The Des Moines metro is experiencing some growing pains caused by the rapid growth it is experiencing, and leaders should focus on strategies that focus on efficiency in the development process and create environments that foster a greater local presence, said panelists who will participate in the Business Record’s April 23 Commercial Real Estate Forum.

They also addressed tax policy and the stress that’s being placed on the housing market.

Panelists will discuss opportunities and challenges facing the commercial real estate sector, the office market and how it’s adapting to the return-to-office trend, and we will also look at ongoing projects, areas where development is likely to occur, and trends to watch for in the coming year. 

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This year’s panelists include:

• Doug Anderson, chief commercial lending officer, Lincoln Savings Bank
• Todd Garner, principal, Substance Architecture
• Carrie Kruse, economic development administrator, City of Des Moines
• Joe Pietruszynski, executive vice president, development, construction and management, Hubbell Realty Co.
• Jaclyn Taylor, owner, Taylor REP
• Bill Wright, senior vice president, CBRE

In a sneak peek into the panel discussion, the Business Record asked each panelist to share their thoughts on challenges the metro is facing as a result of the fast growth it is experiencing, and to provide a possible remedy to alleviate some of those growing pains.

Data from the U.S. Census Bureau shows Central Iowa’s population has grown by an estimated 6.7% since 2020, and nearly 15% over the past decade, with a population of nearly 760,000 in 2025.

Here are the panelists’ responses, which have been lightly edited for brevity.

Kruse

Challenge

One growing pain the Des Moines metro is experiencing is the rising cost of development, which is creating a gap between what the market demands and what can be delivered affordably. In the office sector, tenants increasingly favor modern, amenitized buildings while older inventory struggles with vacancy as renovation costs rise and lease rates lag behind construction costs. Industrial and retail demand remains strong, but higher land, materials and financing costs are pushing rents upward, making it more challenging to deliver space accessible to a broad range of businesses.

Solution

Addressing this growing pain will require strategies that improve efficiency and predictability in the development process. Streamlining permitting and entitlement processes, encouraging reinvestment in existing buildings, and supporting adaptive reuse can help make development more efficient and cost-effective. Continued collaboration between public and private partners will be critical. By working together, our region can create a balanced, resilient commercial real estate market that supports businesses of all sizes while sustaining long-term growth.

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Wright

Challenge

A result from the accelerated growth is that we have many newly constructed buildings with exceedingly high property assessments for tax purposes. This is a function of premium land pricing and escalated construction costs. With the current real estate tax structure in place there is a heightened burden upon commercial real estate properties, and real estate taxes are at all-time highs. It is common to see real estate taxes be 75% or more of a building’s operating expenses. It is becoming increasingly difficult for small businesses to afford operating expenses that are outpacing inflation by such a wide margin. The issue is not only on new construction, but also on second-generation properties that are also experiencing major increases in real estate taxes as they often get swallowed up in the rising assessment environment that has persisted. Some national and regional occupiers can absorb the increased real estate tax cost, but there is a significant pinch on those small businesses that serve as the backbone of our economy.  

Solution

Elements of Gov. Reynolds 2026 property tax reform plan need to be implemented, but I do question making any significant revisions or restrictions to the Tax Increment Financing structures as the potential impact upon development growth in our communities would be catastrophic.

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Taylor

Challenge

In conversations with corporate decision-makers considering a change or investment in new office space, moving away from downtown Des Moines is becoming a consistent driving consideration. Their employees have expressed they no longer feel safe or comfortable navigating the skywalk system, visiting nearby grocery or convenience stores, walking to and from restaurants, or traveling to and from their vehicles. They say this is due to the increased presence of homeless individuals, more frequent inappropriate behaviors and intrusive police presence. At the same time, there is a noticeable shift in the composition of local amenities. As services and amenities supporting the daily needs of residents and professionals continue to diminish, and investments seemingly prioritize amenities geared toward visitors, both downtown Des Moines and surrounding communities risk diminishing their sense of safety, vitality and identity. Areas not intentionally designed to serve and engage the local population can quickly become underutilized, contributing to a perception of vacancy and unease.

Solution

In my opinion, a more sustainable path forward lies in cultivating environments that attract and retain a consistent local presence day to day. When residents are drawn to spend time in an area of town, actively engaging, observing and supporting their community, the sense of safety is strengthened. Ultimately, prioritizing and reinvesting in existing community assets, rather than focusing solely on attracting external activity, will be critical to stabilizing and strengthening the long-term safety and vibrancy of the metro.

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Anderson

Challenge

The growing pain endured by many investors and developers today is downward pressure on cash flow as expense growth has outpaced rent growth. In the first several years following COVID, the investment environment was unusually constructive. Abundant liquidity and historically low borrowing costs elevated investor confidence. Inflation further accelerated effective rent growth, producing outsized returns across all property types. The challenge emerging from that environment is that expense growth typically lags rent growth rather than moving in parallel. Over the last two years, as rent growth normalized and vacancies modestly increased, real estate tax burdens significantly increased from heightened valuations, disruption in the insurance market caused premiums to increase at historic levels and demand for labor markets drove sustained wage pressure. These dynamics have placed measurable compression on margins.

Solution

The path forward is inherently multidimensional. While insurance pricing and valuations appear to be stabilizing, and policy discussions may temper future tax growth, the previous surges are carried forward. The natural solution is rent growth, which is likely to continue at modest levels, but involves numerous and sub-market specific factors. As a result, operational execution becomes the primary lever under owner control. Expense discipline, preventative maintenance, vendor management, and data‑driven property management will be critical to preserving cash flow without eroding tenant satisfaction. Over the next five years, asset and property management quality will be a larger driver of investment performance than macro tailwinds alone, marking a clear shift from the prior cycle.

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Pietruszynski

Challenge

As the metro grows in population, the demand for a mix of diversified housing is increasing, especially in the category of housing that meets the needs of the workforce and our lower income demographic. Unfortunately, housing demand is increasing faster than available supply. There are several reasons why supply is limited. Some of the supply issue is related to higher interest rates impacting the cost of debt for the buyer and the developer, slow wage growth that limits buying power in inflationary conditions, weakened investor sentiment in Iowa, and increased construction cost inputs. Over the past several years, we have seen a significant increase in construction costs that have been driven by commodity escalation, labor inflation, and increased regulations. Unfortunately, all these issues seem to have been placed on the housing market all at once, creating an affordability gap. In addition, recent tax structure uncertainty and concern about important public investment gap resources going away through state regulation changes is holding investors on the sidelines and pushing investment in housing to adjacent states.  

Because of the cost hurdles and weak wage growth, new construction is presenting itself (as) riskier. That risk takes a lot of work to mitigate. It slows down investment and changes it. In the multifamily market, which is essential to our workforce and lower wage demographic, lower-cost apartments are disappearing as older properties get renovated or bought by investors. Also, without public gap fill to keep housing affordable, legacy affordable units are converting into market-rate housing as subsidies expire. 

Solution 

As a community we need to focus policy on workforce and affordable housing. We need more simplified regulations and government processes to allow for homes that people can afford and quality options that investors will find attractive as they weigh Des Moines against neighboring states. We cannot support the needs of our community on luxury alone, and need entry-level single-family homes, duplexes, townhomes and multifamily units that are more affordable. Allowing higher density and smaller lot sizes can increase supply at lower costs. Existing TIF and abatement structures need to be preserved to fill the investment and financing gaps necessary to meet the cost profiles of lower income and workforce demographics. We also need to align state incentives and policy with urban needs so there is a concentrated benefit to where the greatest need exists.

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Garner

Challenge

The fast growth will place additional strain on the infrastructure and services that make Des Moines attractive to so many people and businesses. The ability to fund improvements and expansion to both infrastructure and services will be critical.

Solution

Consolidation of redundant services between cities and counties will help. Our ability to creatively incentivize development associated with the rapid growth should also be applied to finding creative funding sources that will offset the cost of infrastructure and service improvements. ν