A word of caution was issued by panelists at the Business Record’s 2026 Commercial Real Estate Forum about concerns they have with proposed property tax legislation moving through the Legislature this year.

After several proposed versions of property tax reform, the Legislature came to an agreement on legislation, passing it May 3 before adjourning the 2026 legislative session.

The issue of property taxes was just one of many topics discussed during the forum, held April 23 at the Hilton Des Moines Downtown, where this year’s Commercial Real Estate Professional of the Year award was presented to Chris Costa, president and CEO of Knapp Properties.

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

They talked about the current state of retail and office, how the current economy is affecting lending and real estate, downtown housing, and artificial intelligence.

Here are highlights from the conversation; comments on property taxes were made prior to passage of the new bill. Responses have been lightly edited for clarity and brevity.

Property taxes

Pietruszynski: “If I can see anything that can interfere with the progress we’re making, it’s a shift of tax burden to multifamily and senior properties. What that would do is put over $1 billion of loans at risk and shut off our workforce housing engine, which is thriving right now and absolutely essential to keeping this community afloat.”

Kruse: “With the changes proposed, just the TIF piece would be a whole 15% of TIF off the table, and that’s a huge number to have to go out and source with private equity, that’s a lot of projects getting put on hold. I think property taxes need to be simplified but there also needs to be alternative revenue streams that are figured out in how we continue to attract economic investment across our state. Limiting or reducing tax increment financing without some kind of backfill or alternative revenue source to attract investment will have a negative effect on our ability to compete nationwide.”

Anderson: “If something like this is enacted it will entirely shift the capital focus of banks. It will convert from capital deployment to capital preservation. Community banks live and breathe off of commercial real estate, so if you add $200 a unit a month in property taxes it’s going to turn cash flows upside down overnight, and when you compound that with economics that are already tough it’s going to make for a very challenging environment.”

Office

Wright: “People are looking for amenities. Employers want to provide amenities to employees because it’s hard to recruit employees. Those buildings that have done that are doing really well right now. If you’re downtown and you have a 10,000-square-foot Class A tenant, you have two or three options. It’s incredible how few options there are for Class A. Where are there challenges? It’s the buildings that have not invested in their infrastructure, have not built those amenity packages that tenants and their employees are seeking. If you’re a B or C building owner, it’s tough right now.”

Housing

Pietruszynski: “If you look at communities like Ankeny it’s just thriving and it needs additional multifamily support. That’s why we’re focusing several projects there. The workforce needs a diversity of  housing types and we’re bringing that rental type of housing to that community. There are gaps in the Des Moines metro and throughout the suburbs for not only workforce housing but affordable housing. Housing that is focused on entry-level positions from nurses to teachers, there’s a definite need. Those niches need cooperation between government and private equity to make it happen.” 

Kruse: “Downtown is a unique urban environment to live in. I think the demand for more housing will be there. With the volume of housing we have in the pipeline right now, I do see some projects wanting to pause to see how those units get absorbed and what the timeline is for those units to get absorbed. Some market studies suggest building in some additional buffer time for lease-ups. I think as far as new starts, we’ll see somewhat of a slowdown but that the demand will continue.”

Downtown

Garner: “I think the market is incredibly optimistic, even given all the indications that it’s not. We’re seeing a lot more activity. This is a town of big ideas. Few people generate those ideas but then get behind them and create what is exciting downtown. Now we have the Market District coming on board and seeing activity there. It’s those small businesses that are going to create activity during the day to keep those restaurants and smaller businesses open and at night we have enough living activity now in downtown. Downtown is vibrant. It’s a really exciting time and five years from now I think we’ll be really impressed with what’s going on.”

Artificial intelligence 

Taylor: “I’ve had several clients master-plan to build with the mindset of growing and with that growth that means expanding, so they’re purchasing land to build on. Because of AI they are slowing that master plan or stopping that master plan because their capacity to manage clients is much greater due to the tools of AI than when they were making their real estate decisions five to seven years ago. For example, their team members are able to manage three or four more clients per person than they were a year ago. When you start thinking of their growth, they’re not even growing into the building they built because they are continuing to use and advance and invest in their AI tools, allowing them to manage more clients with the people that they have. I also see a lot of opportunities in the construction industry to advance efficiency and projects. We’re constantly looking at ways to be more efficient. I think AI, robotics, getting them in the field and taking off some of the daily tasks of the superintendent, and shifting data gathering on sites could help us be more efficient and deliver projects quicker.”

Lending

Downtown development

Anderson: “We’re cautiously optimistic about the level of activity. We’re getting ready to commit to a project downtown in the next 60 to 90 days. The thought process that goes into that decision is sometimes it pays to be pioneering. The project we’re looking at is first-to-market. Looking at unit count to total units that will be delivered it’s pretty small scope. Because of all the demand drivers that do persist down there and I think it will continue to get better. We’re optimistic but cautious about it.”

Impact of high volume of loan originations maturing

Anderson: “It could create an uptick in transaction volume. You’re going to have loans renewing at a cost of capital at 1 ½ to 2 times what their in-place yield currently is. At the same time, cap rates have not moved parallel with interest rates, and so have one of two scenarios. Because of the cost of capital you can take less return or you can make a capital call to right-size the deal, or with cap rates remaining somewhat favorable can exit the deal, recoup your investment and recycle it into today’s market, if that opportunity exists. So, I think it could create the potential for some increased transaction volume.”