olsson associates office/flex building · 2017-11-15 · 4 offering summary 1700 e. 123rd street...

OLSSON ASSOCIATES OFFICE/FLEX BUILDING1700 E. 123RD STREET, OLATHE, KANSAS

OFFERING MEMORANDUM SINGLE-TENANT INVESTMENT OPPORTUNITY

OLATHE, KANSAS

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Colliers International4520 Main Street, Suite 1000

Kansas City, Missouriwww.colliers.com

01 EXECUTIVE SUMMARY

TABLE OF CONTENTS

Offering SummaryLocation HighlightsTerms of Sale

02 OLSSON ASSOCIATES

03 MARKET PROFILE

Tenant ProfileLease Abstract

Mike YeggyVice President | Kansas City+1 816 556 [email protected]

Drew Quinn, CCIMSenior Vice President | Kansas City+1 816 556 [email protected]

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This offering memorandum is subject to prior placement and withdrawal, cancellation or modification without notice. The information contained herein has been carefully compiled from sources we consider reliable, and while not guaranteed as to completeness or accuracy, we believe it to be correct as of November 1, 2017.

Neither this offering memorandum nor any part thereof, shall be reproduced or distributed without the written authorization of the owner of Building 3, LLC (the “Owner”), and Colliers International | Kansas City (the “Broker”).

Further:

This offering memorandum was prepared on November 1, 2017 by the Broker solely for the use of prospective purchasers of the real property commonly known as the 1700 E. 123rd Street, Olathe, Kansas (the “Property”). Neither the Broker nor the Owner makes any representation or warranty, express or implied, as to the completeness or the accuracy of the material contained in this offering memorandum.

Prospective purchasers of the Property are advised (i) that changes may have occurred in the physical or financial condition of the Property since the time this offering memorandum or the financial statements herein were prepared, and (ii) that the projections contained herein were made by Broker and not by Owner and are based upon assumptions of events beyond the control of Broker and Owner, and

therefore, may be subject to variation. Other than historical revenue and operating expense figures for the Property, Owner has not provided, and will not provide, Broker or any prospective purchaser with any income and expense figures, budgets or projections regarding the Property. Prospective purchasers of the Property are advised and encouraged to conduct their own comprehensive review and analysis of the Property.

This offering memorandum is a solicitation of interest only and is not an offer to sell the Property. The Owner and Broker expressly reserve the right, at their sole discretion, to reject any or all expressions of interest or offers to purchase the Property and expressly reserve the right, at their sole discretion, to terminate discussions with any entity at any time with or without notice. The Owner shall have no legal commitment or obligations to any entity reviewing this offering memorandum or making an offer to purchase the Property unless and until such offer for the Property is approved by Owner and the signature of an authorized representative of Owner is affixed to a real estate purchase agreement.

This offering memorandum is confidential. By accepting this offering memorandum, you agree (i) that you will hold and treat this offering memorandum and its contents in the strictest confidence, (ii) that you will not photocopy or duplicate any part of this offering memorandum, (iii) that you will not disclose this offering memorandum or any of its contents to any other entity without the prior written authorization of the Owner, and (iv) that you will not use this offering memorandum in any fashion or manner detrimental to the interest of the Owner or Broker.

DISCLAIMER

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OFFERING SUMMARY

1700 E. 123rd Street (the “Property”) is a 14,160-square-foot office/flex building located in the Rosehill North Business Park. The Property is fully-occupied by Olsson Associates, a nationally-recognized, employee-owned engineering and design firm. Olsson Associates has leased the Property on an absolute net basis for 10 years with bi-annual rental increases.

Olsson Associates acquired the Property in January 2017 and has spent approximately $967,000 on updating the Property to make it a Class A office and mission-critical facility where they perform all of their testing and sampling for local projects. The Property features renovated office space, two large conference rooms, an x-ray room with two-foot concrete walls and a wet room for concrete sampling.

Olsson Associates has operated in the Rosehill North Business Park since 2008. Prior to acquiring the Property, they leased the building at 1802 E. 123rd Street, two buildings east of the Property.

EXECUTIVE SUMMARY

Pricing Summary

Purchase Price $2,100,000

Cap Rate 6.75%

Lease Expiration 12/31/2027

Lease Type Absolute NNN

Starting Rent $10.00/SF

Rent Escalations $0.25/SF every two years

Investment Returns

Year Rent PSF NOI Cap Rate

1-2 $10.00 $141,600 6.75%

3-4 $10.25 $145,140 6.91%

5-6 $10.50 $148,680 7.08%

7-8 $10.75 $152,220 7.25%

9-10 $11.00 $155,760 7.42%

1700 E. 123RD STREET, OLATHE, KANSAS

loading zoningtenants

occupancy

100%

year renovatedyear built square feet acres

20171991 14,160 1.07

1

clear height

16’-17’

parking spaces

201 drive-in

(12’X14’)1 dock

(8’X10’)

general industrial

district

5

Site

E 123rd Street

N Winchester Street

SITE AERIAL

6

LOCATION AERIAL

W 127th Street

W 119th Street

N Ridgeview Road

S St

rang

line R

oad

Site

Rosehill North Business Park

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TERMS OF SALE

OWNERSHIP ENTITYBuilding 3, LLC

INTEREST OFFERED100 percent fee simple

OFFERING PRICE$2,100,000

OFFERING PROCEDURESeller and agent will assess the qualifications of any party submitting a non-binding letter of intent in accordance with seller’s objectives. In making this assessment, consideration will be given to a number of factors, including, but not limited to, price, timing of closing, and the perceived ability of the investor to complete the transaction.

BID DEADLINEA formal letter of notification will be sent calling for offers on a specific date. Offers should be submitted in the form of a non-binding letter of intent and should specify the following:

> Offering Price

> Study Period (if any)

> Closing Period

> Earnest Money Deposit

> Contingencies (if any)

> References

> Documentation of previously completed transactions

> Sources of Funds (Equity and Debt, if applicable)

> Consents and/or approvals needed (if any)

> Any other information having a direct bearing on the investor’s ability to close the proposed transaction

GUIDED PROPERTY TOURS

Property tours will be arranged by appointment only. Inquiries should be directed to:

MIKE YEGGYVice President | Kansas City+1 816 556 [email protected]

DREW QUINN ccimSenior Vice President | Kansas City+1 816 556 [email protected]

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TENANT PROFILE

Olsson Associates is a nationally-recognized, employee-owned engineering and design firm that has been creating public and private projects throughout the United States. Olsson began in 1956, and offers comprehensive design and consulting services in site/civil, transportation, water, environmental, field operations, survey, and facilities.

Since 1996 Olsson has been included on the Engineering New Record’s list of Top 500 Design Firms and their production reinforces this, as 89% of Olsson’s work in 2016 was a result of repeat business.

As of November 2017, Olsson has over 1,200 employees across 29 offices in seven states. Most recently, Olsson acquired Lutjen, Inc., a 50-person engineering firm in North Kansas City, Missouri, Tri-State Engineering, a 25-person engineering firm in Joplin, Missouri, and Oschner, Hare & Hare, a 10-person landscape architect firm in Kansas City, Missouri.

OLSSON ASSOCIATES

In 2016 Olsson was ranked as the 78th largest Design

Firm in the ENR 500

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OLSSON ASSOCIATES - KANSAS CITY METRO OFFICE LOCATIONS

Site

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Tenant Olsson Associates, Inc.

Lease Commencement Date August 1, 2017

Lease Expiration Date December 31, 2027

Pro Rata Share 100%

Lease Type Absolute NNN

Base Rent Per Month Annual PSF Increase

August 1, 2017 - December 31, 2019 $11,800 $141,600 $10.00

January 1, 2020 - December 31, 2021 $12,095 $145,140 $10.25 2.5%




Extension OptionsTwo options to extend for five years each. Tenant shall provide a 180-day notice of its intent to exercise each option. The option rent shall be negotiated at the time each option is exercised.

LEASE ABSTRACT

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JOHNSON COUNTY, KANSAS

INDUSTRIAL OVERVIEW

Johnson County continues to be the most active and attractive submarket in the metro for both flex and industrial real estate. Based on growth opportunity, location and current demand, Johnson County continues to command the highest rents in the metro. Johnson County is a suburban submarket that is known for its high-quality concentration of industrial buildings along the I-35 corridor. The majority of industrial buildings in Johnson County are newer aged product compared to the overall inventory of the Kansas City metro. Johnson County currently has approximately 63.4 million square feet of industrial inventory and an additional 5.3 million square feet of flex space. The Johnson County submarket continues to be a very active, based on the ideal location and close proximately to the new BNSF intermodal that is situated in the southwest portion of the submarket.

Johnson County has great access to major highways, allowing for quick travel times to all areas within the Kansas City metro. Interstate 435 is the major transportation loop that encompasses the majority of the Kansas City metro residents. The I-435 loop runs through the middle of Johnson County from east to west. Interstate 35 runs north and south through the county, which allows residents to get to downtown Kansas City easily. U.S. Highway 69 and Metcalf Avenue run north and south, allowing easy access to highways and other submarkets throughout the metro.

VACANCY AND SUPPLY

Johnson County ended Q3 2017 with a total vacancy rate of 8.8%. The vacancy rate is currently above the metro wide vacancy rate of 6.5%. The submarket vacancy rate currently is higher than the metro-wide vacancy rate as a result of an influx of delivered speculative product that has come online within the past year. In the short term, recent deliveries have outpaced absorption figures but that is expected to correct in the near future. Through the first three quarters of 2017, Johnson County has accounted for 2.2 million square feet of positive absorption along with several other lease announcements that will account for additional absorption in late 2017 and first half of 2018. Regarding smaller industrial product of less than 30,000 square feet, landlords have been able to successfully raise rents to some extent, where demand is high and vacancy rates are low.

MARKET PROFILE

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LEASE ACTIVITY

Logistics Park Kansas City (LPKC), located adjacent to the BNSF intermodal in Edgerton, Kansas, continues to grow and attract tenants at an unprecedented pace for our market. LPKC delivered over 3.1 Million square feet of industrial product in 2016, with over 2.7 Million square feet of that product already accounted for by tenants. In March 2017, Spectrum Brands occupied 927,100 square feet in Inland Port XXXIII, the largest lease in the Kansas City Metro. Horizon Global also announced they will occupy 512,000 square feet at LPKC with a long term lease. As speculative product is added, large blocks of space remain competitive as landlords attempt to land initial tenants to their completed buildings.

CONSTRUCTION ACTIVITY

In 2016, a record 7.6 million square feet of speculative construction was completed throughout the Kansas City metro in 2016, with 5.6 million of delivery total coming from Johnson County alone. Through Q3 2017, construction activity remains very strong. Currently there is 4.4 million square feet of speculative product under construction, with an additional 2.7 million square feet of speculative delivery. An additional 1.45 million square feet of build-to-suit product is currently under construction as well.

Specific to Johnson County, 3.5 million square feet is currently under construction and 2.7 million square feet has already been delivered in 2017. The majority of the construction activity is a result of LPKC. Outside of LPKC, Midwest Gateway is currently adding their first two speculative buildings. In Q1 2017 Lenexa Logistics Centre North added 635,000 square feet to the inventory, while 56 Commerce Center added an additional 205,000 square feet.

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TRANSPORTATION

The Kansas City area is a major international transportation hub, well-served by a variety of transportation options, including air, rail, barge, and three interstate highways.

Kansas City International Airport (“KCI”) is located in the Kansas City North submarket off I-29, approximately 20 minutes from downtown Kansas City and 40 minutes from Johnson County, Kansas. KCI is a regional airport and routinely draws passengers from Missouri, Kansas, Iowa and Nebraska. The airport has 11 major carriers and offers approximately 200 daily departures, with nonstop service to over 50 destinations. KCI sits on 10,004 acres and has the largest on-airport Foreign Trade Zone in the United States. The airport also ranks as the highest-volume cargo airport in a six-state region, including Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma. The convenient location in the middle of the country means the flight time to either coast is three and one-half hours or less.

Kansas City is the largest rail center in the United States by tonnage and is located at the middle of both the east to west corridor, as well as, the south to north route from Mexico to Canada. Class I freight rail carriers serving Kansas

City include, Burlington Northern Santa Fe, Kansas City Southern, Norfolk Southern and Union Pacific.

The Kansas City metropolitan area is one of only five cities where three or more interstate highways connect. Interstate systems I-29, I-35, I-49 and I-70 all converge upon Kansas City. The result is more freeway-lane miles per capita than any other U.S. city and the third-ranked trucking center in the country with single-day truck access to nearly every major Midwestern market.

MANUFACTURING

The economy of the Kansas City metropolitan area is heavily influenced by the manufacturing sector. The automotive industry is the main force in this sector, with Ford Motor Company’s Claycomo Assembly Plant employing 6,000 people and General Motors’ plant in Fairfax employing 4,000 workers. Ford manufactures the F-150 and the new Ford Transit Van line, while General Motors builds the Chevrolet Malibu and Buick LaCrosse at the Fairfax Assembly plant. Both plants have recently made announcements to expand their workforce and operations within the region. In addition to local growth, several national and international suppliers have recently entered the market to keep up with the demand from the automotive plants. Since 2013, 10 Tier-1 suppliers have entered the Kansas

KC METRO OVERVIEW

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DISTRIBUTION

The Kansas City market continues to become an emerging power and prime target for companies, as a result of our central location and multiple intermodal operations, which allows the growing e-commerce and distribution sector the ability to quickly deliver goods. Based on location and transportation access, Kansas City continues to evolve as a major distribution hub. Nationally, the presence of intermodal rail operations is the common denominator in the most active industrial markets. The majority of U.S. cities with the lowest industrial vacancy rates are port or inland distribution markets with intermodal rail connecting to one or more of the seven Class-1 North American railroads. The Kansas City metro currently has intermodal options that include Logistics Park Kansas City (LPKC), Centerpoint Intermodal, and KCI Intermodal. With the recent delivery of the new BNSF Intermodal facilities in Edgerton, Kansas, the rail operation will nearly double its previous container capacity from the Argentine Yard and bring additional employment opportunities to the region.

The new BNSF facility encompasses 433 acres and has been designed to accommodate the growing demands of freight rail transportation in the Kansas City region. Approximately 1,300 acres of land is being developed by NorthPoint, adjacent to the BNSF facility. LPKC delivered over 10 Million square feet of industrial product since 2013 with additional projects under construction. Upon full build-out of the park, LPKC is projected to create 7,400 jobs within the Kansas City metro and 13,000 jobs within the state of Kansas.

Colliers International4520 Main Street, Suite 1000

Kansas City, Missouriwww.colliers.com

Mike YeggyVice President | Kansas City+1 816 556 [email protected]

Drew Quinn, CCIMSenior Vice President | Kansas City+1 816 556 [email protected]

olsson associates office/flex building · 2017-11-15 · 4 offering summary 1700 e. 123rd street...

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