Greater Des Moines Retail Market Is on Track for Fast Recovery
By Christopher Stafford, Cushman & Wakefield
The Greater Des Moines retail market continues to emerge from the pandemic and is quickly regaining its footing from the closures and challenges experienced by many retailers, restaurants and businesses alike. Despite a few setbacks, occupancy rates and rents have generally held steady.
Consumer spending is surging and according to a WalletHub study, Iowa’s COVID-19 recovery is the quickest in the nation, earning a total score of 75.25 out of a possible 100. The study compared all 50 states across three categories: COVID health; leisure and travel; and economy and labor market.
A local real estate mogul recently made the analogy that the Des Moines retail market is currently much like a chessboard — lots of moving pieces and strategic repositioning by the current players. Greater Des Moines, like other Midwest cities, is experiencing a handful of post-pandemic retail trends that include:
• Integrated retail approach (omnichannel): Bricks & mortar + online presence and ordering + apps + delivery/pickup. The presence of drive-thru and pickup services will shape the future of retail and are in high demand by restaurants and retailers.
• Space transformation: Spaces once occupied by traditional retailers are now being backfilled by untraditional office users seeking increased visibility, signage and retail amenities. One example is a local residential real estate brokerage occupying a space formerly home to Fresh Market at 5901 Mills Civic Parkway in West Des Moines.
• Decline in new construction: Developers and retailers alike are navigating the exponential rise of construction and materials costs, supply chain delays and labor shortages. When combined with the decreased demand and increased rents, the number of new retail construction projects has declined significantly.
• Shortage of qualified workers: Restaurants and retailers are experiencing a shortage of qualified workers, which in turn impacts the customer experience. It is not uncommon to see a sign on the front door of a Des Moines restaurant that reads, “Hiring. We are experiencing a shortage of employees; please be patient.”
New brands plant their stake
Greater Des Moines is home to a few recent significant transactions. Three notable projects include:
H&M opened a 25,000-square-foot, multi-level store at Jordan Creek Town Center in West Des Moines. The H&M opening was highly anticipated by Iowa shoppers over the past year and a half. Adjacent to H&M, athleisure brand Fabletics will open its first Iowa store in time for the holiday season.
Ruth’s Chris Steak House and CRG residential will begin construction this fall on a 9.5-acre multi-use development at the corner of Jordan Creek Parkway and Ashworth Road in West Des Moines. The 15,000-square-foot steakhouse will rise two stories with additional retail space on the ground floor, surrounded by a four-story, 200-unit high-end apartment complex, pool and courtyard. This will be the first location in Iowa for Ruth’s Chris.
Floor & Décor opened its first Iowa location, occupying the 78,978-square-foot former Gordmans store at Westowne Shopping Center in West Des Moines. This transaction was the metro area’s largest retail lease footprint recorded in 2020.
Suburb spotlight: Grimes
Grimes, a Des Moines suburb in northwest Polk County, is in the middle of a development boom that only continues to gain momentum. While some communities are experiencing the ripple effects of the pandemic, Grimes has aggressively pushed through and is quickly making its case to be a major player within the Midwest youth sports and entertainment landscape.
Fueling Grimes’ rapid growth is a $250 million, 200-acre mixed-use development referred to as Hope District. It will include hotels, restaurants, retail and a multi-use sports tournament venue.
Included in the development is the Grimes Sports Plex, a 55-acre multi-use sports tournament complex with 13 full-sized pitch fields (soccer), up to 26 midsized fields and 16 baseball and softball fields of varying sizes. The complex will include lighted fields, concessions, restroom facilities and areas for food trucks and vendors. When completed in late spring 2022, the complex will be the largest multi-use synthetic turf sports tourism venue in the Midwest.
The excitement around the Grimes Sports Plex, with an anticipated 1.5 million annual visitors, has placed Grimes in the crosshairs of many national and regional site selectors. Developers have also taken notice, as the construction of multiple new community retail centers is underway with available leasing opportunities. Over the past 18 months, the following retailers and businesses have either opened their doors, begun construction or secured their position within the submarket:
Hy-Vee is constructing a new flagship 92,989-square-foot grocery store on approximately 10 acres that is scheduled to open in September 2021. The store will be the first model of Hy-Vee’s new look and design, which has been in development over the past several months. The property will also include a nail salon, DSW Shoes, Joe Fresh Clothing, Starbucks, pharmacy, wine and spirits, Aisles Online and a Hy-Vee Fast & Fresh convenience store on the front outlot.
Additional new businesses and retailers include Menards, Starbucks, Kwik Star, Aldi, KinderCare, Dupaco Community Credit Union, GreenState Credit Union, Culver’s, Arby’s, O’Reilly Auto Parts, Sherwin Williams, Dental Associates, Dollar Tree, Mister Car Wash, Tommy Car Wash, Hyper Energy Bar and Home2 Suites, with additional announcements expected.
The Iowa Economic Development Authority (IEDA) recently approved $100 million in state tax revenue for six redevelopment proposals across Iowa. IEDA established the Iowa Reinvestment Act to assist communities in developing transformative large-scale projects that improve the quality of life, create and enhance unique opportunities and substantially benefit the community, region and state.
Two of the redevelopment proposals selected are located within the Greater Des Moines metro area. Together, they will receive half of the $100 million state tax revenue allotment.
Merle Hay Campus reinvestment proposal receives $26.5 million:
At Merle Hay Mall, plans call for the development of a 3,500-seat multi-use arena and training center in the former Younkers department store site and current Kohl’s department store building. The facility would be home to the Des Moines Buccaneers hockey team. The arena would include three additional sheets of ice for competition, training and recreation. In addition, a multi-story hotel would be attached to the arena and training center.
Des Moines reinvestment proposal receives $23.5 million:
At the former Dico Inc. site in Des Moines, plans call for the construction of a 6,300-seat multi-use outdoor stadium with three practice fields. The stadium, which would be owned by a nonprofit group, would be home to a professional soccer team. Plans also call for the construction of a 150-room, eight-story hotel south of the stadium on the Dico site. The hotel would include a rooftop bar and view deck.
As we imagine the shift in the Greater Des Moines retail landscape over the next decade, one or both of the proposed projects would be game changers and serve as significant economic drivers for their respective communities.
All in all, the Greater Des Moines market is well positioned for continued growth and retail expansion. When, and if, the metro area will achieve the ultimate goal of “checkmate” — only time will tell.
Christopher Stafford is director and senior vice president with Cushman & Wakefield Iowa Commercial Advisors. This article originally appeared in the June 2021 issue of Heartland Real Estate Business magazine.