Amazon Takes New Spec Industrial Building for Kansas Fulfillment Center

By Gail Kalinoski

Rendering of the building Amazon will occupy in Edgerton, Kan.

Kansas City, Mo.—Amazon.com Inc. will occupy the largest speculative industrial building ever constructed in the Kansas City, Mo., market for its latest fulfillment center. The 822,104-square-foot building is located in Logistics Park Kansas City in Edgerton, Kan., and expected to create about 1,000 new jobs.

“Amazon’s announcement validates the vast investments our local developers have made in speculative industrial developments,” Tim Cowden, president & CEO of the Kansas City Area Development Council, said in a prepared statement. “There are over a dozen spec projects in 28 different locations across the metro right now, and we’re very optimistic about the market remaining strong. Over half the companies occupying Kansas City’s spec space are new to the market.”

The Kansas City Area Development Council, which represents 18 counties in the Kansas City metro area, said the region has seen an average of 4 million square feet of speculative space added annually for the past five years. More than 5.8 million square feet of speculative industrial space opened in the market in 2015 and another 6.3 million square feet are under construction.

“The Kansas City region offers a unique combination advantage to companies looking to diversify distribution with a Midwest location,” said Chris Gutierrez, president of KC SmartPort, which promotes logistics opportunities in the 18-county, bi-state Kansas City region. “We are seeing the industrial market respond to demand for new distribution space, and this opens up opportunities for growing supply chain companies.”

The demand for industrial space outpaced the rate of construction in the Kansas City market, according to Cushman & Wakefield’s 2015 MarketBeat Annual Market Report for Kansas City. The report noted 4.1 million square feet of space was absorbed dropping the vacancy rate from 7.7 percent to 7.3 percent. Demand for spaces over 100,000 square feet was particularly strong with 12 companies taking occupancy of the bigger buildings. The report called Logistics Park Kansas City (LPKC) where Amazon is locating the “most ambitious industrial development in the market.”

The 1,700-acre industrial park wraps around the BNSF Railway Intermodal facility and is being developed by NorthPoint Development and BNSF Railway. It is located along the railway’s Transcontinental Corridor and opened in 2013. While Inland Port XIV, the building Amazon will occupy, is currently the largest speculative building in the region, NorthPoint announced this week two more projects are starting construction–Inland Port XXXII, a 765,927-square-foot facility, and Inland Port XXXIII, a 927,155-square-foot building. A press release from the developer said the decision was made to start construction now because of existing and new tenant demand. Two million square feet will be added at the park this spring. When the two additional buildings are completed by the summer, there will be approximately 6.5 million square feet of new building at LPKC, which has a total building capacity of 17 million square feet.

“The addition of these two speculative buildings – one being the largest ever built at 927,155 square feet – indicates that there is a very strong demand to locate at LPKC,” Edgerton Mayor Donald Roberts said in a prepared statement. “Buildings of this size will attract the caliber of tenants that LPKC was designed for, while positively impacting our community with possible new jobs and other new opportunities.”

John Thomas, a vice president of development at NorthPoint, told Commercial Property Executive the Amazon building is still in the planning and design phase.

“The building construction is complete. Shell building modifications are required and will begin soon,” Thomas said.

Amazon said the state-of-the-art fulfillment center will handle large items like big-screen televisions, sports equipment and kayaks for shipping. The facility will create about 1,000 full-time hourly jobs, plus many managerial and support roles, according to Amazon.

The Seattle-based e-commerce giant already has a 267,000-square-foot fulfillment center at Lenexa Logistics Center in Lenexa, Kan., which it has occupied for about two years. That center was also a speculative building and Amazon was the first tenant to sign a lease at the 120-acre logistics park, according to the Kansas City Business Journal.

Joe Accurso, a senior vice president with Cushman & Wakefield’s Kansas City office, represented Amazon in the LPKC transaction. NorthPoint, the exclusive developer of LPKC, is represented by JLL’s Kevin Wilkerson, a managing director, and Phillip Algrim, a senior vice president, both in the Overland Park, Kan., office.

Kansas isn’t the only state to get a new Amazon fulfillment center. The company announced Wednesday it was adding a 1.1 million-square-foot facility in San Bernardino, Calif., the third in that city and the seventh in California. The San Bernardino fulfillment center, which is also expected to create about 1,000 jobs, will be handling smaller items like books, electronics and toys. Hillwood Investments is developing the project. Further details on the exact location or size of the facility were not available.