Employers and landlords are edging toward the future of the Corridor’s downtowns. “They’re trying to figure out what the world looks like, and are people going to come back to the office?” said Jon Dusek. “I think the three-day (in-office) work week is probably going to be the norm.” Mr. Dusek, president of Armstrong Development […]
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Employers and landlords are edging toward the future of the Corridor’s downtowns.
“They’re trying to figure out what the world looks like, and are people going to come back to the office?” said Jon Dusek. “I think the three-day (in-office) work week is probably going to be the norm.”
Mr. Dusek, president of Armstrong Development Company, was sitting at a desk in the Armstrong Hub, the 25,000-square-foot downtown co-working space opened in mid-March. With a staffed reception and waiting area, private meeting rooms and semi-private lounges, fresh coffee, and the latest office equipment, it’s a response to and a potential model for the future of downtown offices post-pandemic.
“We had a partial tenant on about a third of the floor, and they went remote,” said Mr. Dusek. “This one had been vacant for a while. I think most people want nice, clean spaces that are ready to go. They want it to be easy.”
The Hub is just the latest transition for the Armstrong Centre at 222 Third Ave. SE in Cedar Rapids. Mr. Dusek noted the building was a department store through the early 1990s, when retail moved to malls. The fourth-floor space is adjacent to 6,000 square feet leased to GoDaddy, which moved operations from a call center in Hiawatha that’s now for sale.
“It’s definitely a change to the entire office culture around our region and across the country,” said Austin Korns, director of business development for the Iowa City Area Development Group. “These behemoths of offices that we have, there just isn’t a need for that anymore.”
Conversion to co-working spaces is one immediate response as commercial real estate adjusts to hybrid work routines.
“We’ve seen companies that have opened office spaces here, and it’s being used in a different manner,” said Betsy Potter, executive director of the Iowa City Downtown District. “People still want and need that space. You still need a place to entertain clients, or have meeting space. There’s still demand.”
That’s the philosophy behind the Armstrong Hub: a space for small-to-medium-sized enterprises whose employees now work mostly from home but who also need a place to meet with clients, to train staff, or for the occasional all-hands gathering.
“They want a place where they can have a larger meeting, but they don’t want to have it in a rental space,” Mr. Dusek said. “They don’t want to pay for space they’re going to use once a month for a few hours, so we have shared, small huddle rooms to medium-sized conference rooms to larger training rooms.”
The demand for parking in downtown Cedar Rapids - “the number-one way to understand where we’re at” – is now 55-60% of pre-2020 levels, according to Jesse Thoeming, Downtown District executive director for the Cedar Rapids Metro Economic Alliance. The eight downtown ramps’ daily occupancy averaged more than 90% before 2020.
“I’ve never seen anything like it in 30 years,” said Scott Olson, commercial broker with Skogman Realty. He said some 400 Cedar Rapids office spaces, some up to 90,000 square feet, are currently listed on the Multiple Listing Service. “It is going to be different, no doubt about that.”
Major downtown employers have adopted hybrid work routines. GreatAmerica Financial Services has averaged 60% of employees in-office weekdays, spokesman Matt Doty said. At Alliant Energy, “Many of our employees work remotely a few days a week and balance it with the value of in-person time together at our office and field locations,” spokeswoman Melissa McCarville wrote in an email.
Based on market listings, parking use, and reports from employers, Mr. Olson estimates 10,000 workers are downtown on weekdays, down from 15,000 in 2019.
The University of Iowa drives some continued demand for office space in downtown Iowa City.
“It isn’t that we aren’t going to have an office anymore, it’s what we are doing to rethink what we want in an office,” Mr. Korns said. “Having those places for people to come together and hold events and just work together is still important.”
Research spun off from the university drives some new uses, Mr. Korns said.
“What are those industries that have to be done in person?” he said. “We see so much success in Coralville in biotech, whenever wet lab space becomes available people grab it. That’s an incredible asset for our region. A lot of companies we take through office spaces are in need of lab space. That’s what it’s going to end up being.”
The transition has accelerated efforts to bring residential development to downtown Cedar Rapids. About 1,000 residential units are on track for completion through 2024.
“We were adding about 250 units a year (pre-pandemic),” Mr. Olson said. “Now, we’re going to have a surge.”
“More people want to live downtown than ever before,” said Mr. Thoeming. “That has just blown up.”
Some of that demand is driven by remote work for out-of-town employers whose workers seek a cheaper place to live.
“You don’t have to live in Chicago if you work in Chicago any more," Mr. Thoeming said. “You cannot live in a major metropolitan area with a middle-class income and expect to have a quality of life.”
More downtown residents should bring demand for restaurants and nightlife options. Coffee shops that once catered to lunch hours may shift to after-hours.
“Downtown is going to be more event-centered,” Mr. Thoeming said.
“Twenty years ago, we were an urban office park,” Mr. Dusek said. “There certainly wasn’t a lot of housing.”
Mr. Olson sees ancillary businesses such as coffee shops and cafes shifting business hours.
“If you come downtown now, you’ll see some of the new restaurants don’t open until 3:00,” he said. “But we’re going to have more people coming downtown - just for different purposes.”
“You come down here on a Friday or a Saturday night when there’s stuff going on at the theaters, the restaurants are packed,” Mr. Dusek said. “It’s kind of reversed itself, so now we’ve got to work on the daytime population.”
That will be addressed in a new downtown Cedar Rapids master plan now being developed by the city, the Economic Alliance, and stakeholders like Armstrong. A Denver-based consultant is preparing the plan for release this fall.
“We’re actually in a good place moving forward,” said Mr. Dusek, a member of the planning committee. “It’s easy to get downtown. We have plenty of parking capacity close by. We’re going to really be focusing on Third Street as a connector from the (Alliant Energy PowerHouse) arena down to NewBo. Make that a signature street.”
