MIDDLE MARKET HIGHLIGHT, JUNE 2008

Lake of the Ozarks

Kevin Jeselnik

John Q. Hammons is developing Chateau on Lake of the Ozarks, a 320-room resort in Osage Beach, Missouri.

With a long-range master plan built to serve its year-round residents and its huge tourism base, the Lake of the Ozarks region in central Missouri is in the midst of a major revitalization. The area, including the towns of Lake Ozark, Osage Beach, Sunrise Beach and Camdentown, has consistently drawn between 4.5 million and 5 million tourists per year, and is shaking up its array of entertainment, retail and service offerings in hopes of growing that number over the next decade.

The most expansive effort currently underway is in Lake Ozark. An approximately 1,500-acre parcel of prime land in and around the historic Bagnell Dam is being developed by a collection of developers. Thanks in large part to local and in-state investors, much-needed infrastructure improvements are being made. The 2-mile, four-lane divided Horseshoe Bend Parkway is being built, which will connect to the new Highway 54 expressway that will be complete in 2011. As the Horseshoe Bend Parkway is completed, it will allow greater access to the 1,500 acres and encourage development to commence.

According to William Kuhlow, a partner with Horseshoe Bend Development Group and president of Cody Road Development, the Lake of the Ozarks region is significantly under-retailed, and the time is ripe to bring in much-needed retailers of all types.

“The Lake of the Ozarks developed in a very linear format,” Kuhlow explains. “In Lake Ozark, commercial development has occurred along the U.S. Highway 54/Bagnell Dam Boulevard for 40 years, and it hasn’t moved very far off of that corridor. The market now finds itself lacking sufficient commercial ground to satisfy the current market.”

That is where the 1,500 acres of land come into play. Kuhlow’s team, along with other large developers, are finally entering the market, and bringing the resources necessary to install infrastructure and develop land for commercial use.

Horseshoe Bend Development Group is coming out of the gates with the first commercial endeavor in Lake Ozark. On 470 acres of land, a local landowner, The Stanton Trust, is joining with Kuhlow to bring approximately 2.9 million square feet of commercial space and 2,200 residential units to the market. The Horseshoe Bend project will include between 1.6 million and 1.8 million square feet of retail; additional commercial space in the form of office parks, medical offices and other institutional offerings; and a collection of rental and for-sale residential units.

The first component of the project to break ground will be The Shoppes at Horseshoe Bend, a 740,000-square-foot power and lifestyle center. The project will be built on 100 acres, and will include approximately 450,000 square feet of power center retail and a lifestyle component of at least 165,000 square feet. Development is expected to begin concurrently with the construction of the new parkway.

Once Horseshoe Bend Parkway is open, the redevelopment of the 290-acre Bagnell Dam Strip area will begin. Silver Star Development is planning a reportedly $300 million endeavor on 180 acres along the Highway 54 corridor, where the city’s original retail development took place (the roadway is now Business 54/Bagnell Dam Boulevard). Silver Star’s revitalization of the area around the historic Bagnell Dam is in the planning stages, but it will be geared more towards entertainment, hospitality and restaurant uses in order to complement the retail that the Horseshoe Bend project will bring. Proposed components include a 400-room hotel/waterpark concept, a 5,000-seat arena and a zoo, which would be located on approximately 40 to 50 acres. Ron Armitage of Silver Star Development has experience in exotic animals and zoos, and has brought in the former director of the St. Louis zoo to program and plan the new offering.

On other pieces of the 1,500-acre tract, there are plans for a $240 million retail development, a $150 million retail endeavor and a $200 million upscale condominium project. The area has thrived in recent years as a destination for Midwest professionals seeking second homes. There has been an explosion of condominium development around the lake, which only adds to the confidence that the area’s residents and visitors will easily adopt the new retail offerings.

“The second home market continues to remain strong even in today’s economy,” Kuhlow says. “The future customer base of the Lake of the Ozarks is very broad, encompassing St. Louis/Southern Illinois, Kansas City, Lincoln and Omaha, Nebraska, and Iowa — we anticipate it growing to include the Chicago market, Indiana and southern Michigan.”

Springfield, Missouri-based John Q. Hammons Hotels & Resorts is developing a new project that will help serve, and hopefully expand, the area’s tourism base. In Osage Beach, the company is developing the Chateau on Lake of the Ozarks, which is underway now with an expected opening spring 2010. Similar in design to the company’s Chateau on the Lake in Branson, Missouri, the 15-story Osage Beach resort includes 320 rooms and more than 100,000 square feet of meeting space. It is located along a new interchange on Highway 54 and will offer views of the lake from three sides of the peninsula on which it is situated.

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