Change. It’s happening today in downtown Des Moines. And as the office market here continues to struggle through the rise of the work-from-home movement, these changes will only accelerate in 2023.
That’s the main takeaway from JLL‘s latest office insight report for the Des Moines market.
According to JLL, one big change hitting downtown Des Moines’ office market is the sale of 1615 Locust St. MidAmerican Energy, a utility company owned by Berkshire Hathaway, has announced that it will purchase the 180,000-square-foot office buiding from Dotdash Meredith, a national digital and print publishing company.
The four-story office building sits in Des Moines’ Western Gateway area of downtown and features about 300 underground parking stalls. The sale will close in April of 2023. This move means that MidAmerican Energy will leave space behind at 666 Grand Ave. in Des Moines. The company has leased space there since 1975 and will be vacating four floors.
And this is just one major transaction that is reshaping the tenant mix of Des Moines’ downtown office core.
Another big office sale took place in the fourth quarter in the Des Moines market. As JLL reports, Lainson Properties 1031, LLC purchased Northpark Town Center in Urbandale, Iowa, for $10.8 million. This property consists of five single-story office buildings on Northpark Drive totaling 66,000 square feet.
The same buyers purchased three additional office buildings at 5404 – 5504 W. 88th St in Johnston, Iowa, during an acquisition that happened in November of last year. These buildings were purchased for $4.4 million.
In another big move, Wells Fargo vacated about 139,000 square feet at 6200 Park Avenue in Des Moines. This accounted for the majority of the negative office absorption the Des Moines market saw in the fourth quarter of last year. This building is now one of nine in the Des Moines market with more than 50,000 square feet of continguous space available for lease. Five of these buildings are located in Des Moines’ CBD.
JLL reported that the amount of new office deliveries in the Des Moines market dropped in 2022. The 52,000 square feet of new office space delivered during the year was significantly less than the market’s previous four-year average of 341,000 square feet. In all, seven office projects were under construction in the fourth quarter in Des Moines, with four of those being developed in the western suburbs for owner-users.
The office market looks to be a challenging one for Des Moines again this year. JLL says that the market will face additional large blocks of space becoming available with MidAmerican Energy’s move and the city’s federal courthouse moving from its location of 110 E. Court Ave. to a new home at 100 Locust St. These two moves will leave about 167,000 square feet of vacant office space behind.