Cerner Corp. plans to sell off major Kansas City area campus after move to hybrid work

Cerner Corp. plans to sell off one of its major office campuses this year.

The healthcare IT company informed employees this week that the Continuous Campus near Village West in Kansas City, Kansas, would go on the market next month as the region’s largest private employer considers its long-term real estate needs.

In June, Cerner announced most employees would not be required to return to the office full time after more than a year of working remotely.

Cerner officials said recent analysis determined the company, which has several campuses across the metro area, has enough space to consolidate employees.

Cerner plans to transition its Wyandotte County employees to two campuses across the state line in South Kansas City. The company says its Realizations Campus and its Innovations Campus are better suited to foster collaboration among staff. The company employs about 26,000 people across the globe, including some 13,000 in the Kansas City metro area.

But since embracing a hybrid model, in which employees can work at a physical office or at home, the company has hired dozens of new employees across 17 different states, officials said.

Though stock market watchers continue to speculate that Cerner could be the target of an impending takeover, Cerner told employees in an internal memo that its headquarters would stay in Kansas City. Executives plan to discuss real estate changes on Friday’s earnings call with investors.

Cerner characterized the Continuous Campus as “nearly empty already” in the employee memo, but said all remaining staff had been notified of the relocation.

“We’ve had a pretty good idea that this was coming,” said Katherine Carttar, economic development director for the Unified Government of Wyandotte County/Kansas City, Kansas.

But Mayor David Alvey told The Star the news was a “complete surprise,” adding later that he had heard rumors about the company potentially marketing its KCK offices but never got confirmation.

“I understand why they’re consolidating to one place,” Alvey said. “Frankly I think we should have been apprised of this before it showed up through an internal memo.”

The mayor said Cerner had made commitments about employment levels to Kansas as part of its incentive package to construct buildings in KCK. He said the Unified Government would review those agreements.

“Whether the state wants to enforce that or not is another issue,” Alvey said.

Cerner has also listed two smaller properties for sale this year. The company’s Riverport building, the former Sam’s Town Casino structure that Cerner used for employee training, is on the market. And the company recently sold a building on North Oak Trafficway to Riverside-based NorthPoint Development.

In Wyandotte County, Cerner promised to bring more than 4,000 new jobs to fill its 660,000-square-foot complex, which opened in August of 2013. In exchange, taxpayers heavily aided the development of the stainless steel building designed to resemble the pattern of human DNA.

The Cerner project was part of a $414 million development deal in 2010 that also saw the addition of Sporting KC’s soccer stadium to the area.

The state and Wyandotte County invested more than $170 million in STAR bonds into the projects. Those funds were expected to be recouped by sales taxes collected at the Village West retail area.

Cerner also received more than $50 million from Kansas for creating jobs in the state.

That includes a 2013 commitment from the Job Creation Fund to create 2,000 to 3,500 jobs by December 31, 2017. Those funds were not to exceed $5.25 million — about $1,500 per job. Cerner ultimately received about $4.3 million from that program, according to the Kansas Department of Commerce.

The company also entered into an agreement with the state, which began in 2010, to receive $48 million for creating 4,500 jobs. The incentive was initially tied to jobs, but later changed to the company’s total investment in the campus. Cerner received the $48 million plus nearly half a million dollars in job training funds.

Prior to Cerner’s announcement, the department told The Star the company had been in compliance with its state incentive agreements and the state considered those projects closed.

On Wednesday, Lt. Gov. and Commerce Secretary David Toland said the state hadn’t received any formal notification of Cerner’s plans, despite recent communications with the company.

“If what we are hearing through the media about Cerner’s plans is true we will enforce all clawback provisions in the state’s incentive agreements with Cerner,” Toland said in a statement. “The state upholds its end of incentive agreements and we expect our private-sector partners to do the same.”

“Cerner is in compliance with all existing incentive agreements with the state,” the commerce department said in a statement.

The loss of a marquee employer won’t go unnoticed in western Wyandotte County, particularly since Cerner’s presence has often been credited with helping to build out the wider Village West area, which includes Children’s Mercy Park and the Legends Outlets Kansas City.

“It’s a big deal,” Carttar said. “That was a large employer.”

But with few workers frequenting the two, eight-story towers, she said the decision to sell may provide a chance to bring new life to the area with a new employer.

“Because it has been underutilized for so long, it’s actually a good opportunity for us,” Carttar said. “So we would like to see them sell it rather than hold it and not have people coming to the office. It’s good Class A office space and hopefully we can get some businesses in there that will actually go to the office and then patronize all the retail and commercial opportunities at The Legends.”

The mayor echoed that outlook, noting new projects like Homefield’s nearby redevelopment of the former Schlitterbahn waterpark will add more vibrancy to western Wyandotte County.

“It’s just got such a good collection and a variety of attractions and amenities,” Alvey said. “I’m sure they will bring in new occupants to that building. I guess I’m more concerned about the process by which this came to be known.”

The Star’s Steve Vockrodt contributed to this story.