Downtown Des Moines' office vacancies slowly recovering
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While downtown office vacancies are showing signs of recovery from pandemic-era losses, it will take creativity by developers to fill larger spaces, says TJ Jacobs of commercial brokerage firm CBRE.
Why it matters: Full office spaces bring more foot traffic to surrounding areas, helping nearby retailers and restaurants.
- Vacant buildings can also lower the property value of neighboring businesses.
Yes, but: A 2023 study by the Greater Des Moines Partnership shows central Iowa workers still also want flexibility and the option to work from home — preferring a schedule that's 60% remote and 40% in person, the Business Record reports.
State of play: Foot traffic downtown has been "great" after 4pm thanks to Des Moines' entertainment and dining scene, but there's still a push to bring back the typical morning and afternoon office worker crowds, Jacobs tells Axios.
By the numbers: Des Moines' central business district had 18% vacant office space in Q2 — equating to around 1.145 million square feet, according to CBRE's office report ending June 30.
- That's a decrease compared to the first quarter, when vacancy was 19%.
What's happening: Businesses are now more willing to renew leases for longer periods of time than even just a year or two ago, Jacobs says.
- A recent major renewal was the lease for Dentons Davis Brown — 48,000 square feet at 215 10th Street.
- Beyond lease renewals, major businesses are also showing a bigger push for the return to the office, notably Principal's announcement that employees must return by November.
Zoom in: There's been a "significant" amount of tours showing the downtown buildings Wells Fargo is selling as the company moves its workers to its West Des Moines campus, Jacobs says.
The bottom line: Local retailers and businesses, especially downtown restaurants, are still navigating how to handle the hybrid schedules of office workers.
- While traffic from Tuesday through Thursday is picking up, Monday and Friday are still a struggle.
What's next: Downtown developers will need to transform their vacancies to become more attractive to potential tenants — possibly cutting down the size of their offices and considering the potential for other purposes, including residential space, Jacobs says.