FEATURE ARTICLE, AUGUST 2008

REBUILDING CEDAR RAPIDS
A look at how the commercial real estate community is dealing with floods that struck the city and state of Iowa.
Ashley Ball

The primary focus in Cedar Rapids is on getting each displaced resident back into their home, but the commercial real estate industry is working hard to bring downtown businesses back and recruit new companies to what will be a revitalized city.

Less than 1 month after the muddy Cedar River tore its way through downtown Cedar Rapids on June 12, Kirk Hiland, managing broker for NAI Iowa Realty Commercial, insists, “We are open for business.”

From hosting charitable rock concerts to selling T-shirts, the Cedar Rapids downtown community is banding together to rebuild their city.

“The response of the community has been unbelievable, and the people of Iowa, the Midwest and all over the United States have been tremendous,” Hiland says. “However, at this point in time, relocating tenants is pretty much a local effort of the commercial brokers in town.”

As the rising water level made it clear that downtown businesses and government agencies were going to have to relocate, local real estate companies responded quickly by negotiating short-term leases outside the flood zone. Although there are still some office users in need of space, according to Hiland, most companies have been moved to temporary locations.

“We’ve relocated hundreds of thousands of square feet of office space on a temporary basis,” Hiland explains. “Ninety percent of our work — which started while the flood was still in progress — has been temporary, so people plan on coming back downtown if the arrangements can be made such that landlords can afford to get their buildings back in shape for the tenants.” 

Many downtown businesses are now functioning in surrounding office parks, and the city and county governments have moved their operations into the financially distressed Westdale Mall, where only JC Penney and Younkers remain open. Additionally, the local community college offered space for businesses.

Although the locations are considered temporary, it could be years before downtown businesses can get back into the city. Approximately 28,000 to 30,000 Cedar Rapids residents are still without homes, causing commercial development to take a back seat to residential projects.

“We have a tremendous workforce in Cedar Rapids,” Hiland explains. “We don’t want people to be discouraged and move away, so that residential development has been a major emphasis.”

While the need for residential construction has hindered commercial redevelopment, Cedar Rapids is not yet issuing any building permits for the reconstruction of interior space. The city first wants to understand how much federal aid it will receive for rebuilding efforts, and it is also focusing on more rudimentary problems downtown. Although electricity is functioning throughout much of downtown, the electrical switching and transformers for individual buildings will need to be rebuilt, according to Hiland. Additionally, water has not been turned back on in the city (as of mid-July).

“What we’re going through right now is the recovery operation of demolishing the [interior] space, starting to de-water and eventually starting to rebuild,” Hiland says. “Probably 98 percent of all the downtown buildings received substantial damage to the point where people have had to move out.”

Fortunately, downtown properties have not reported enough structural damage to cause them to have to be demolished, according to Hiland. Pumping basements, drying out concrete, and removing sheetrock and plaster are the extent of rehabilitation projects currently underway in the city.

“Without a doubt, downtown is going to be rebuilt and re-tenanted,” Hiland says. “What form that’s going to take and how that’s going to be done is still very much up in the air.”

While definite plans and dates for reconstruction are uncertain, local developers are encouraging landlords and building owners to keep the disaster in mind whenever rebuilding does begin. 

“We’re encouraging everybody as they plan new building operations to get things up high enough so that if this should happen again, it won’t be so critical in the rebuild,” Hiland adds.

The real estate community is emphasizing the need for space on upper floors of buildings to house computer servers, HVAC plants and any other utilities critical to the building’s function.

“Get it out of the basement,” Hiland says. “So many of the buildings were somewhat older, albeit in very good condition, but everything was located in the basement, right down to the security deposit vaults at the banks.”

In the immediate aftermath of such a disaster, the silver lining can be difficult to deduce; however, the flood has created a tremendous opportunity for businesses to relocate to the area. With approximately 75 percent of local businesses expected to return downtown, there should be an abundance of space available for potential tenants.

Hiland is confident that within 9 months or 1 year, Cedar Rapids will be a completely revitalized city.

“The city was just getting to work on some big reinvestment in the downtown area for Riverwalk and things like that, so all those dynamics have to come into play,” Hiland says. “Six years from now, I don’t think people will recognize downtown Cedar Rapids, and I think it will be much stronger than it was pre-flood.”

The commercial real estate community, like the city itself, is back on its feet and working to rebuild downtown. They are anxious to accommodate all local tenants and begin bringing in new business to Cedar Rapids as soon as possible.

“Landlords and tenants have an upbeat attitude,” Hiland explains. “We are all working around the clock to rebuild Cedar Rapids.”

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