A six-story mixed-use building would be built on the county-owned parking lot at Fifth and Cherry streets under a proposal from an Indiana developer that was approved by the Des Moines City Council on Dec. 22.

The council agreed to preliminary terms of an urban renewal development agreement with the Annex Group of Indianapolis for the redevelopment of the parking lot. The agreement was part of the council’s consent agenda and it was approved without discussion.

David Wesner, vice president of development for the Annex Group, said the company is familiar with the city, having built the Union at Rivers Edge project on Indianola Avenue, and was eager to submit a proposal when it learned the parking lot was available for redevelopment. 

He said the parking lot’s proximity to the downtown core and other development along the Martin Luther King Jr. Parkway corridor and areas to the south and west of downtown were factors in the Annex Group’s decision to submit a proposal.

“We have a pretty good understanding of what’s going on in the city with some of the newer residential development occurring south of MLK and some of the new, especially high-end market rate that’s going in the core of downtown, and the movement around the Market District, we saw this site as being in the middle of all those things,” Wesner said.

The council’s approval of the agreement is the latest step in efforts to redevelop the site, located just south of the courthouse.

Polk County issued a request for proposal for the parking lot in June 2024. The RFP was reissued in December 2024 with the help of the city’s office of economic development.

In June, the county and city entered into a 28E agreement that defined what role the city would play in evaluating development proposals for the site.

Surface parking lots downtown have been identified by developers and others as the next place to watch for development in downtown Des Moines. County officials have said the parking lot’s proximity to Court Avenue makes it ripe for redevelopment. The site would also serve as a connector from the downtown core to areas that are being redeveloped to the south and west, including the Pro Iowa Soccer Stadium and Global Plaza.

According to a city staff report, the Annex Group has proposed the construction of a six-story mixed-use building that would include approximately 280 residential units on floors two through six, 6,000 square feet of ground-level retail space, and additional ground-floor amenities for tenants.

The building would feature 115 one-bedroom units, 110 two-bedroom units and 55 three-bedroom units. It would also include inside parking stalls on the first floor, along with indoor bicycle storage, a community room, fitness center and internal resident courtyard. The agreement calls for 20% of the units to be kept affordable for 30 years.

The cost of the project is estimated at $75.95 million. 

According to the staff report, the Annex Group will buy the site from Polk County for $2.4 million, but the city has negotiated a 50% discount on the purchase price that would be structured as a forgivable loan from the county.

Preliminary terms of the agreement call for the city to provide tax increment financing with a maximum value of $5.14 million to help close a funding gap that the development team is facing.

The city would also provide a “ground-floor commercial occupancy” grant to incentivize occupancy by “desirable” tenants in the downtown core. An additional $5 per square foot would be paid to the Annex Group for occupied ground-floor tenants to a maximum of $30,000. Funds for the grant would be generated from tax increment financing, the staff report stated.

Wesner said the Annex Group will be working with the city to ensure the right tenants are found for the building.

“We don’t have any interest in letting retail spaces sit vacant,” he said. “Our interest is to make sure we’re finding and executing on the retail and we’ve partnered with the city to make sure that the retail we’re providing is right-sized and improve the experience for the tenants and other folks who visit downtown.”

When it’s done, the assessed value of the property is estimated at $55.83 million. It currently has no assessed value.

Wesner said the Annex Group hopes to close on the purchase of the property by the end of 2026. He said construction would happen concurrently to that process with completion expected in 2028.

He said redeveloping a surface lot tends to be easier than a building where demolition may occur.

“It eliminates the demolition cost and because it’s been operating as a service parking lot, we know it’s a 100% impervious service, so that makes our storm water plan a little easier,” Wesner said. “If you’re putting an impervious building on top of an impervious parking lot, you don’t have to do anything that hasn’t been done before. So that definitely adds to the simplicity.”

The Annex Group will go through all the required environmental testing and take any action that’s necessary, he said.

“But generally, a parking lot is a really good thing to redevelop,” Wesner said. “You don’t have a lot of demolition costs. They tend to be pretty flat, which this one is, so we definitely view that as an advantage here.”