By Aaron Hyde and Justin Lossner, JLL
Regional markets like Des Moines are no longer waiting their turn. Retailers and office users that once bypassed mid-sized metros for coastal or high-growth markets are compressing their timelines and arriving here ahead of schedule. Heading into the second half of 2026, that shift is already playing out on the ground.
Des Moines faces constrained supply and steady demand—not excess capacity. Across retail and office, the question isn’t whether tenants want to be here, but whether growth can physically occur.
Retail: strong demand
Retail vacancy in metro Des Moines sits around 3.5 percent, the tightest rate in over a decade. Demand spans categories: Quick-service restaurants, banks, auto tenants, fitness and junior box soft goods retailers all absorb space as it becomes available.
Retailers are no longer simply looking for the next door down the street. They’re expanding regionally, and markets like Des Moines are benefiting as larger metros tighten. National retailers now enter Des Moines earlier in their expansion cycles. In fact, roughly 36 percent of new national retail leases were signed within five months of space becoming available. Des Moines is consistent with that velocity.
Space — not demand — limits growth in Des Moines.
Development fills gap
With second-generation space largely absorbed, the market is entering its first new junior box construction cycle in years. The wave of backfilling bankrupt big box space — TJ Maxx, Ross and Burlington taking over vacated anchors — has largely run its course. Developers are now moving to build, with projects like the proposed 200,000-square-foot Plaza 36 development in Ankeny, a 150,000-square-foot development in Altoona and Waukee Towne Center, an approximately 300,000-square-foot mixed-use project anchored by Target, all serving as clear signals of that transition.
Junior box tenants are accustomed to second-generation lease rates, and new construction economics require a reset. Tax-increment financing and other municipal tools are helping bridge that gap — a sign that cities see value in activating these sites.
Downtown convergence
The suburban story is about scarcity. The downtown story is about convergence — office leasing velocity, multifamily growth and street-level retail activity are reinforcing one another in a way the market hasn’t seen since 2019.
Office leasing stayed active over the past 12 months. Long-tenured tenants have renewed and expanded, and suburban tenants relocated downtown, bringing new employment to the core. The Des Moines market recorded five consecutive quarters of positive net absorption through first-quarter 2026, totaling more than 103,000 square feet year-to-date.
Suburban West — specifically the Westown Parkway corridor — led all submarkets with nearly 150,000 square feet of net absorption. Class A vacancy there stands at 9.8 percent. Top-tier Class A space is absorbed, and no new supply is coming. Tenants now target well-managed mid-tier assets.
Multifamily growth deepens the downtown population base, and two signature residential projects expected to deliver within 12 months will add further density to the core. While skywalk-level retail remains historically challenged, first-floor retail is the direct beneficiary, with roughly a dozen new leases signed recently across service, food and entertainment categories.
The convergence of these three forces — office absorption, residential density and retail activation — is what separates downtown Des Moines from a simple recovery narrative. It’s a market building on itself.
The development pipeline
With existing space increasingly absorbed, attention is shifting to new development, with the West Des Moines corridor reflecting the early stages of that response with sustained fundamentals. Valley West stands out as a compelling long-term redevelopment site with demonstrated retailer interest. Owners and investors are responding to demand that is already present and looking for a home.
Capital investment reinforces momentum. Owners are investing in common area, HVAC and technology upgrades across the office market. These improvements are happening ahead of broader transformation, signaling confidence and helping draw further investment.
Outlook: growth to follow
Retail vacancy is expected to remain low due to space constraints, with junior box projects creating new districts and unlocking downstream pad site demand. Office absorption is expected to stay positive, concentrated in mid-tier product, with early signals that new Class A development may re-
enter the conversation before year-end.
Des Moines’ trajectory is about sequencing growth. According to 2025 U.S. Census estimates, Des Moines recorded the highest population growth rate among Midwest cities, at 6.7 percent since 2020. That population base is driving everything else: producing the office tenants, fueling the retail spending and anchoring the residential density that are converging downtown and pushing out into the suburbs.
The space to accommodate that growth is being created now. What gets built in the next 18 months will define the market’s next chapter.
Aaron Hyde is a senior vice president and Justin Lossner is a senior managing director with JLL. This article originally appeared in the June 2026 issue of Heartland Real Estate Business magazine.