The city of Des Moines would purchase property owned by Nationwide Mutual Insurance Co. at 1200 Locust St. and a parking garage under a proposal that will be considered by the City Council on Monday. Photo special to the Business Record

The former Nationwide building in downtown Des Moines’ Western Gateway district would be purchased by the city to house several departments and the police headquarters under a proposal that will be considered on Monday by the City Council.

If the purchase is approved, the acquisition would allow the city to consolidate offices now spread among five buildings, a move that would improve efficiencies and reduce overcrowding. The purchase would also reduce a surplus of vacant office space in downtown Des Moines.

Under the proposal, the city would pay Nationwide $30 million for the five-story, 371,920-square-foot building at 1200 Locust St. that was constructed in 2005. It would also pay the insurance company $10.6 million for a nearby six-story, 1,690-space parking garage at 1200 Mulberry St.

Nationwide, which moved its office workers to a hybrid work model during the pandemic, vacated the second through fifth floors of the office building earlier this year. The company consolidated its offices in a second downtown building it owns at 1100 Locust St.

In late 2021, Nationwide began actively seeking a buyer for the building or tenants to lease the vacated space.

“It’s really rare for us to find a building that’s the size we need and with enough parking,” said Matt Anderson, Des Moines’ deputy city manager. “This is a once-in-a-generation opportunity for us to improve our office space.”

New facilities mulled for several years

City officials for several years have mulled selling the Armory building and relocating police headquarters into a new facility.

In 2017, city officials said they were considering relocating Des Moines’ police headquarters to a new facility that would have been built on a former manufacturing site in southwest downtown. A few months later, officials asked developers to submit proposals for redevelopment concepts of the Armory building. Offices in the Armory would have been moved to a new building that would have been constructed on land owned by the city.

Both plans were too costly and didn’t move forward, Anderson said.

Construction-related costs have increased even more in the past 18 months and supply-chain related issues have made it difficult to complete projects in a timely manner, he said.

“If we were going to rebuild the Armory [in a new location], we probably would not be able to move forward because of the expense and everything else going on in the market,” Anderson said.

Construction of new commercial office space in the Des Moines market ranges from $300 to $400 per square foot, according to information provided by the city. If the city acquires the Nationwide building, the per-square-foot cost would be less than $90, according to the city. (Remodeling costs were not included in the per-square-foot costs.)

If the council approves the purchase, the city’s next step will be to select an architectural firm to conduct a workspace utilization study to determine city departments’ space needs, develop a master use plan, and estimate costs of office designs and renovations. The architectural firm will be selected through a competitive bid process.

The study is expected to begin the fall with the first phase completed by mid-2023.

The city would sell both the Armory (pictured above) and the police headquarters building.

What offices will be located in the Nationwide building?

The Armory building currently houses the city’s development and neighborhood services departments and portions of the information technology and legal departments. Those departments are candidates to be relocated to the former Nationwide facility, as is the human resources department, which is located in the Municipal Services Center.

“We know that we’re going to look at all city administration employees, including those at city hall,” Anderson said. “We put them all in the mix, shake it up and see who fits where.”

If the purchase of the former Nationwide building moves forward, the only certain occupant is the police department.

“We know from a high level that the building will fit our needs,” Anderson said. “What we don’t know is who’s going to move there, when are they going to move, how do you phase the moves.”
The workspace use study will answer those questions, he said.

Anderson said officials have no plans to vacate the historic City Hall, also located along the riverfront at 400 Robert D. Ray Drive. “There’s obviously a lot of sentimental attachment to City Hall,” he said.

However, several of the departments now located at City Hall could be relocated to other buildings including the former Nationwide facility, he said.

“The goal is to be more efficient … and make ourselves more productive and provide better value to the citizens,” Anderson said.

Paying for the proposed acquisition

The proposed purchase of the former Nationwide building would be financed through a lease-purchase agreement with a private partner, Anderson said.

The city used a similar arrangement for the parking garage at 402 E. Second St., he said. West Bank provided the financing for the construction of the garage; the city makes regular payments to West Bank.

The parking garage would be purchased through the city’s parking system enterprise fund, Anderson said.

The city likely wouldn’t acquire the garage until late 2025, he said. The proposed acquisition of the office building would be in mid-2023.

Glut of vacant office space in downtown Des Moines

Des Moines’ central business district has more than 6.5 million square feet of office space, of which 18.7%, or 1.2 million square feet, was vacant in the second quarter, according to CBRE|Hubbell Commercial’s second-quarter market report.

The downtown area’s office vacancy rate has increased since spring 2020 when the pandemic sent workers home to do their jobs. Since then, many companies have begun to offer office employees hybrid schedules that allow both remote and in-the-office work.

The new work arrangements typically mean companies like Nationwide need less office space.

Bill Wright, CBRE|Hubbell Commercial’s senior vice president and managing director, estimated it would take two to three years for the vacant space at the former Nationwide building to be fully leased.

“Taking that much square footage off of the market is a very positive thing for downtown,” said Wright, who had been marketing the Nationwide property.

The city’s proposed move to the Western Gateway also will bring more workers to the area, which includes numerous restaurants as well as the 4.4-acre Pappajohn Sculpture Park.

Several restaurants are located in the street-level space of the Nationwide property, including Jimmy John’s, Blu Thai Food and Sushi, and Dough Crazy. The city will honor restaurants’ leases, Anderson said.

There also could be opportunities to add additional street-level retail, he said.

“We could have some surplus of space, and if that’s the case, we’re interested in expanding the ground-level activity,” Anderson said. “We certainly don’t want to do anything to take it away.”

Tiffany Tauscheck, chief operations officer of the Greater Des Moines Partnership and president of Downtown DSM Inc., described the city’s proposed purchase of the Nationwide property as a “win-win for both organizations.”

“This project will add more everyday foot traffic to the west side of downtown,” she said in a prepared statement.

Nationwide remains committed to downtown Des Moines
Nationwide remains committed to Des Moines even though it has agreed to sell one of its two downtown office buildings, a spokesperson wrote in an email to the Business Record.

“As the company continues to implement its new hybrid workforce model announced in April 2020, it needs less office space,” wrote Ryan Ankrom, director of public relations. “Nationwide was thrilled when the city approached us with interest in the facility. It has been important for us to find a partner as committed to the community and ongoing growth of the city — and the surrounding neighborhood — as we have been.

“Nationwide remains fully committed to Des Moines. 1100 Locust Street continues to be a key facility for us, and we have no plans to vacate that building. Nationwide has consolidated its in-office based associates into the 1100 Locust building (732,000 square feet). The company employs 25,000 associates across the country, with roughly 3,000 based in Iowa.”

Editor’s note: This story has been updated to include accurate information about restaurants located in the former Nationwide building in downtown Des Moines.