General Motors is investing $55 million in a new operation that will employ about 500 workers at a building near its Fairfax assembly plant in Kansas City, Kan.
The automaker will lease and occupy the 830,000-square-foot industrial building under construction by NorthPoint Development in the Fairfax Industrial District. NorthPoint is about two-thirds of the way finished with the project.
Chad Meyer, president and chief operating officer for NorthPoint, said General Motors will use the building as a “logistics optimization center” that would help make its assembly plant operate more efficiently. The plant builds the Chevrolet Malibu and Buick LaCrosse.
GM officials could not be reached for comment Friday.
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Already one of Wyandotte County’s largest employers with more than 3,000 workers at the Fairfax plant, General Motors’ profile in Kansas City, Kan., will increase with this newest venture. And it’s another demonstration of the staying power that industrial and manufacturing development has in the Kansas City area.
Joel Kotkin, an urban studies researcher and author who spoke at the Kansas City Area Development Council’s annual meeting Nov. 4, said that day that Kansas City should focus on its strengths. Industrial development, he said, was on that list.
The GM expansion, which did not involve any state-level incentives to the automaker, follows an announcement earlier this week that CVS Pharmacy plans to open a distribution center in the Northland’s Skyport Industrial Park. That development is expected to create between 360 and 400 jobs. NorthPoint would sell the land it owns at Skyport to CVS to develop the distribution center that can grow to more than 1 million square feet. It’s been described as a $110 million development.
Coupled with a pair of announcements this year that Amazon would build fulfillment centers in Edgerton and Kansas City, Kan., that would each hire more than 1,000 workers, industrial, logistical and manufacturing sectors have emerged as bright spots in Kansas City’s economy in 2016.
“The last six months, and I’ll say the last three, four, five years, we have seen a resurgence of industrial development,” said Chris Gutierrez, president of Kansas City SmartPort, an affiliate of the Kansas City Area Development Council focused on attracting and supporting transportation and logistics industries in Kansas City.
Gutierrez credits that to the speculative development of industrial warehouse and distribution spaces throughout the Kansas City area —speculative in that buildings were built without a tenant in mind, but built with confidence from investors and lenders that a tenant would soon occupy the space.
Gutierrez said that 9 million square feet of this type of speculative industrial space has been built in Kansas City. It’s the type of risk-taking that’s not seen in other real estate sectors.
Most office developers in Kansas City won’t start on a new office development unless they can prelease at least half of the planned space ahead of time.
Meanwhile, local developers such as NorthPoint, Block Real Estate Services, VanTrust and others have bit on building speculative industrial space.
“These are all local players who recognized there’s an opportunity in the marketplace, and they took the risk,” said Tim Cowden, president and chief executive of the development council.
A number of factors have traditionally leaned in Kansas City’s favor in the industrial and manufacturing sectors. Ample rail lines and highway systems run through Kansas City. It’s centrally located — Gutierrez said 85 percent of the United States population can be reached from Kansas City in two days or less. Several companies tied to logistics and transportation — YRC, Freightquote, Kansas City Southern and others — have headquarter operations in Kansas City.
Job numbers support the investments made in industrial and manufacturing development.
Companies tied to the logistics and transportation industries have added 14,600 jobs in the metro area since 2009, according to federal Bureau of Labor Statistics data.
In that agency’s August jobs report for Kansas City, it noted that manufacturing jobs grew 2.2 percent metrowide from the year before, while the rest of the country saw a decrease in manufacturing jobs.
General Motors will help those numbers locally.
The automaker’s lease is a continuation of NorthPoint’s relationship with GM. The Riverside-based real estate development firm has created about 4 million square feet of industrial space for the automaker nationally.
NorthPoint’s agreement with General Motors marks a turnaround for the 80-acre site that the development firm bought out of the RACER Trust in 2013. RACER stands for Revitalizing Auto Communities Environmental Response. The trust was formed in 2011 and tasked with remediating and selling properties owned by GM prior to its 2009 bankruptcy.
“It’s been a great brownfield redevelopment project for us,” Meyer said.
NorthPoint announced it started construction on the building at Fairfax after receiving a 75 percent tax abatement on the property from the Unified Government of Wyandotte County and Kansas City, Kan., in May.