Developers hoping to put up an office building next to the new Staybridge Suites hotel at Interstate 435 and Metcalf Avenue have asked for a two-year extension on their deadlines because of difficulty finding tenants.
The Overland Park City Council’s Finance, Administration and Economic Development committee gave its blessing to an extension twice as long as the developer requested after being told that one year would not likely be enough.
The Metcalf 108 project was green-lighted in 2017 as a replacement for the aging 435 Overland Park Place Hotel, which had been closed the year before. Developers proposed to raze it and put in a new hotel, office building and parking structure.
A redevelopment agreement provides for tax increment financing, a community improvement district and a break on sales tax for construction materials but that only applies to the office building and parking garage. No public money is available until the office and garage get underway.
But lawyer Curtis Petersen and James Clark, managing member of Oxford Realty LLC, told the committee that the developers have had trouble finding tenants for a variety of reasons.
Prospective office tenants usually want to move in less than the two years, Petersen said. But the developer needs that much time to build. And buildings usually need to be half pre-leased before it’s feasible to start construction, he said.
Meanwhile, Clark said construction costs have “gone nuts” and lower rents from property on the Sprint campus and elsewhere have affected efforts to find tenants.
“Our perception was that the significant location and visibility would drive that tenant and someone who wanted that kind of exposure. To date we’ve been disappointed, to say the least,” Clark said.
However in a letter to the committee, Petersen said the developer has changed brokers and is encouraged that the new broker will have better success because of the attractiveness of the Staybridge building.
This is the second deadline delay for the project. The first was about a year ago.
The deadline extension gives the developer more time to put together a public financing package, which would be considered later by the city council.