 Source: Kansas Department of Commerce This data and the report that includes it show the following: While the total number of projects considered by the Department declined slightly from FY 2009 to FY 2010, the number of projects successfully completed increased substantially (62%). While the total capital investment declined slightly from FY 2009 to FY 2010, the number of jobs created increased substantially (53%). - Capital investment over the past four years totaled nearly $3.4 billion. The lowest amount in that period was $780 million in FY The highest amount in the prior seven years was $417 million in FY 2000.

14 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 10 - The jobs created in FY 2010 were the highest in the past 11 years. Prior to FY 2009, the next highest job creation number was 7,927 in FY Table 5 shows a healthy level of activity in the State resulting in considerable capital investment and job creation. Success levels in both categories in the past four years have been substantially higher than in the prior seven years. 2. FY 2010 business recruitment leads handled by the Kansas Department of Commerce broke down by type as shown in Table 6: Table 6 Kansas Department of Commerce FY 2010 Business Leads By Type Leads Type Number % of Total Manufacturing 43 24% Office 30 17% Energy 29 16% Professional 24 13% Advanced Manufacturing 23 13% Bioscience 16 9% Logistics/Distribution 12 7% Agriculture 1 1% Source: Kansas Department of Commerce Table 6 demonstrates that the State of Kansas is attracting interest from a wide variety of project types. This suggests that new business park development should be intended for a mixture of uses. 3. Of the 178 leads shown in Table 6, the Department had 68 successful projects in FY Table 7 shows the type and related jobs and Capital investment. Table 7 Kansas Department of Commerce FY 2010 Business Successes By Type Successes Type Number % of Total Jobs Capital Investment Office 24 35% 2,126 $59 million Manufacturing 15 22% 1,496 $232 million Professional 11 16% 7,817 $285 million Logistics/Distribution 7 10% 260 $41 million Bioscience 5 7% 232 $35 million Energy 3 5% 574 $93 million Advanced Manufacturing 3 5% 1,414 $232 million Agriculture 0 0% Source: Kansas Department of Commerce

15 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 11 Table 7 verifies the fact that Kansas is attractive to, and successful in attracting a variety of project types. Of the 68 projects shown in Table 7, 12 were reported to be in nonmetropolitan areas of the State. 4. Commerce Department reports showed the following breakdown of most requested building sizes: Table 8 Building Size Requested Building Size Range Number of Requests (Square Feet) 1,000 10, ,001 25, ,001 50, , , , , , Source: Kansas Department of Commerce Table 8 demonstrates several important points: Space needs reported by prospects to the Kansas Department of Commerce run the spectrum of sizes. Although not specifically stated in the source report, Commerce representatives confirmed in interviews that Kansas is no different from other states, with the vast majority of prospects (reported to be 80%) looking for an existing building. A conversion of the requested building size to a lot area, using the assumptions of a future doubling of the building size with a maximum one-third land coverage by the building footprint shows the statewide projects would have required a variety of site sizes, with approximately 50 needing a site of 5 acres or less, 32 needing sites between 5 and 15 acres, and 35 needing larger sites (20 acres and larger). Business parks that can accommodate a wide range of building sizes, or occupant sizes within a larger building, will have a competitive advantage over parks that are limited to one size. While the preference is for finding an existing building, some projects are new construction. A wide variety of site sizes are needed, with some companies likely preferring a planned park environment. Parks that prime the pump by planning a speculative building (either actually constructed or virtual) may have an added advantage. 5. The Kansas Department of Commerce provided a more detailed list of 65 FY 2010 projects; it is presented in Table 9 on page 13. Table 9 shows:

16 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 12 A mix of project types: 33 new; 12 retention; 11 expansion; 3 international; 3 combined expansion/retention; 1 combined new/retention; 1 relocation A mix of facility uses including many manufacturing operations of a wide variety of types; several distribution facilities; several headquarters, regional offices and back office facilities; a variety of service operations A broad range of sizes as measured by either job creation (5 to 4,500) or capital investment ($75,000 to $170,000,000) Projects by employment size broke down as follows: 29 projects up to 50 jobs; 16 projects between 51 and 100 jobs; 6 projects between 101 and 150 jobs; 14 projects more than 150 jobs Projects by capital investment size broke down as follows: 40 projects $5 million or less; 13 projects between $5 million and $10 million; 3 projects between $10 million and $20 million; 9 projects over $20 million These 65 projects occurred in 22 different communities; however, 15 occurred in Kansas City; 12 occurred in Overland Park; 6 in Lenexa; and 4 each in Leawood and Olathe 1 project occurred in Leavenworth a Central Bag facility employing 65 with a capital investment of $6,525,000 The Greater Kansas City area accounted for 48 of the 65 projects (74%) Table 9 on the following page demonstrates that a wide variety of project types and sizes are occurring in Kansas, with the vast majority occurring in the Kansas City area. While Leavenworth County captured only one of these in FY 2010, this activity around Leavenworth suggests the County has unrealized potential, and that there is some obstacle to capturing more of the project activity. As discussed elsewhere in this report, a common opinion is that Leavenworth County is being overlooked because of a lack of available real estate (including both existing buildings and shovel-ready sites). Demand Side Summary There is a substantial level of prospect activity in Kansas and the Kansas City metroplex, which includes Leavenworth County. This level of activity appears to be increasing as the nation emerges from the recession. Prospect types include all types of projects (manufacturing/advanced manufacturing, warehouse/distribution, office, research & development) and are of a wide variety of sizes measured in terms of both space demand and job creation). While most prospects are looking for a building to occupy, there is also a reasonable level of demand for sites for new construction. There is a reported increasing demand for rail served sites. Leavenworth County has been unable to convert many of its initial prospect inquiries into project discussions because it cannot deliver the real estate either buildings or land the projects require.

17 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 13 Table 9 Kansas Department of Commerce FY 2010 Project List

18 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 14 Supply Side Data Leavenworth County has the widespread reputation of having a very limited supply of nonretail, available, modern business space both existing buildings and developable sites. Available Buildings in Leavenworth County Available buildings are important because, as previously noted, the vast majority of business prospects (an estimated 75-80%) begin their search for space with a preference for an existing building. This is because fit-up and occupancy of an existing building is usually much quicker than new construction; often, it is also less expensive. Existing buildings are competition for new construction on a building lot. LCDC uses the Location One Information System (LOIS) to maintain information on available real estate in the County. As of mid-may 2011, LOIS included 26 building listings, of which 22 were not retail. Table 10 on the following page summarizes information on these buildings. Table 10 shows: Leavenworth County s inventory of available buildings is skewed to the smaller side, with 17 of the 22 11,000 square feet or less in size. Within the size limitation, there is a mixture of buildings by different intended use, but a small choice for any specific use. The County is nearly devoid of larger blocks of space for warehouse/distribution use, which frequently are larger space users. Six of the seven buildings being marketed for this use are 7,500 square feet or less in size. The highest ceiling height is 16.2, which is inadequate for many warehouse or distribution uses requiring pallet stacking or racking systems. The largest available space, a 300,000 square foot portion of the 1.5 million square foot Loring Underground project, is being marketed for warehouse/distribution use, but only has a 14 ceiling height, which is inadequate for many warehouse uses. This property is shown as build-to-suit, indicating it does not exist yet. Leavenworth County cannot meet a need for manufacturing space that is larger than 33,000 square feet. As Tables 4 and 8 demonstrated, many of the space requests in the Kansas City marketplace are for buildings larger than this. Similarly, Leavenworth County cannot meet an office need larger than 24,000 square feet. There is a good choice between properties for sale and those for lease. Sale prices run from $43.30 to $78.58 per square foot (a commercial building). Lease prices run from $4.00 to $7.50 per square foot gross for industrial or warehouse space, and $6.00 to $21.50 per square foot for office space. These prices appear to be reasonable within the Kansas City marketplace except for warehouse space, where the average rent is $3.25.

19 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 15 Table 10 Available Buildings in Leavenworth County Building Name Community Building Available Ceiling Sale Lease Notes Size Height Price/SF Price/SF Warehouse/Distribution Loring Underground Basehor 1,500, ,000 14' $2 Shown as build-to-suit Kelly Williams Bldg. Leavenworth 9,000 7, ' $7.50 gross Each 1500 SF unit includes 400 SF office Parallel Ln. Basehor 6,352 6,352 16' $ Parallel Ln. Basehor 5,760 5,760 $53.81 Parkway Place-Bldg 3 Basehor 5,000 5,000 12' $6.25 gross 5 year lease Parkway Place-Bldg 1 Basehor 7,500 4,500 14' $6.50 gross Parkway Place-Suite B Basehor 7,500 1,500 14' $7.50 gross Industrial Perka Bldg. Tonganoxie 33,000 33,000 22'/18' $37.88 $4-$7 NNN Lease depends on improvements Tec Fab Tonganoxie 25,000 $55.00 $6.00 Right Choice Bldg. Tonganoxie 10,800 10,800 16' $59.24 Canaan Stone Works Leavenworth 10,000 10,000 23'/20' $69.50 $6.95 net Elite Electric Basehor 5,640 5,640 20' $71.81 Industrial/Office Front Street Properties Tonganoxie 9,350 9,350 $ SF each; 2759 SF shop; 4800 SF warehouse Office Eisenhower Crossing Lansing 47,000 24,000 $ story building 1839 S. Broadway Leavenworth 40,000 20,000 9' $6.00 First National Bank Lansing 6,000 9,000 9' TBD Tonganoxie Post Office Tonganoxie 2,808 2,808 $53.42 Parkway Lace-Bldg 2 Basehor 10, ' $7.95 gross Commercial 2221 N. 127th St. Basehor 10,600 10,600 $ Industrial St. Lansing 10,500 10,500 16' $ Parallel Ln. Basehor 6,500 6,500 20'/16' Jay Carey Leavenworth 3,500 10'

20 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 16 Leavenworth County Virtual Speculative Buildings In the past, LCDC has been active in developing speculative buildings. More recently, as many places have done to reduce out-of-pocket construction costs for speculative buildings, LCDC has created design plans for several virtual speculative buildings in the 30,000 60,000 square foot range suitable for several locations in the Gary Carlson Business Park, Urban Hess Business Park and Lansing Business Center. Depending on actual use and construction cost, these buildings are available for as little as $55 per square foot. These sizes partially address the current lack of larger industrial buildings, but require a longer timeframe than a company seeking nearly immediate occupancy may have. It should also be noted that the building plans available from LCDC s website lack visual clarity, making it difficult to read building dimensions. Leavenworth County Available Building Summary Leavenworth County currently has a very small inventory of available building space. This inventory is inadequate to make the County competitive for meeting the space needs of prospect companies, particularly larger ones, and those seeking large blocks of space for warehouse/distribution use. Since finding suitable real estate is usually the second most important factor (after a suitable labor supply) for companies seeking a new location, it is highly likely that Leavenworth County s business recruitment (and perhaps retention) efforts are being impeded by this lack of real estate. Available Building Space in the Kansas City Metroplex 1. Leavenworth County frequently competes with other places in the greater Kansas City area for projects. Colliers International s First Quarter 2011 Kansas City Metro Area Market Report for industrial properties shows a total of 17.5 million square feet of available industrial space in the region, broken down as 11.9 million square feet of warehouse space; 4.2 million square feet of general industrial space; and 1.4 million square feet of flex space. Similarly, Colliers International s First Quarter 2011 Kansas City Metro Area Market Report for office properties shows a total of 10.9 million square feet of available office space in the region, broken down as 4.2 million square feet of Class A space; 5.9 million square feet of Class B space; and nearly 900,000 square feet of Class C space. Colliers analysis only includes office properties of 20,000 square feet or larger, so there is even more competition when smaller blocks of office space are included. 2. KCADC s website uses the Location One Information System (LOIS) to provide information on available real estate. Within the 18 county region KCADC serves, the LOIS database shows 1,478 available buildings, of which 499 were for office use; 313 were for industrial use; 268 were for warehouse/distribution use; 106 were categorized as flex-tech space; and 8 were for research and development. It was not possible to derive available space totals for these categories and the inventory is too large to analyze here for specific

21 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 17 characteristics. Suffice it to say, there is a substantial amount of available space in the KCADC territory which most likely can meet every conceivable need. 3. The Kansas Department of Commerce also uses LOIS. Table 11 shows its available building listings for Douglas, Johnson and Wyandotte Counties: Table 11 Kansas Department of Commerce Available Building Listings Douglas, Johnson and Wyandotte Counties Type Space Douglas Johnson Wyandotte Type Total Industrial Warehouse/Distribution Office Flex Tech R&D County Total Source: KS Department of Commerce Website Real Estate Listings analyzed by Garnet Consulting Services, Inc. Again, this is too lengthy a list to analyze in detail, but demonstrates clearly that Leavenworth County s very small inventory of available buildings is at a competitive disadvantage when compared with surrounding counties in Kansas. Available Land in Leavenworth County LCDC s LOIS listings show 38 available sites in the County, which are summarized in Table 12 on the two pages 19 and 20. The following observations are germane to this Market Analysis: While Leavenworth County has a total of 760+ acres available, this is a misleading number. Of the total, 237 are included in the Tonganoxie Business Park, which currently lacks utilities and is therefore not shovel-ready. In addition, another 146 acres (the 198 th Street and 24/40 Highway site), also in Tonganoxie, is described as for future development and also appears not to have full utilities. The removal of these two sites reduces the County s available site inventory to 377 acres, a relatively modest amount for a County of Leavenworth s size, particularly when compared with other locations surrounding Leavenworth, and with which Leavenworth competes. The Wolf Creek Industrial Park is currently not shovel-ready, further reducing the County s effective inventory. It requires sewer to be extended under US from the north, extensions of other utilities, and has a right in-right out access issue from the highway. Access could be addressed with an internal road up to 155 th Street, but this would require additional costs and approvals. The vast majority of available sites, including the Urban Hess Business Park and the Lansing Business Center, are intended for small users; 27 of the sites are less than 5 acres, and of these, 20 are less than 3 acres. In addition, the 25 acre Highland Ridge

22 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 18 Business Center is planned for lots in the acre range. While some of these sites may be combined into larger lots, inadequate information is available from the LCDC website to be able to provide more detailed information. There is a mismatch between site sizes available and site sizes sought by prospect companies. Development of the Tonganoxie Business Park would be a major step in correcting this deficiency. Although not shown in Table 12, a tour of the County s available sites showed they are well situated and generally have good road access. Other than the previously mentioned Tonganoxie Business Park and 198 th Street and 24/40 Highway site, nearly every site in the inventory has full utilities available. Plans already exist for installing full utilities to the Tonganoxie Business Park. The County s available sites are well served with utilities. The majority of available industrial sites, particularly those in business parks, are reasonably priced. The Highland Ridge Business Center is priced at three to five times the norm for the area with no explanation as to what justifies such an asking price. Smaller properties and office properties are more expensive, which is typical for small sites and/or commercial land. The County has several master-planned business parks, which can be a marketing advantage compared with unplanned greenfield sites. The City of Leavenworth is working with private development firms to create an 18 acre area across from Fort Leavenworth that will include a business incubator, office and conference space, and a research center.

23 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 19 Table 12 Available Land in Leavenworth County Site Name Community Acres Available Price/Acre Zoning Utilities Notes Business Parks Tonganoxie Business Park Tonganoxie 237 $10,000 Business Park Planned Urban Hess Business Park Tonganoxie $43,560 Light Industrial Full ac. Adjacent; Lots combinable up to ac. Urban Hess Business Park #1, Lot 5 Tonganoxie 1.26 $43,663 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #2, Lot 14 Tonganoxie 1.57 $43,477 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #2, Lot 15 Tonganoxie 1.56 $43,448 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #2, Lot 16 Tonganoxie 1.56 $43,448 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #2, Lot 17 Tonganoxie 1.97 $43,538 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #3, Block 1, Lot 3 Tonganoxie 3.08 $43,532 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #3 Block, 1, Lot 4 Tonganoxie 1.54 $43,475 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #4, Lot 1 Tonganoxie 4.52 $43,521 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #4, Lot 2 Tonganoxie 1.66 $43,665 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #4, Lot 3 Tonganoxie 3.69 $43,595 Light Industrial Full 50 ac. Adjacent Urban Hess Business Park #4, Lot 4 Tonganoxie 3.63 $43,536 Light Industrial Full 50 ac. Adjacent Gary E. Carlson Business Center Leavenworth Total acres available in 4 lots Gary E. Carlson Business Center-Lot 5 Leavenworth 9.41 $43,560 Light Industrial Full Lots 5, 6 and 7 can be Gary E. Carlson Business Center-Lot 6 Leavenworth 7.67 $43,560 Light Industrial Full combined into a single 22+ Gary E. Carlson Business Center-Lot 7 Leavenworth 5.21 $43,560 Light Industrial Full acre, L-shaped site Gary E. Carlson Business Center-Lot 9B Leavenworth 3.12 $43,560 Light Industrial Full Lansing Business Center Lansing Lansing Business Center, Lot 1 Lansing 1.01 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 2 Lansing 1.22 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 3 Lansing 1.36 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 4 Lansing 1.2 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 5 Lansing 1.03 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 7 Lansing 1.22 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 8 Lansing 1.17 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 9 Lansing 1.12 $39,000 Commercial Full 15 ac. adjacent Lansing Business Center, Lot 10 Lansing 1.48 $39,000 Commercial Full 15 ac. adjacent Other Parks Highland Ridge Business Center Tonganoxie 25 $141,570-$261,360 Light Industrial Full ac. Sites First City Industrial Park Leavenworth 21.2 $62,291 Heavy Industrial Full Wolf Creek Industrial Park Basehor $30,000-$40,000 Light Industrial Full Sewer must be extended mwaterhouse@snet.net

24 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 20 Table 12 - Continued Available Land in Leavenworth County Site Name Community Acres Available Price/Acre Zoning Utilities Notes Other Sites 20th & Spruce St. Leavenworth 7 $135,714 Commercial Full 7 ac. Adjacent 4th & Reece Leavenworth 1.8 Heavy Industrial Full 90 Ash Street Leavenworth 1.8 $77,722 Other Full th Street Leavenworth 0.7 $184,286 Office Full.73 ac. adjacent Eisenhower Crossing Lansing North Main Lansing 2 $198,150 Commercial DeSoto & West Mary Street Lansing 30 $20,000 Agriculture Full North 155th Street Basehor 2.06 $84,951 Business Park Available Basehor Industrial Parcel Basehor $20,000 Agriculture Full Requires utility extensions 200 adjacent acres available 198th & 24/40 Highway Tonganoxie 146 $15,000 Other Total Land Available Source: LCDC website analyzed by Garnet Consulting Services, Inc.

25 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 21 Available Land in the Kansas City Metroplex 1. The Colliers International Kansas City Metro Area Market Reports do not provide information on available land. 2. KCADC s website shows 711 sites in their LOIS listings. Several of these sites are 1,000 acres or more in size. These listings make it obvious that there is a great deal of land available for business development in the 18 county region served by KCADC. 3. The Kansas Department of Commerce website shows the following information about available sites in Douglas, Johnson and Wyandotte Counties: Table 13 Kansas Department of Commerce Available Site Listings Douglas, Johnson and Wyandotte Counties Type Land Douglas Johnson Wyandotte Type Total Light Industrial 46 Sites 26 Sites 32 Sites 104 Sites Ac Ac. 1, Ac. 2,973.5 Ac. Heavy Industrial 1 Site 1 Site 1.07 Ac Ac. Office 18 Sites 4 Sites 22 Sites Ac Acres Ac. Planned Park 6 Sites 6 Sites Ac Ac. County Total Sites/ Acres 46 Sites Ac. 50 Sites 1, Ac 37 Sites 1, Ac. 133 Sites 3,843 Ac. Size Range Ac Ac ,235 Ac ,235 Ac. Most Common Size 20 Ac. or less 35 Ac. or less 25 Ac. or less 35 Ac. or less Rail-served Sites 2 Ac. 4 Sites Total Ac. 2 Sites Total Ac. 7 Sites Total Ac. Source: KS Department of Commerce Website Real Estate Listings analyzed by Garnet Consulting Services, Inc. Table 13 shows: Just within the three nearby Kansas counties that are some of the most frequent competitors with Leavenworth County, there are a substantial number of available sites totaling more than six square miles of area. These sites are zoned to meet a mixture of uses. Both Johnson and Wyandotte Counties have much more land available than Leavenworth County does. These sites can accommodate a wide variety of project sizes. Several of the sites have rail service available.

26 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 22 Major Intermodal Complexes Under Development The contemplated development of a rail-served area in the City of Leavenworth, or in Leavenworth and Lansing, would compete with other intermodal complexes currently under development in the region. 1. BNSF Gardner/Edgerton Complex BNSF Railroad is currently in the process of developing a 1,000 acre intermodal complex, including a 440-acre BNSF Intermodal Facility and the 560-acre Logistics Park-KC, between Gardner, and Edgerton, KS, situated between I-35 and the BNSF rail line. Figure 1 provides a map of this complex. Located approximately 40 miles from Leavenworth, and with better highway access, this complex would be significant competition for a small rail served site in Leavenworth and/or Lansing. Figure 1 BNSF Gardner Intermodal Complex

27 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page Kansas City Southern CenterPoint Intermodal Center This 1,340-acre development includes a 1,000-acre industrial park located directly adjacent to the newly-opened Kansas City Southern Intermodal Facility. The complex has infrastructure in place, and can accommodate facilities up to 1+ million square feet. Figure 2 provides a map of this complex. This complex is located just south of Grandview at the intersection of U.S. Highway 71 and Highway 150, approximately 6 miles from I-435 and I This complex also has better highway access than the Leavenworth/Lansing area and will be significant competition. Figure 2 Kansas City Southern CenterPoint Intermodal Center

28 Leavenworth County, Kansas May 2011 Industrial Parks Marketing and Feasibility Study Section 1 - Page 24 Supply Side Summary Leavenworth County has a very limited inventory of available real estate both land and buildings suitable to meet the needs of non-retail business prospects. The defining characteristic of the County s available business real estate is small. Most buildings can only accommodate smaller users, and most sites, particularly existing business parks, have been planned for smaller users. While some of these lots could be combined to create larger sites, this does not markedly improve the supply of sites for larger projects in the long run. There is substantial competition from available real estate in the Kansas City metroplex and in the nearby Kansas Counties with which Leavenworth County frequently competes. Bringing the Tonganoxie site to shovel-ready status would significantly improve Leavenworth County s competitiveness. There is substantial competition for projects needing rail service, including two newly developing complexes in or near Kansas City that have better highway access. Development of the 133,000 square foot building proposed for the Abeles Field site in the City of Leavenworth, without the rail siding being considered, would still be of great benefit for the County. Other Research Findings The following summarizes findings from project interviews and other document and website research. 1. Leavenworth County 2010 Census data provided by LCDC shows the county is growing, with an 11% increase from 68,691 in 2000 to 76,227 in While the City of Leavenworth has seen a very small population decline in the decade, other portions of the County have grown substantially, particularly Basehor with a 51.4% growth and Tonganoxie with a 45.3% growth. A growing population creates both a growing labor force and increasing need for local employment oppontunities. The County s high number of military retirees provides a potential pool of labor, many of whom have high levels of education and technical skills. Leavenworth is the most highly educated county in Kansas; however, it is not a wealthy county the Kansas Statistical Abstract shows that in 2008, Leavenworth County s per capita income of $33,100 lagged the state s by $5,800. The City of Leavenworth provides the name recognition for the County. Current LCDC target industries are distribution, biosciences and defense. Thought is being given to adding wind energy. About 70% of Tonganoxie residents out-commute daily. This potentially provides an available labor pool for businesses in a new business park if jobs have wages that justify changing employers when reduced commuting costs and time are factored in. Tonanoxie is not a well-known area and requires aggressive marketing. The City sought to partner with a broker on its proposed park, but received no responses to its RFP.