For years, Greater Des Moines developers have believed west is best. Now, according to some of the industry leaders, it’s time to look south.

The largely undeveloped land just south of Des Moines “will be the next boom area,” predicted Gerry Neugent, president of Knapp Properties Inc. and a panelist at the Commercial Real Estate Trends and Issues Forum on Sept. 1. “Development along [the rebuilt Iowa] Highway 5 has been somewhat stunted because of the Jordan Creek Town Center project. But from our perspective, we think that will be the real development opportunity.”

Jim Hubbell, chairman of CB Richard Ellis/Hubbell Commercial, agreed that the area is gearing up for growth. “There’s a tremendous amount of planning and work going into northern Warren County,” he said. “Look in the plat book along Highway 5, and you’ll recognize the names.”

Knapp Properties owns several parcels of land in the area.

Forum moderator Mike Blouin, director of the Iowa Department of Economic Development, had brought up the topic this way: “The Highway 5 project was supposed to drive development east and south, so it wasn’t just a march through Dallas County. The fear was that development would just take the form of convenience stores and [low-priced] motels at each interchange, and I’m starting to see that happen. Is the project accomplishing what it’s supposed to?”

“Development along Highway 5 has been somewhat stunted because of the Jordan Creek Town Center project,” said Neugent, whose company is now developing the nearby Galleria at Jordan Creek shopping area. “From our perspective, we think it will be the real development opportunity.”

Neugent also said Madison County “has tremendous growth potential” but characterized its growing number of acreages as “classic urban sprawl.”

“Madison County leadership has been easy to work with, but I don’t know how proactive they’ll be in their planning,” Neugent said.

Chris Greenfield, president of Grubb and Ellis/Mid-America Pacific, and attorney Bill Lillis of Connolly O’Malley Lillis Hansen & Olson L.L.P. completed the panel in a session that also discussed the current business climate, downtown housing and the proposed city-county merger. The semiannual event was sponsored by the Des Moines Business Record, Metro Waste Authority, Russell Construction Co. and Des Moines Area Community College.

ECONOMY MOSTLY STRONG

Blouin said the past 18 months produced “phenomenal” economic activity in Iowa and labeled the Grow Iowa Values Fund as “a massively successful economic engine that improves the quality of life all over the state.” That fund is inactive now, awaiting a political compromise between the governor and legislators. Blouin predicted that the original $100 million appropriation to the fund will be restored.

Speaking of the local economy, Neugent said, “There’s an incredible amount of money available for real estate investment.” That’s both good and bad news, he said. “It puts upward pressure on sale prices, but certain segments have been overbuilt and vacancies have increased.”

Hubbell said his company is seeing drastic differences between the residential and commercial parts of its business. “We can sell every house we can build; the residential side is phenomenal,” he said. “But the commercial side is terrible, particularly the industrial side. There’s a total lack of demand.”

DOWNTOWN HOUSIING A STRUGGLE

Greenfield, until recently the president of the Downtown Community Alliance, said, “People are always saying to me, ‘Gosh, downtown is about done.’ That’s not the way it works at all. We can’t predict in any way the demand we’re going to see for housing downtown.”

He noted that downtown housing “is an incredibly difficult struggle. Land costs are high and construction costs are high, but rents are modest. You wind up with a unit that cost $100,000 to build and has a value of $60,000.” When developers seek financial assistance to make such projects feasible, “it’s difficult to guess where the pools of money are going to come from,” Greenfield said. “We need to make the process more clear and more predictable.”

Greenfield acknowledged that the commonly accepted goal of having 10,000 housing units downtown by the end of this decade probably isn’t achievable, but said it was a worthwhile goal nonetheless.

Hubbell said, “I have no doubt whatsoever that [eventually] we’ll have 10,000 housing units downtown; whether it takes 10, 12 or 13 years is irrelevant.”

If the goal is reached, he said, “It will have an enormous impact on how downtown functions, on how many people are on the street at 9 o’clock in the morning and 9 at night.”

SUPPORT FOR A MERGER

All of the panelists expressed support for some form of city-county merger, an issue that will be the subject of a referendum this fall.

“I think it would be helpful to have a one-stop shop for planning,” Lillis said. “Omaha is one city, and that’s a plus.”

Hubbell said: “We see communities competing for deals, we see companies moving just to get a better deal, and it’s really a zero-sum game. It isn’t helping the community, and it’s got to change.

“We’re not going to be effective competing for more big projects like Jordan Creek unless we get better cooperation among our governments,” he said. “If we have to always fight and compete, we’re wasting time and money.”