Following a sluggish 2020, immense bounce backs, growth and stabilization came alongside the new year and markets seem to be rounding out 2021 in a mostly favorable position. From retail, industrial, and a booming multifamily investment sector to a balancing office market, every industry seems to be trending in the right direction, according to CBRE | Hubbell Commercial quarterly market surveys.
By far one of the strongest sectors in the Greater Des Moines metro is the multifamily market who is experiencing 95.8 percent occupancy thanks to strong summer leasing and sustainable levels of new supply. Construction levels are also continuing at a modest pace with 310 units added in Q3 alone, bringing the estimated year-end total to around 1,015 units.
The headline belongs to multifamily sales volume which surged to $378 million by the end of Q3 2021. This eclipses 2020’s record activity both in number of transactions and total volume. There were four deals greater than $22 million in Q3 alone.
Of these units, only one is set to go vertical in 2022 and that is Hubbell Realty Company’s Level at the Bridge District, a 114-unit apartment community that will round out that neighborhood. However, Altoona and Ankeny still account for 54 percent of the construction activity.
Read the full report on Multifamily here.
While leasing activity rebounded from 2020 levels, vacancy rates tightened across the metro. Downtown and big box net absorptions remained positive for the second consecutive quarter, reflecting continued demand recovery from the pandemic. Year-to-date investment volume also swelled to $153 million, which easily eclipses 2019’s record total of $139 million.
The downtown core specifically recorded 16,906 square feet of positive absorption from year-to-date with the leading area being the Gray’s Area, south of MLK Jr. Parkway. This is being driven by the strong lease-up of the ground floor at LINC at Gray’s Station and notable tenants such as Starbucks, Table 128, Craft Bru and Mad Meatball joining the downtown scene.
Read the full Retail report here.
With roughly 1.4 million square feet under construction in the Greater Des Moines area, the industrial sector continues to receive headlines and attention and will likely do so well into 2022.
In addition to Kemin, Kreg Tool, Amazon Inc., and others expanding their footprint in the Ankeny Crosswinds Business Park area, more warehouse facilities are emerging due to the continued demand. Ryan Companies recently added rail track to their DSM Industrial transload facility site off of SE 14th Street and MLK Jr. Parkway – one of the first facilities to put the focus on railcars instead of trucking.
"It's adding that one factor that we don't really have in the market," he said. "We have air at Des Moines International Airport, and we have trucking on 80/35, so it adds that third factor that benefits all users,” explained Harrison Kruse, Senior Associate with CBRE| Hubbell Commercial. “The transloading facility also could mean that more logistics, supply chain and distribution companies seeking the economy of rail shipping will consider Des Moines for relocation or expansion.”
Hubbell Realty Company’s Crosswinds II facility is clocking in at 225,000 square feet of customizable space and is currently on the market. Of the 1.4 million square feet, roughly 70 percent will deliver in 2022.
Read the latest Industrial report here.
Undoubtedly, one of the hardest hit sectors across the region has been the office. The overall vacancy sits at a 16.7 percent while the downtown core sits just shy of 20 percent. Year-to-date activity is down 22 percent in number of new deals reported and 47 percent in total volume. Sublease inventory also swelled to approximately 364,000 square feet in Q3, the highest level since 2011.
While the market can’t expect much speculative office construction soon, there will be prime sublease opportunities in Class A and B spaces both in downtown and suburb locations.
Read the latest Office report here.