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Big box market driving commercial real estate


Greater Des Moines put another 775,000 square feet of retail space into use in 2004, according to an annual commercial real estate market survey conducted by CB Richard Ellis/Hubbell Commercial and Frandson, Knapp & Associates. It’s the biggest “absorption” of retail business in the eight years of the survey.

But while new big-box retail stores were driving that figure up, the occupancy rate slipped slightly for multitenant buildings with small to medium-sized businesses. The decrease was less than 1 percent overall, but in the western suburbs, neighborhood and community center occupancy was down 3 percent. This was “largely due to new construction coming online and still in the initial phase of absorption,” the report said.

The statistics were presented March 31 at a luncheon featuring speaker Greg Vorwaller, president of investment properties for CB Richard Ellis Inc. Here are some of the key findings of the survey:

* Retail: In the big-box category – including grocery, home improvement, retail and discount stores over 20,000 square feet – the occupancy rate hit 94.2 percent in Greater Des Moines. New stores on the Jordan Creek Town Center campus but separate from the mall added about 310,000 square feet to the inventory. “Outlots on the mall campus are all leased and occupied with the exception of the gourmet grocery store, which has not opened,” the report noted.

The Jordan Creek mall is 93 percent occupied, but the area’s other regional malls have lost tenants. Valley West Mall stands at 92 percent full, down from 95 percent. Merle Hay Mall is 88 percent occupied, down from 98 percent, even though it’s currently offering less space while construction continues on a Target store on the site previously occupied by Younkers. And Southridge Mall has plummeted to 60 percent occupancy from 80 percent a year earlier.

In the smaller multitenant facilities, Ankeny boasts a 93 percent occupancy rate compared with 81 percent in the western suburbs.

* Industrial: A large amount of warehouse space became or remained vacant in Central Iowa, with a negative absorption figure of 438,000 square feet. However, the report characterized this sector as “relatively strong.” Thirteen new buildings were added to the warehouse inventory while five were removed, resulting in a net increase of 342,000 square feet. A 611,000-square-foot warehouse in Urbandale vacated by SuperValu Inc. in 2002 remains vacant. Overall, 84.5 percent of the warehouse space in Greater Des Moines was occupied.

Manufacturing occupancy improved to nearly 94 percent, up from 92 percent in 2003. In Ankeny and on the fringe of the Des Moines central business district, the figure hit 100 percent.

Most of the former R.R. Donnelley & Sons Co. printing plant at 5701 Park Ave. remains vacant; the 621,000-square-foot building accounts for nearly 5 percent of the manufacturing space in the Greater Des Moines market.

* Flex: The inventory of flex space – which can be used for a combination of office, retail, showroom and warehouse purposes – increased to 138 buildings from 131, with five of those new structures in the western suburbs. The occupancy rate for flex space decreased to 87 percent in the western suburbs, down from 89.5 percent; for the area as a whole, it dropped two percentage points to 83 percent.

* Office: In the competitive office space market, the overall occupancy rate stayed relatively unchanged at 83 percent. Occupancy decreased in the western suburbs and improved in the central business district core. The market will add several buildings this year, including a 55,000-square-foot building at 6601 Westown Parkway that’s expected to open in the second quarter and a 75,000-square-foot building in Country Club Office Plaza in West Des Moines, scheduled for completion in the fourth quarter.

The planned conversion of several downtown office buildings to residential uses will remove “a significant amount of square feet from the competitive office market,” the report noted.

Greater Des Moines’ entire office space inventory – including owner-occupied space – now totals 23.9 million square feet in 758 buildings.


Small investors are flocking to real estate but institutions might be easing away, according to national statistics collected by CB Richard Ellis Inc.

The company’s annual look at the real estate climate found that individuals and syndicates made 52 percent of the multi-housing property purchases in 2004 and 27 percent of the sales; real estate investment trusts accounted for just 7 percent of purchases and 19 percent of sales; life insurance and pension funds accounted for 14 percent of purchases and 20 percent of sales.

In the retail property category, individuals and syndicates made 40 percent of the purchases, and life insurance and pension funds made 32 percent of the sales. Individuals and syndicates made 33 percent of the office property purchases, and the big funds made 33 percent of the sales.

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