In The News


West Des Moines, IA (February 22, 2013) – CBRE|Hubbell Commercial, the leading commercial real estate broker in Iowa, announced yesterday the results of its 16th annual Des Moines Metro Real Estate Market Survey, prepared by Frandson & Associates, L.C., and the 43rd annual Des Moines Metro Apartment Survey, prepared by Commercial Appraisers of Iowa, Inc.
Results of the presentations by CBRE|Hubbell Commercial professionals indicate that the main property types making up the Greater Des Moines market (office, industrial, retail, investment and multi-unit housing) are rebounding at a steady pace.
Expert panelist members from CBRE|Hubbell Commercial included:
•    Rick Krause, Vice President - Multi-Unit Housing Analysis
•    Jan Berg, Vice President, CCIM, SIOR - Office Market Analysis
•    Jon Ledinsky, Senior Associate - Industrial Market Analysis
•    Tyler Dingel, Vice President, CCIM - Retail Market Analysis
•    Linda Gibbs, Senior Vice President - Private Capital Group, CCIM, SIOR - Investment Property Analysis
•    Tim Sharpe, Senior Vice President - Private Capital Group, CCIM, SIOR - Investment Property Analysis
Conducted for CBRE|Hubbell Commercial by Frandson & Associates, an appraisal and consulting firm, the 2013 Des Moines Metro Real Estate Market Survey analyzes office, flex, industrial and retail space by geographic market area in Greater Des Moines. Information was gathered from owners, managers and brokers throughout the Greater Des Moines area during the first quarter of 2011, 2012 and 2013 to provide business and city leaders current and useful commercial real estate information such as lease rates, occupancy trends and major events impacting their local commercial real estate decisions.
“The combination of increased leasing activity, conversion of some Class C buildings to residential and the repurposing of two vacant office buildings located in the CBD is positively impacting market fundamentals and breathing life and vitality into our market,” stated Jan Berg, CCIM, SIOR, office expert for CBRE|Hubbell Commercial. “These renovations remove buildings, such as the JC Penny Building and Des Moines Building, from office inventory and raise competitive office market occupancy.”
•    For the first time since the onset of the survey, total office inventory has declined from the previous year.  Class A inventory remained unchanged, but declines in both Class B and C occurred in the CBD due to properties being repurposed.
•    The office market occupancy rate remained relatively consistent this year, reaching 89%, which is a slight increase of 0.5%.  Class A and B sectors experienced positive occupancy increases while Class C experienced an overall decline in occupancy of 2.6%.
•    A large block of Class C office space and stagnant growth from small office occupiers led to a negative aggregate absorption.  The Greater Des Moines metro experienced 355,851 SF of net negative absorption.
•    The competitive office market, consisting of buildings considered to compete for tenants, has experienced a nearly 3% increase in occupancy and positive total absorption of 32,172 SF.
“Contrary to a couple years ago, warehouse, distribution and manufacturing occupiers are pushing the demand for industrial space.  Developers are adding new products in the Western Suburbs and Ankeny submarkets, and lease rates are remaining stable with nominal rent reductions and concessions,” commented Jon Ledinsky, industrial expert for CBRE|Hubbell Commercial.
•    Occupancy of warehouse space in the Greater Des Moines market has steadily improved over the last three years, reaching its highest occupancy level since 2001 at 91.6%.
•    The occupancy of manufacturing space has been hovering above 95% for several years, sitting at 95.7% in 2013.
•    The industrial sector grew by 1,200,000 SF this past year.
•    The warehouse sector experienced a positive aggregate absorption of over 1,000,000 SF, the largest amount absorbed since 2007.
•    The manufacturing sector also experienced a positive aggregate absorption of 450,000 SF, the largest levels since the inception of this survey in 1998.
•    Growth in industrial space demand has come from warehouse and distribution occupiers as well as manufacturers related to the agribusiness and bio science industries. 
“As the outlook for the economy brightens, so has the Greater Des Moines retail market.  Neighborhood centers, historically a laggard, have displayed improved occupancy for two straight years. However, landlords continue to offer incentives to help maintain occupancy, masking the true effects of the recent recession.  Concessions such as reduced or free rent and offered tenant improvements lower the net effective rent and have limited new construction in the marketplace,” said Tyler Dingel, CCIM, retail expert for CBRE|Hubbell Commercial.

•    Occupancy at Jordan Creek Town Center, Valley West Mall and Merle Hay Mall remains strong with rates of 98.8%, 95.0% and 96.4%, respectively.
•    The continuing redevelopment of Southridge Mall has been well received as Foot Locker, Kay Jewelers, Rue 21 and T-Mobile have opened new stores plus additional tenants for 2013 have been announced.
•    The neighborhood and community center category experienced increased occupancy for the second year in a row.  After decreasing for eight consecutive years, occupancy rose to 77.3% in 2012 and to 78.9% in 2013.
•    Overall net absorption was positive for the Greater Des Moines area with over 150,000 SF of positive absorption since the first quarter of 2012, a sign that fundamentals are improving in this product type.
•    The big box retail category continued its strong performance with a 96.7% occupancy rate.  The Northwest and South submarkets are experiencing the greatest gains.
•    Absorption of big box retail space was significant with 423,700 SF absorbed during the past 12 months. A significant contributor to this positive trend was the addition of a 263,250 SF Fleet Farm store delivered in Ankeny.
“The US commercial real estate market has remained resilient given the current economy and continues to recover into 2013, providing compelling risk-adjusted returns to property investors,” stated Tim Sharpe, CCIM, SIOR investment properties expert for CBRE|Hubbell Commercial.   
“Real estate is the preferred asset class as investors are searching for investment yields backed by relatively safe fundamentals in the current historically low interest rate environment,” added Linda Gibbs, CCIM, SIOR investment properties expert for CBRE|Hubbell Commercial.
•    Investment sales were up 24% over 2011 according to Real Capital Analytics.
•    At year end 2012, individual property sales were up 24% over 2011 with multi-family posting the most robust trends with volume up 47%.  Office and retail sectors were up approximately 20% with industrial remaining flat.
•    There was an increased number of transactions in the secondary and tertiary markets in 2012 from investors looking for higher yields.  This surge in transactions suggest that pricing expectations between buyers and sellers are aligned, making the market more efficient.
•    Partial interest transactions totaled $396 billion in 2012, the largest on record.  Several partial interest transactions took place in Des Moines in 2012.
Conducted for CBRE|Hubbell Commercial by Commercial Appraisers of Iowa, Inc., an appraisal and consulting firm, the Des Moines Metro Apartment Survey analyzes the apartment market by geographic area in metro Des Moines. Information was gathered from owners, managers and brokers throughout the Greater Des Moines area during January 2013 to provide business and city leaders current and useful apartment market information such as rental rates, occupancy trends and new construction data.
“Currently, there is pent up demand for apartment homes in our marketplace.  While many young adults are choosing to live at home, as the economy improves, they will transition into apartment living,” stated Rick Krause, multi-unit housing expert with CBRE|Hubbell Commercial.  “Demographics suggest that we need 1.1 – 1.7 million more households nationally.  With the high occupancy levels the Des Moines metro is experiencing, there is a strong need for additional multi-unit housing developments.”
•    The Des Moines metropolitan apartment vacancy rate decreased from 5.3% in 2012 to 4.2% in 2013, reaching its lowest level since 1994.
•    Ankeny and Indianola experienced the highest vacancy of all areas surveyed with 5.1% and 4.8% vacancy rates, respectively.  The East submarket has the highest vacancy in the greater Des Moines submarkets with a 4.7% vacancy rate.
•    The average vacancy rate for low income housing tax credit projects decreased to 2.2% from 4.6% the prior year.
•    Rents have increased for all unit types over the past year.  The increase in average rents ranged from 0.5% for three bedroom units to 5.3% for one bedroom units.
•    Planned multi-unit housing developments for 2013 project that 1,809 market rent and 320 tax credit units will be added to the greater Des Moines metro.

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