Nearly three years later – and nearly 19 months after the start of the pandemic – almost 20% of the more than 6.4 million square feet of central business district office space is sitting empty, CBRE|Hubbell’s more recent market report shows.

“The pandemic has had a great impact on the office market, and those effects are going to linger,” said Jackie Nickolaus, senior developer for Sherman Associates, a Minneapolis-based developer with several projects underway in Des Moines.

Nickolaus was one of three panelists who talked about downtown development activity during a recent discussion sponsored by the Des Moines Downtown Chamber. Others on the panel were Tim Leach, senior vice president of downtown development for the Greater Des Moines Partnership, and Carrie Kruse, an economic development administrator for the city of Des Moines.

When the pandemic hit, many companies sent their office workers home to work remotely. While several companies planned to bring workers back to the office during the fall, the outbreak of new COVID variants has delayed those plans. In addition, some companies are allowing workers to work remotely full time or up to four days a week.

The flexible work arrangements mean companies have unused office space that can be leased to other users, panelists said.

In Des Moines, Nationwide announced a hybrid work model where some employees would work remotely and others would work primarily in the office. The move allowed Nationwide to offer one of its downtown office buildings – a five-story, 372,000-square-foot Class A building at 1200 Locust – for lease.

According to CBRE|Hubbell’s third-quarter report, sublease inventory in the Des Moines area climbed to 363,890 square feet, the highest level since 2011. A combined total of 53,036 square feet of sublease space became available at an office building at 909 Locust St. and at the Hub Tower, 699 Walnut St., both downtown Des Moines properties. The central business district has 89,000 square feet of sublease space available, most of which has been added to the market since the start of the pandemic, according to the report.

The availability of so much leasable office space in the Des Moines area, and particularly downtown, could provide opportunities for niche users or the redevelopment of historic buildings or those with smaller footprints, Nickolaus said.

“Those buildings that offer something different could have the opportunity to be more successful, at least in the short term, as everything is worked out with the larger footprint buildings,” she said.

Kruse said there are bright spots in the Des Moines office market. Ames-based Landus Cooperative, Iowa’s largest agricultural co-op, is contemplating leasing 25,000 square feet in a recently completed building at 220 S.W. Ninth St. The building was developed by Sherman Associates.

According to a city document, the lease would be for 10 years. The company would consolidate its office locations and innovation into the new headquarters.

“Des Moines does present such a great economic opportunity for companies that are looking to consolidate locations and trying to have one centrally located physical presence somewhere,” Kruse said. “Des Moines is a great place to do that.”

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