Many have talked about the housing crisis in Kansas City around the coffee table at Parena Bread but it seems that even the Kansas City Star believes there is a serious housing crisis in Kansas City, at least in downtown. On April 20, they publish an article about it called, Shortage of low income downtown KC housing will hurt city.
There is something that really jumps out of the article that I think we should take some time and discuss about doing business, especially online business in Kansas City.
“An entrepreneur might risk just working on his or her business, Our society benefits from that.” (Michael Frisch)
What is it that the Director of Urban Planning and Design from University of Missouri-Kansas City sees that many do not, including our current governor, Eric Greitens. It seems that the governor justs thinks tax credits are “giveaways” and a form of welfare.
While, as a social conservative, I can see the value in this; I think it is not a smart move. There is a housing crisis in Kansas City and it seems that pricing people out of rent is not going to make things any better for the residents of America’s bread basket.
What it means for startups?
Let’s assume that Tom wants to start an application for Android. However, in the early stages, he is trying to reduce his cost of living to focus on his product. One of the options that he could look at would be to come to a midwestern city. On top of that list would probably be Kansas City.
One of the main draws to startups would be the rent for a decent apartment would be much less than what they would pay in San Jose or San Francisco. (It is easy to fly out thought) However, the benefit of cheap rent is going away since the the housing crisis in Kansas City exist. This is probably one of the most pressing needs if the city is serious about becoming a tech hub for the nation.
If other cities such as San Antonio can offer affordable rent for people trying to build an online company; Kansas City will lose business and in turn, the local economy will suffer as a result. The more people moving to Kansas City, especially educated people, the more money is changing hands every day. If we lose the startups, other cities will win over us in the tech race.
There has to something done to make affordable lofts in Kansas City in order for the city to be competitive in this growing global economy. If the goal is to develop from River Market to Crown Center into a major business district; they have to have a long hard look at what is going on in what they call “loftville.”
The biggest hindrance to addressing it seems to be the Mayor’s Office. They have great places but vision goes nowhere without logistics. Because they have no logistics in their long term vision, it will never really address the root problems that startups need to be successful.
Housing Crisis in Kansas City : Suburbans
One of the answers people seem to always throw around is moving to the suburbans and driving to Downtown to Crossroads. It sounds good but according to the Federal Reserve, new home construction is down. That means it is only a matter of time before there is another housing crisis. The way it works in the outskirts of any major city is new homes are built and the older homes is sold off to people who can’t get a new home. As it cycled several times, everyone has a home that they can afford. With the top the chain removed, it is going to hit hard at some point.
This is not considering that the drive in keeps getting longer and longer. The mindset is to keep building out in every direction. Currently, people are living 50 miles away from work and they are still in Metro Kansas City. People do not want an hour’s drive in ideal traffic to get to the office. It is true that the city has a great highway system but that long commute is very taxing after a day of meetings.
With new home construction and the distance factored in, it will be a matter of time before there is another major problem in the suburbans. It is something that I do not believe that national and local governmental leaders are ready to address at this point.
Overcoming the Crisis?
For a startup, this can be quite the challenge because they work from their apartment often. There are options on the table. Some people are buying RVs and living at parks which does work for a while. There are clear benefit to doing this. However, for many, this is not ideal and for other, it is not even an option.
Other people are moving out even more to a smaller town and just sucking up the long drive to the city if they need to meet people. There is several people that I personally know that live in Lawrence and come to Kansas City a few times a week to do business. St. Joseph and Odessa are other cities that people are considering.
However, in most cases, people in startups need to live close to the city’s urban core for practical purposes. They need to be able to quickly meet people, travel, and have resources at their fingertips. This means that majority of them are back with one question: How do deal with the housing crisis in Kansas City and namely about the downtown lofts.
The answer is not clear at this point and hopefully, the Mayor’s Office will start to be more concerned about it and start talking urban logistics for business. We are not at that point in the process it seems. However, the mayor must step down in 2019 and there might be a difference in the discussion with whoever become the next mayor of Kansas City.