A homegrown line of products is gaining international traction, and a new headquarters is in the works.
Kuat Innovations LLC broke ground in February on a $3.6 million, 40,000-square-foot warehouse and corporate office at 2240 N. Alliance Ave., near the entrance of Partnership Industrial Center West.
“We’ll be moving the whole operation,” said President Luke Kuschmeader.
Kuat – pronounced “koo-at” – makes vehicle racks that carry bicycles and other outdoor-sports gear. Production is completed in China and Taiwan, Kuschmeader said, while design, marketing, warehousing and wholesale logistics are handled locally.
“The brand has been growing, within primarily North America,” Kuschmeader said of the company he launched in a pole barn in 2007. “But we also have new international markets that are expanding – Australia, New Zealand, the Philippines, Costa Rica.”
The new building, funded by Guaranty Bank and designed by Arkifex Studios LLC, will more than triple Kuat’s space, he said, to keep up with undisclosed sales growth.
The company currently leases just across the street, in a small portion of 4520 W. Kearney St., from landlord Rich Kramer Construction Inc. for about $6,000 per month, Kuschmeader said. Around the corner, RKC is general contractor on the project expected to be move-in ready by October.
Although the property flanks the entrance signage for PIC West, it’s actually outside of the industrial-park border. But the land is part of a broader area incentivized for economic development, known as an enhanced enterprise zone, said Sarah Kerner, director of economic development for the city of Springfield.
“It can be used by certain businesses that are eligible by industry classification and are making new improvements or rehabilitations that are recognized as increasing property values by the assessor,” she said.
Springfield’s four EEZs are part of a state program that encourages business development and job creation, Kerner said, by granting a 10-year, 50 percent property-tax abatement to businesses that locate to or expand within designated areas, especially those known for low income and high unemployment. The tax abatement, she added, only applies to the portion of the assessed value that increases due to the land improvements.
The first local zone was established in 2005 to cover the north side of town, Kerner said, but nearly all of Springfield was included in three more zones set up in response to a storm-related state of emergency in 2009.
Kuat has not yet applied for EEZ benefits, but Kuschmeader said the company intends to in the future.
At the rate the company is expanding, he expects the local employee count to grow to 40 from 24 during the next two years.
The new building would likely qualify for EEZ status, Kerner said, since warehouses and headquarters are both included in a list of 16 approved land uses, including manufacturing, finance, insurance, waste management, health care, arts and recreation.
If the new Kuat property is assessed at its construction cost of $3.2 million, Kerner said the EEZ tax abatement savings over the program’s 10-year term could be $335,970. That sum is roughly equivalent to what Kuat paid for the land.
Room to grow
The tax savings are a nice touch, but Kuschmeader said he and business partner Guy Mace had more important reasons for choosing the new 14-acre property.
For starters, there were few options in Springfield for existing large warehouses with office space, he said, plus undeveloped commercial land options in the city are limited.
“This was attractive also because of the ascetics,” Mace said.
The company actually bought three lots. The main section will be home to the new warehouse and headquarters, a second stretches out to the east for future expansion, and a third spans north to reach Kearney Street.
“That property is not buildable,” Mace said of the northern plot, “because it has so many sinkholes in it. But it would be perfect for our test track.”
Kuat has an in-house testing lab, where heavy-duty, homemade machines subject the product lines to abusive structural tests. But in order to test the bike racks in real-world, off-road scenarios, Kuschmeader said he currently drives to land in Chadwick. The new property will have a large greenspace with a testing area and walking trails.
“We’ve learned a lot about [product] development,” he said.
The size of the land purchase is also a sign of the confidence the partners have in the future of the young company. Kuat is building 40,000 square feet now, Kuschmeader said, with room to add up to 70,000 square feet.
“I expect this company to grow rapidly,” said Mace, the former president and CEO of Turblex Inc. who now co-owns Baron Venture Capital LLC and operates Route 66 Car Museum. “I don’t think this space we’re building is going to last more than three to five years.”
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