David Hinchman is First Vice President now acting Managing Director of the Kansas City CB Richard Ellis office. He has been in the real estate brokerage and development business since 1976, and at CB Richard Ellis since 1978. In the past 5 years, he has represented developers, Fortune 500 companies and others in real estate transactions in excess of $1 billion. In addition, he is a member of the company’s Special Properties Group which oversees the acquisition and disposition needs of large industrial facilities in ex-urban areas in both Missouri and Kansas.
What is the industrial leasing climate like right now and how is that affecting development?
At this time, leasing in the Kansas City industrial market is still at a moderate velocity with indications of increasing demand. Even though there are limited vacancies, because of the concerns nationally about over building, developers in Kansas City are still cautious about adding more new projects until stronger leasing demand is solidified. Having been in the commercial and primarily industrial real estate market for the past 34 years, I have had the opportunity to move through many business cycles including the first challenging one in the early years of my career. As I was just getting settled in the business, interest rates shot up to 22% and Kansas City’s industrial vacancies hit the highest level I have seen throughout my career. I admit that the present economic cycle we are experiencing has been one of the most unique and challenging one for tenants, brokers, developers, and investor owners of real estate. Our clients recognize that the Kansas City market is a more stable one than most other areas of the country. At the same time, we are part of a national and global economy that has an impact on our industrial market. We feel that Kansas City is on the verge of becoming a significant player in the national big box distribution center market. A momentum was building from the period of 2002 to 2007 when economic turmoil on Wall Street put a halt to industrial and other commercial real estate development. The developer clients have been hit as hard as any components of our market since their growth was typically fueled by continual development. Developers in this market are cautiously optimistic that we are seeing a turn in both the economy and demand for industrial space in the coming future which coupled with Kansas City’s low vacancies will generate new development opportunities in this marketplace.
In general, are your clients most likely to expand, downsize, or renew in this current climate?
The majority of tenants are still continuing to renew for the short term. The balance falls into two camps on either side of the issue. Some are taking the positive economic signals as an opportunity to begin expansion of their market share and expanding for more efficient operations in the future. The balance of tenants, due to cutbacks from their customer demand, have reduced their overall footprint in the Kansas City market, but nowhere to the degree they have in other industrial markets around the country.
Tell us about some of your interesting deals.
One of the projects that has been an exciting one for us to be involved in is a new industry for the United States that appears to be focused in Kansas City. A year and a half ago I made contact with Bryan Hansel, CEO of Smith Electric Vehicles – US (SEV-US). Bryan is bringing to the United States a tried and true product that was developed by his soon to be former parent company; he is acquiring the parent company. The vehicle is an all battery, zero emission depot based delivery truck. When I was introduced to Bryan by one of my colleagues, we immediately began the relationship of searching for the initial headquarters and plant operation facilities for this exciting and emerging industry. We found flexible space at KCI for both components. As a result of the trusted advisor relationship we developed, my team and I and CB Richard Ellis have been engaged on an exclusive national basis to represent SEV-US in the development of their to be built international headquarters/research and development and regional assembly operation. In addition, we brought in one of our other national clients who we represent for their 45+ offices around the country, TranSystems, who completed a four month LeanManufacturing process review for SEV-US. As a result of that review, recommendations were made and accepted to create up to 20 decentralized final assembly/sales/service facilities in major metropolitan markets throughout the United States. I will be heading up all of the real estate search and other processes for my good friend and client, Bryan Hansel, CEO of Smith Electric Vehicles – US.
How does KC compare to other industrial markets?
As I mentioned before, Kansas City is one of the more stable industrial markets throughout the United States. Most professionals in our business consider that there are either three or five core industrial markets in the United States. Southern California, Chicago, and Northern New Jersey, with some considering in addition the Dallas/Ft. Worth metroplex and Atlanta. Kansas City is a clear, solid, second tier market that has shown stability throughout economic cycles and is growing in its reputation as not only a national or regional distribution center for logistics based companies, but also a stable market for institutional and entrepreneurial owners of industrial real estate to acquire properties. As a result of that growing interest in Kansas City as an industrial investment market, our team has facilitated close to $600 million of industrial investment sales over the past seven years. The Kansas City market has one of the lowest vacancy levels in the United States at approximately 7%. Below, a multi-tenant deal by Hinchman and his team in Lenexa.
What’s your niche?
My niche is to provide a range of services to selected clients. I operate as the senior member of our team advising, consulting and working with all of our team members to bring our talents and expertise to our clients. Additionally, my background and experience in industrial development has allowed me to assist in the development of over 15 million SF of industrial facilities for users and developers alike. Additionally, I have developed relationships as a trusted advisor to corporations such as Smith Electric Vehicles – US, TranSystems and Insurance Auto Auction as either their sole or primary real estate provider.
Tell us about your interesting background
I was born and raised in Kansas City. I left here for college and did not return until seven years later, having lived in California, Europe and traveled the world. I spent those years studying, working in the film industry, and having a small organic farm in the wine country of Northern California. When I came back to Kansas City, it was with a unique career and training as a teacher of the Transcendental Meditation Program. I taught the Transcendental Meditation Program directly or indirectly to over 5,000 people predominantly in the Kansas City area including programs that were sourced by local businesses to bring this stress reduction and creativity increasing technique to their sales, executive, or work force. Additionally, I have led over 13 wilderness trips under the auspices of the Wilderness Guides Council. These programs are designed to take an individual into a wilderness environment to learn more about themselves emotionally, intellectually and spiritually, at the same time to address transitionary times in their lives such as the evolution of a boy into his manhood or an individual ending a long time successful career while moving into the new phase of their retirement life. These wilderness trips are typically done in Big Bend National Park in Southwest Texas where an individual challenges Nature and themselves to understand and then commit or recommit to their deeper purposes in their lives.
We heard you’re quite a cyclist
I am an avid bicycler, having one time and hopefully again, participated in RAGBRAI the 500 to 600 mile week long bike ride across Iowa. I have also studied a Chinese training program called Qi Gong for the past 11 years through a teacher based in the Austin, Texas area. My son is a fourth year financial analyst in the private equity markets at Goldman Sachs and will be moving this fall to work for Oak Tree, a Los Angeles based hedge fund. I have an 18 year old Chinese born daughter graduating from Bishop Miege High School this spring who will be attending her freshman year at the University of California San Diego.