Luxury housing projects pause as demand dips
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Pinnacle on Fleur developers are thinking about renting over a dozen units that haven't sold after being on the market for nearly 18 months. Photo: Jason Clayworth/Axios
Two highly anticipated condo or townhome projects along Fleur Drive are facing indefinite delays as rising interest rates and economic uncertainty slow down the area's previously swift expansion, their developers tell Axios.
Why it matters: The slowdown indicates a reset in Des Moines' upper-tier housing market, which has been strong in recent years as part of the fastest-growing metro in the Midwest.
Case in point: Pinnacle on Fleur, a high-end development on the former AIB campus, has sold only one of 15 units listed since June 2024.
- The project's eight customizable units, expected to sell for up to $1.4 million and offer views of downtown, also haven't sold, Jenna Kimberley, CEO of Kimberley Development, tells Axios.
Zoom in: Less than a block south of the Pinnacle, developer Adam Sieren has indefinitely paused his planned Oaks on Fleur project.
- He tells Axios that he regrets demolishing a brick house on the site in 2022 to make way for the development, as it could have been rented out during the project's pause.
The intrigue: Sieren is moving forward with Westwood Estates, a separate luxury condominium project at 5702 Grand Ave., targeting cash-ready downsizing buyers.
- Construction could start next year, depending on pre-sales, he said.
State of play: Hubbell Realty, one of Des Moines' largest development companies, also recognizes a slowdown in the high-end market and is shifting focus to offer more affordable townhomes starting around $240,000 in places like Gray's Station, CEO Rick Tollakson tells Axios.
- Pinnacle's developers may rent out the 14 completed but unsold units, Kimberley said.
- Sieren is focusing heavily on for-rent projects, where he says demand remains strong, including the upcoming construction of Summit Townhomes near St. Anthony's Church at 16 Indianola Road.
Reality check: New condos and townhomes make up a small portion of metro sales, Les Sulgrove, a local Realtor and former president of the DSM Area Association of Realtors, tells Axios.
- There were 380 new condos or townhomes for sale in the metro as of last week, slightly below the 400 on the market a year earlier, according to Sulgrove.
- The median price of the current listings was just below $275,000.
Stunning stat: DSM's building permit values exceeded $1 billion in the fiscal year that ended in June — a record even after adjusting for inflation.
What we're watching: The Des Moines City Council is reviewing changes to its tax abatement program and recently delayed action on the matter to consult more with developers.