Market still has regional draw.
The conservative nature of the Des Moines marketplace has been tested in the past 24 months yet cautious optimism prevails. Historically the high concentration of financial service and insurance companies translated into quick absorption of large blocks of space. However, the downturn in the economy and the move of companies such as Allied-Nationwide, Wellmark Blue Cross/Blue Shield and Aviva to new, owner-occupied buildings left behind significant blocks of space that have increased the office vacancy rate to almost 19 percent and will send it even higher.
New construction and development has been divided between the central business district (CBD) and the west suburban markets. The 152,000-square-foot Davis-Brown Tower and the Wellmark’s 550,000-square-foot headquarters are significant additions to the CBD Gateway West corridor, while Aviva’s 360,000-square-foot, United States headquarters is situated in the ever-emerging Jordan Creek corridor. Although development of smaller office buildings has been slowed, there are some signs of positive growth. Delta Dental Iowa is nearing completion of its new 25,000-square-foot headquarters at Northpark Office Park in Urbandale. In addition, two significant lease transactions were signed in the west suburban market, including 25,000 square feet for Strategic America at 6600 Westown Parkway and 93,000 square feet for Sammons Financial Group at Regency West Office Park.
Des Moines’ regional draw for consumers continues to attract new retailers. America’s Incredible Pizza leased 48,102 square feet at 86th Street and Douglas Avenue in Urbandale giving the community shopping center a much needed boost by filling its vacant anchor position. Staples, Ulta, and Walmart have recently added stores. Vacancy metro-wide in retail centers has remained fairly consistent during recent years at approximately 12 percent.
Industrial activity in 2009 was slower, but there are signs of a pick up in early 2010 as several large tenants are searching for space. Vacancy in the warehouse market remains at approximately 9 percent. Recent speculative construction has been minimal except for 268,000 square feet in Meredith Business Park in Urbandale and 110,000 square feet in the Grimes Business Park.
— Bill Wright is managing director of transaction services with Terrus Real Estate Group/TCN Worldwide in
Des Moines, Iowa.