Lights Out in Lenexa, But NCUA Still Holds the Deed
The lights have been shut off at what used to be U.S. Central’s headquarters in Lenexa, Kan., but the NCUA still holds the deed to the failed corporate’s 130,000-square-foot office building at 9701 Renner Blvd.
NCUA Public Affairs Specialist John Fairbanks confirmed the building is still on the market after being listed for sale in May. The asking price remains at $14.3 million.
Gregory W. Swetnam, a principal at Kansas City-based Kessinger/Hunter Commercial Real Estate who specializes in large office listings, called the U.S. Central building a deal at that price for the right buyer, which would likely be an owner-user relocating operations rather than an investor looking for rental property.
At more than $100 per square foot, the NCUA would have to significantly reduce its asking price for an investor to earn a profit after footing the bill for tenant improvement and paying operating expenses, taxes and fees, he said. However, the listing is far cheaper than the $175 to $200 per square foot it would cost to build a similar building today, he added.
The headquarters also has an owner-user layout, which Swetnam said includes “beautiful but inefficient” features like an expansive lobby with an atrium, a large boardroom and an employee lunchroom.
A depression in rental rates also affects the market. Lenexa has struggled to fully develop its Kenner Street corridor, which Swetnam said was developed 20 years ago in hopes of competing with nearby Overland Park’s more prestigious College Boulevard business addresses.
“Lenexa is an industrial town, and this development was going to bring business to Lenexa, but it just didn’t happen,” Swetnam said. The Kenner Street corridor isn’t out of favor or overbuilt, however.
Swetnam said state incentives have attracted businesses that are filling empty buildings and putting up some new structures. Nonetheless, a number of empty office buildings roughly the size of U.S. Central will be competing with the NCUA for potential buyers looking to relocate to the area.
Swetnam said one of his competitors, commercial real estate firm Cassidy Turley, is listing the property. He predicted the firm will be able to find a buyer within a year, given Cassidy’s familiarity with the area.
The NCUA on Monday announced it had formally closed U.S. Central Bridge following months of transitioning its members to other service providers.
“Closing U.S. Central Bridge is the last step in the effort to stabilize and reform a corporate credit union system that was close to collapsing three years ago,” Board Chairman Debbie Matz said in a statement.
U.S. Central was founded in 1974 and became the largest of the corporate credit unions, serving as the top tier of a three-level credit union system, before it was conserved by the NCUA in March 2009 after experiencing devastating losses on mortgage-based securities.