HEARTLAND SNAPSHOT, MAY 2004

Quad Cities

Jeffrey Miller, Partner, Premier Partners

Healthcare construction remains a leader in local development in the Quad Cities (an area consisting of Davenport and Bettendorf, Iowa; and Rock Island, Milan, Moline and East Moline, Illinois). Other active property types in the area are owner-occupied facilities, build-to-suits, and office and industrial projects. “Low interest rates will signal a continued trend in these areas,” says Jeffrey Miller, a partner with Davenport-based Premier Partners.

Birchwood Fields at Crow Valley Plaza is the newest Class A office park development in the Quad Cities. The development is located in Davenport at the northeast quadrant of Interstate 74 and East 53rd Street. Two corporate headquarters facilities are currently under construction in the office park: a 75,000-square-foot building for the Mississippi Valley Regional Blood Center and a 25,000-square-foot building for Russell Construction Company. Ground will be broken this month on a 30,000-square-foot facility that is 50 percent pre-leased to Merrill Lynch.

Trinity at Terrace Park recently opened its new $72 million, 150-bed hospital project. The facility is adjacent to a $6.5 million, 60,000-square-foot medical office building that is being developed by The Alter Group and is 75 percent pre-leased.

Genesis Medical Center also recently opened a 13,800-square-foot gastroenterology facility on its 18-acre campus in Crow Valley Business Park in Bettendorf. This is the first phase of an aggressive development for Genesis, Miller says.

In downtown Davenport, One Renaissance Plaza — a 90,000-square-foot office project developed by Ryan Companies — will welcome its first two local corporate tenants by this summer. Another office building under construction in downtown is the Ag/Tech Center, a 30,000-square-foot facility, located at Ripley and 4th streets. It is pre-leased, in part by Great River Capital. Also, the Figge Art Museum is scheduled for completion early next year.

Last December, The Home Depot opened its initial Quad Cities location, a 115,000-square-foot store, in Duck Creek Plaza in Bettendorf. Additional plans for Duck Creek Plaza include an expansion of Marshalls and the creation of new retail space for local tenants. St. Louis-based Schnuck’s Grocery will open its first area store in Duck Creek Plaza late this year. This new store signals Schnuck’s willingness to compete with Des Moines, Iowa-based HyVee Food Stores for a share of the Quad Cities market.

HyVee Food Stores is scheduled to break ground on its new 80,000-square-foot store in Milan this year. HyVee has also purchased the 75,000-square-foot former Eagle Food Store at Middle and Devils Glen roads in Bettendorf. The company plans to relocate its current store from the Glenroads Shopping Center to the former Eagle site.

O’Rourke Distributing has completed the rehabilitation of the 117,000-square-foot former Wal-Mart store on Elmore Avenue in Davenport. O’Rourke Distributing will use 80,000 square feet of space for its headquarters and warehousing needs. Also at the site, Klavohn Furniture has leased 25,000 square feet of space, and Iowa Oriental Rug Company has leased 5,000 square feet of storefront space.

The Rock Island Arsenal Development Group, a subsidiary of the Quad City Development Group, has been created to market available space on the Rock Island Arsenal in Rock Island. This 946-acre island in the Mississippi River currently houses a state-of-the-art manufacturing, administrative and logistics facility for the Department of Defense. The Arsenal is the second largest employer in the greater Quad Cities area and has been a military installation since the early 19th century. The inventory, which consists of manufacturing, warehouse and office space, is ideal for companies looking for a high-security location or for companies that deal in the defense contracting business.

The city of Moline’s Bass Street Landing project, located on the riverfront in Moline, has broken ground on its mixed-use condominium, office and retail building. This project is an extension of the city’s John Deere Commons area.

Vacancy rates in the Quad Cities range between 7 percent and 15 percent for office space, and between 5 percent and 10 percent for industrial space. “The area has been cautious regarding the speculative market for office and industrial projects during the past 10 years,” Miller says. “Vacancy rates have been stable during this period of time. Rental rates also have remained stable for existing industrial and office space, with rental rates rising for new office construction and retail development.

Two major projects will shape the future of commercial and commuter traffic patterns in the Quad Cities, Miller says. The $200 million West Rock River Bridge will link Moline, Rock Island and Milan; it will open additional areas for development; and it will increase access to the Quad Cities Airport. The project is scheduled for completion in fall 2005. The second project is the construction of a new I-74 bridge spanning the Mississippi River between Moline and Bettendorf. The project, estimated at $800 million, will relieve traffic congestion and facilitate new commercial opportunities on both sides of the river. The project is currently in the design phase with an estimated completion date of 2011.

The I-74 corridor between Davenport, Bettendorf and Moline remains an area of interest for retail and office developers and users. This corridor is a main artery in the area, and it offers convenient access to development from both sides of the Mississippi River, Miller says.

In Davenport, the area surrounding West Kimberly Road and Fairmount Avenue will see continued growth spurred by the Wal-Mart Supercenter that opened last fall.

In Moline, the John Deere Expressway — on either side of I-74 — will see expanded development. Medical and retail development will continue at 7th Street and near 70th Street toward Deere Run golf course, which is home to the PGA Tour’s Deere Classic.

“The Quad Cities area continues to sustain itself based on its tradition of financial conservatism,” Miller says. “Although unemployment remains at unacceptable levels, the manufacturing anchors of the area — such as Deere & Company, Alcoa and The Rock Island Arsenal are adding new jobs as they strengthen their national and international reach. Housing sales are at an all-time high in the area, and should remain there, because of low mortgage rates. Commercial real estate will continue its steady pace to lead the way to a revitalized market.”

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