HEARTLAND SNAPSHOT, AUGUST 2006

Des Moines, Iowa, Retail Market

The most prevalent trend in retail development throughout the Des Moines metropolitan area is the urban village concept of mixing residential and office components with retail product. The first of these was Urban Development’s very successful Somerfield, a small development in West Des Moines. Now several new developments are underway; the largest are West Glen Partners’ West Glen Town Center, Ladco Development’s Villages of Ponderosa and West Des Moines; and Walters Companies’ Jordan Creek Crossing and Fox Prairie Village within West Des Moines. In downtown Des Moines, the Court Avenue District and the downtown business core are experiencing explosive residential development, which includes construction of condominiums and leased housing, as well as conversion of former office and warehouse buildings for residential occupancy. Approximately 3,000 units are either underway or approved for the downtown core. Across the Des Moines River, the East Village is a mixed-use redevelopment area, which has attracted an exciting and eclectic mix of retailers, galleries and eateries while adding loft-style housing and new office buildings. Many of these developments include first-floor and skywalk-level retail components, along with some office space as well.

The impact of mixed-use developments is found in their catalytic effect on future development — each infusion of one component draws more developers of the other uses. Mixed-use developments are strong retail draws because they combine the daytime traffic created by the office component with the evening and weekend traffic of the residential component. 

Another major trend is the addition of significant entertainment components to the developing and redeveloping areas. New national and local restaurants abound; new venues for musical entertainment are coming to the former Nacho Mama’s building on Court Avenue and inPLAY recently announced plans to occupy two floors, 42,000 square feet, of a former office building near the Iowa Events Center. InPLAY will be a family-oriented entertainment facility with separate gaming areas for adolescents, teens and young adults, a two-story plus climbing wall, a Legends Grille, private and corporate party rooms, and a banquet facility.

The majority of retail development is occurring in two areas — West Des Moines, both north and south of Mills Civic Parkway from 50th to 74th Street, and in downtown Des Moines, east of the river in the East Village and west of the river from the Court Avenue District north to the Iowa Events Center/Veteran’s Auditorium. 

The major factors influencing development are significant to each area. West Des Moines has seen the development and construction of General Growth Properties’ 200-acre Jordan Creek Town Center. The center’s opening in August 2004 spurred construction of access ramps to Interstate 35 at Mills Civic Parkway and reconstruction of the parkway. Downtown Des Moines has continued to see an increase in the insurance industry and has become the Number 1 insurance city in the country, surpassing Hartford, Connecticut. Des Moines’ nearly 100,000 downtown employees are connected by the largest skywalk systems in the country. Allied/Nationwide Insurance and Wells Fargo Financial have constructed more than 1 million square feet of office space in the downtown area in recent years, while Principal Financial Group continues to expand its downtown base. Many major public attractions have come to the downtown core including a David Chipperfield-designed Central Library, the Iowa Events Center and HyVee Hall, which attracted the Iowa Stars Hockey Team to the city. The Science Center of Iowa relocated to the Court Avenue District, adding the city’s only IMAX Theater to the downtown core. Principal Financial is redeveloping the riverfront within downtown to include pedestrian and bike paths, an ice rink and gardens as gathering places. These added attractions are drawing legions of would-be residents to the downtown core, causing city and area developers to respond with new and renovated housing opportunities.

Retailers are responding to this significant daytime and residential population growth by seeking to position stores to meet the new demand for products and services. The Kaleidoscope at the Hub, Hubbell Realty Company’s 98,000-square-foot enclosed mall in downtown Des Moines, is at 100 percent occupancy for the first time in a few years. The Kaleidoscope’s seven skywalk bridges linking it to major office buildings have made it attractive to the many retailers now vying for the best position in the growing downtown office and residential market. The center’s strong mix of retail product including apparel, home furnishings, cards, gifts and flowers; service retailers including optical shops, salons, and travel and cellular services; and restaurants including delis, bagels, coffee shops and a full line Food Court draw the highest foot traffic in the entire skywalk system.

When the skywalk system was built in the early 1980s, street-level retail virtually disappeared. Today, most skywalk retail is fully occupied and the increased demand for space by retailers is fueling a demand for street-level space from retailers. Most new buildings and many redeveloped buildings include first-floor retail space, and other existing buildings are seeking to replace first-floor office tenants with retailers.

Some of the more active developers in the area include West Glen Partners, Walters Companies, Ladco Development, SJ Jordan, General Growth Properties, Paradise Development and Hubbell Realty Company. West Glen Partners developed the 1 million-square-foot mixed-use West Glen Town Center, located on 50 acres of land in West Des Moines. Village of Ponderosa, developed by Ladco Development, is a 97-acre development with 300,000 square feet of retail and office space and 500 residential units in West Des Moines. The metro area’s first lifestyle center, Jordan Creek Town Center, was developed by General Growth Properties and consists of a nearly 1 million-square-foot enclosed mall, six freestanding national restaurants surrounding a lake, an extended-stay hotel, and freestanding and open-air retail centers located on 200 acres in West Des Moines. Florida-based Paradise Development is preparing to bring two large retail developments to the Jordan Creek area of West Des Moines. Galleria, also in West Des Moines and developed by SJ Jordan, is a 1.2 million-square-foot mixed-use property with 370 residential units. Hubbell Realty Company is currently developing more than 250 residential units within the downtown core.

The mixed-use properties have brought many new retailers to the Des Moines area.  Jordan Creek Town Center brought retailers Costco, Century Theatres, Dillard’s, Chico’s, Williams-Sonoma, Build-A-Bear, Scheels, Sharper Images, Ann Taylor, Pottery Barn, Aeropostale, Jos. A. Bank, Hollister; and restaurants The Cheesecake Factory, P.F. Chang’s China Bistro, On the Border, Bravo! and Fleming’s. Brooks Brothers 346 and Wet Seal also have plans of moving to the center.  The Galleria boasts a Fuddruckers and Red Robin, and Starbucks Coffee has opened multiple stores in the area during the past 3 years.

Recent leases demonstrate increased activity in West Des Moines and the Des Moines suburbs.  Retailers joining the West Des Moines area include Wal-Mart Supercenter on Mills Civic Parkway; SuperTarget in West Glen Town Center at Interstate 35 and Mills Civic Parkway; HyVee at 50th Street and Mills Civic Parkway; and a proposed Lowe’s Home Improvement Warehouse at Jordan Creek and Mills Civic Parkway. New leases in Urbandale include Dahl’s Foods at 128th Street and Meredith Drive in Paragon and The Home Depot at Northwest 100th Street and Plum Drive.

Future developments worth watching out for include the new retail development in the northwest quadrant of Urbandale. The development was initiated a few years ago by SuperTarget and will see The Home Depot in 2007. R&R Realty Group is developing Paragon, a commercial complex, situated on approximately 280 acres of land between 121st and 128th streets, with approximately 70 acres devoted to retail development. Dahl’s Foods has acquired 12 acres for a grocery store with a convenience store and fuel service. Citigroup has located in a 169,000-square-foot building anchoring the office/warehouse/distribution component of this development. Also, the collateral development around Jordan Creek Town Center is in the early stages with significantly more to come on the northeast corner of Mills Civic Parkway and 68th Street, the Galleria, West Glen Town Center and the Village of Ponderosa. The redevelopment of downtown Des Moines’ Younkers department store building, further development of the Fifth Street and Court Avenue corridor, and the continued development in both the Court Avenue District and East Village, are noteworthy projects to watch in the near future.

Greater Des Moines is a vibrant retail market with significant growth throughout the area. More importantly, there is strong evidence of a change in how people perceive the integration of their lives, work and neighborhoods, and developers and cities are responding to their desires with mixed-use neighborhoods. Once considered too small by major national retailers, the economic strength of the local demographic combined with affordable real estate and the power of General Growth in drawing new retailers to the market have caused Des Moines to be seriously considered by these major retailers. Combined with the efforts of the various cities’ governments to provide important infrastructure changes and public attractions heavily supported by local businesses, we are embarking on the most significant retail growth period in the market’s history.

— Colleen Johnson is a senior associate at CB Richard Ellis | Hubbell Commercial in West Des Moines, Iowa.

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