Industrial space tight, Jordan Creek office rents highest in metro
KENT DARR Jan 24, 2018 | 11:11 pm
2 min read time590 wordsBusiness Record Insider, Real Estate & Development, The Insider Notebook
Greater Des Moines industrial vacancies stood at 2.4 percent at the end of the fourth quarter, the lowest rate in several years, pushing up lease rates 1.5 percent from 2016 and contributing to a burst of new construction, according to a report from JLL.
Quality Manufacturing has leased all 510,000 square feet at 5701 Park Ave., a property owned by Signature Real Estate Services and Hurd Real Estate Services, with the company subleasing 200,000 square feet to MYA Logistics, according to the report.
Other sizable lease transactions were XPO Logistics taking 300,000 square feet at a newly completed building by Graham Warehouse at 6812 S.E. Delaware Ave. in Ankeny, and Daimler Trucks North America’s lease of a 245,000-square-foot warehouse at Anderson Properties’ Legacy Park in Grimes.
R&R Realty said today it is adding a 300,000-square-foot Class A industrial building at its Prairie Business Park in Grimes (see item in Local News). Speculative projects underway include Opus Group’s 200,000-square-foot warehouse at Corporate Woods in Ankeny and Graham Warehouse’s two buildings totaling nearly 915,000 square feet at Northeast 29th Street.
Manufacturing and flex properties are also in high demand, according to the report. Anderson Properties recently completed a 135,000-square-foot flex building, which is half leased to Insta-Pro International.
Several large tenants are looking for space in Greater Des Moines, JLL said.
In the office sector, JLL said that some large moves resulted in large vacancies.
Iowa Workforce Development moved the IowaWorks program from 51,000 square feet at 430 E. Grand Ave. to 200 Army Post Road; William Penn University downsized its 30,000 square feet at 1275 N.W. 128th St. in Clive and moved to Johnston Station on Merle Hay Road; and ARAG moved out of 31,000 square feet at Capital Square to 41,000 square feet at the renovated space at 500 Grand Ave.
Companies leasing new space in the western suburbs included Iowa Credit Union League (25,000 square feet), BKD CPAs (11,700 square feet), Franke Miller & Associates (7,800 square feet) and ARI Network Services (6,200 square feet). In downtown Des Moines, larger leases were signed by Catholic Health Initiatives (12,100 square feet), Charles Saul Engineering (4,500 square feet), BH Management (4,400 square feet) and Global Atlantic (2,700 square feet).
New office developments were announced during the quarter. Ryan Companies US Inc. will build a two-story, 134,000-square-foot office building along Northpark Drive in Urbandale for John Deere Intelligent Solutions. The building will house 600 workers when completed in 2019. R&R Realty plans a 45,000-square-foot speculative office building at Meredith Drive and 121st Street in Urbandale.
Meanwhile, a separate JLL report found that Jordan Creek Parkway has the most expensive office rents in Greater Des Moines and among the highest in the country.
Average rents along Jordan Creek Parkway are nearly $25 per square foot, 37.5 percent higher than average office rents in Greater Des Moines. The West Des Moines thoroughfare ranks No. 42 on JLL’s 2017 listing of the most expensive streets in America.
Sand Hill Road in San Francisco topped the list at $119.38 per square foot; Park Avenue in New York City was second at $116.04.
“This area of the market has seen two office building completions in the last three years with another 160,000 square feet of office space under construction,” said Eric Land, senior research analyst for JLL in Des Moines. “Newer, modern spaces have been demanded in the market and convenient access makes them even better.”
Rising construction costs, premium office finishes and market demand are pushing rents higher along Jordan Creek Parkway, according to the report.