MIDDLE MARKET HIGHLIGHT, MAY 2007

Cedar Rapids
Dan Marcec

The city of Cedar Rapids has experienced a tremendous amount of growth in just the past 2 years, as more than 3,000 jobs have been added to the market and capital investment during that time has been approximately $825 million. The most significant expansion has been in the food ingredients and bio-processing industry, as well as in advanced manufacturing and insurance companies.

Solihull, England-based Aga Foodservice Group broke ground in April for a new $6 million, 90,000-square-foot production facility for Aga Commercial Products in the Bowling Street Industrial Park in Cedar Rapids, Iowa.

Priority One, which is the economic development division of the Cedar Rapids Area Chamber of Commerce, facilitates a lot of this growth, dealing specifically with basic sector economy rather than all-encompassing commercial real estate. Priority One has helped attract Aga Foodservice Group, which recently broke ground on a new manufacturing plant that will be complete in approximately 1 year, and Cole’s Quality Foods, a manufacturer of frozen goods that is building a new $18 million facility that will add 60 jobs to the market.

“Our strategy is face-to-face interaction, as we travel to Europe two or three times a year and throughout the United States and Canada working with companies looking to expand to Cedar Rapids, or with companies already here looking to expand within the market,” says Mark Seckman, president of Priority One. “Our angle is one-stop shopping, as we bring in our partners in the city and act as a facilitator to these companies for all their needs in expanding here, in addition to introducing them to other companies in their industry to understand the benefits of doing business here.”

In general, most of the expansion in these industries has occurred in privately owned industrial and office parks throughout the city. The industrial vacancy rate remains low at approximately 5 percent, and there are a lot of build-to-suit opportunities in that sector. The office market is a little slower, with vacancies around 15 percent, and there has not been a high demand for new construction. The residential market, especially single-family homes, has been growing significantly, and that sector of the market boasts a vacancy rate of only 4 percent vacant. With an increasing residential population comes essential retail, which is popping up in Cedar Rapids mostly in the form of neighborhood and strip-style retail centers.

Again, however, the most significant growth has been in Priority One’s target industries. Both Archer Daniels Midland and Penford Products are building new ethanol plants in the food ingredients and bio-processing sector, the former investing $545 million into its new development, which is undergoing site work and should be complete in a little more than 2 years. Penford’s $40 million facility, on the other hand, will be complete in approximately 12 months; both facilities are built with sophisticated manufacturing equipment.

Rockwell Collins, which develops electrical equipment for the aerospace industry, is investing $20 million in two projects that will add 350 jobs to the market. The company, which is headquartered in Cedar Rapids, already has 8,000 employees, and is looking to create 700 to 800 more. Further, Aegon, a Dutch-owned insurance company, is looking to add 400 employees to its base of 3,100 already in the area. The firm recently purchased land to build a new $20 million facility.

Nordstrom Direct, the catalog fulfillment e-commerce branch of Nordstrom’s department store, is undertaking a $50 million expansion and adding 525 employees. Also, Clipper Windpower has invested more than $20 million in a new facility, now employing approximately 140 people.

“I can see the trends continuing this way, both in manufacturing and in bio-processing,” Seckman says. “Our focus is capital investment and not labor; in other words, we want to see investment but require employees that are highly skilled, allowing companies to pay higher wages.”


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