Jeffrey Miller Partner Premier Partners

The Quad Cities area includes Davenport and Bettendorf, Iowa, and Rock Island, Moline and East Moline, Illinois, and a statistical marketing area population of 360,000. The area usually services national and regional tenants, but it has experienced slow leasing activity for all property types during the past several years. This trend is indicative of the national real estate market slowdown during the same time period. “Yet, spurred by low interest rates, local companies are expanding current operations and leading the build-to-suit activities for new construction,” says Jeffrey Miller, a partner with Davenport, Iowa-based Premier Partners. “With a favorable economy, I expect this trend to continue.”

Most of the Illinois Quad Cities are land-locked, situated between the Mississippi and Rock rivers, but Davenport and Bettendorf are blessed with available land. “As a result, the majority of development is taking place in the Interstate 74/Interstate 80 corridor in Iowa,” Miller says. Much of this new construction is occurring in the area’s key economic sectors: advanced manufacturing, healthcare and information solutions.

In May, S.J. Russell Company broke ground on a 25-acre, Class A office development called The Aspens at Crow Valley Plaza. This three-phase development, located in the northeast quadrant of Interstate 74 and 53rd Street in Davenport, will create approximately 250,000 square feet of professional- and medical-related office buildings in a private, heavily landscaped setting. The first phase of development will include a 75,000-square-foot corporate headquarters for the Mississippi Valley Regional Blood Center and a 25,000-square-foot corporate facility for Russell Construction Company.

“In an effort to better meet the needs of Quad City residents, the area’s two local hospitals currently are expanding or enhancing their operations,” Miller says. For example, Trinity Medical Center is building Trinity at Terrace Park, a 150-bed hospital in Bettendorf to replace its North Campus. The $72 million project will be completed in December. Trinity also is building a 60,000-square-foot, three-story out patient medical office building next to the new hospital at a cost of $6.5 million.

In addition, Genesis Medical Center recently unveiled plans for a new campus located on 16 acres in Bettendorf. The first phase will be a 13,800-square-foot facility, which will offer a variety of healthcare services.

In Davenport, the city is implementing extensive efforts to attract visitors, residents and businesses to its downtown. For example, River Renaissance is a $113.5 million downtown revitalization project that includes the development of two new parking ramps, the Figge Arts Museum and the agriculture/technology venture capital center. It also includes the renovation of John O’Donnell Stadium and the redevelopment of a historic building into a museum and cultural center.

“The revitalization efforts are sparking excitement and new development,” Miller says. One such example is Mississippi Plaza, which will be the first new office building in downtown Davenport in 20 years. The $14.3 million, six-story, 90,000-square-foot building is scheduled for completion in May 2004. The developer, Ryan Companies US, expects it to be the first of a two-phase project.

There is activity in the retail market as well. Duck Creek Plaza, which was Iowa’s first enclosed mall, is undergoing major renovation as part of a two-phase project. The first phase includes the construction of a 115,000-square-foot The Home Depot, and the second phase includes construction of 140,000 square feet of additional retail space. “This project highlights the importance of adaptive re-use of older retail centers,” Miller says.

In Davenport, Wal-Mart recently relocated from a 117,000-square-foot store to a new 220,000-square-foot Supercenter. Locally based O’Rourke Distributing purchased the vacated space almost immediately. The company will use 80,000 square feet for a corporate headquarters and warehouse space. The remaining 37,000 square feet, located at the front of the building, will be renovated for retail space for up to six tenants.

Wal-Mart also is constructing a 207,000-square-foot Supercenter in northwest Davenport that will stimulate additional development of surrounding properties. The $20 million project, being developed by THF, is expected to be completed this summer.

Some of the more active developers in area include S.J. Russell Company, THF, Ryan Companies US and Equity Growth Group. New tenants in the area include Dillard’s at Davenport’s NorthPark and Moline’s SouthPark malls, The Home Depot at Duck Creek Plaza, Barnes & Noble at NorthPark Mall and American TV & Appliance on Elmore Avenue.

Major leases that have been closed recently include QC Consolidation and Distribution’s lease of 552,000 square feet in Davenport’s Eastern Iowa Industrial Center; United Title & Settlement’s lease of 10,500 square feet in the American Bank Building in Davenport; and Iowa Health Solutions lease of 15,000 square feet in the AAA Building in Bettendorf.

The vacancy rates in the Quad Cities range from 7 percent to 15 percent for office space and from 5 percent to 10 percent for industrial space. According to Miller, during the past 10 years, the Quad City area has been a cautious, speculative market for office and industrial space, and vacancy rates have been stable. In addition, rental rates have remained stable in existing industrial and office product, while rental rates have increased in new office construction and retail developments.

The city of Davenport currently is working on a funding package to upgrade and service the northwest quadrant of the city with utilities and a new primary sewer system. “This will have a great effect on the Interstate 80/280 corridor,” Miller says. It will open thousands of acres of underused land to higher and better uses, which in turn should add to the new job growth potential for the area.

“While the Quad City investment market has some activity, this is the longest sustained market downturn this area has experienced,” Miller says. However, Miller remains optimistic about the market. “I am confident that we will see an economic catalyst that will lead the way to a revitalized market,” he says.

©2003 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.