City managers highlight ongoing projects in wake of pandemic, derecho

The past year has certainly been challenging, but commercial real estate development in the Corridor is holding its own, as evidenced in a panel discussion during the Corridor Business Journal’s virtual Commercial Real Estate Symposium on March 4. The city managers of Cedar Rapids, Iowa City, Marion, Coralville, North Liberty and Hiawatha shared recaps of the successes – and a few of the struggles – they’ve experienced in a year fraught with the dual challenges of a stifling pandemic and a devastating hurricane-force derecho. Inside, read (in a lightly edited form) what each manager had to say about what’s going well – and not so well – in the commercial real estate market in their communities. Ryan Heiar, North Liberty city manager: The commercial market has been relatively slow in the last 12 months, although I see that changing down the road. We fortunately have not had or are not aware of any closures. There was a lot of concern with the hospitality and restaurant businesses and certainly, we have some that are struggling. We had one closed down, we had one temporarily closed down that intends to open back up shortly. We’ve seen a fair amount of interest in the medical field. Of course, we have UI looking at a substantial facility in North Liberty – a $230 million project that was denied by the certificate of need board. We anticipate they will be going back to them with some additional information and seeking approval. Steindler Orthopedic just purchased some ground in North Liberty and they’re looking at a significant expansion of their business. At P&Z another medical office – a medical spa and salon – is looking to open in North Liberty. With some of these other potentials like the university, we’re getting water and sewer up to the new Forevergreen Road interchange right now. We anticipate seeing some interest out there as well. Lon Pluckhahn, Marion city manager: We were very happy to see in January the opening of our new community rec facility and YMCA. The new one is about 80,000 square feet, compared to the 35,000 at the former YMCA. We have a new headquarters fire station being constructed immediately to the south of it, that we’re expecting to be completed in April, and we’ll be moving that into that in May. We have continued investment in the restaurant sector. We’re going to be seeing our first one that’s more of a sit-down place coming out into the Tower Terrace Road area that will complement medical and personal services investment out there. We still have a lot of opportunities in this area. And we would expect over the next couple of years that it will really grow and mature because the link on Tower Terrace Road between Cedar Rapids and Marion is expected to be completed in 2023. The Marion Enterprise Center continues to be a bright spot, and I think is one of our best success stories from its start back in 2007. Of the original 188 acres, it’s about halfway done. And we’re working with MEDCO [Marion Economic Development Corporation] holding company, the owner, on making a second connection onto Highway 151 to complete the infrastructure buildout. Along our central corridor, we are seeing continuing work and investment, especially along the East End, Sixth Avenue that connects the two token roundabouts for our expanded uptown footprint, and it will be completed this year. Our new library will be an anchor for our Uptown district; it’s more than twice the size of our former facility. With the proposed Broad and Main in the heart of our Uptown district, the Marion Economic Development Company has partnered with the development group that did most of the new development in the Cedar Falls Main Street district to redevelop existing strip mall sites right next to City Square Park. This will be a multi-story mixed-use building coming into the community on the north side of that parcel. And then once that one is completed, there’ll be a second phase building that will add multi-story residential on the south side of the lot. Kim Downs, Hiawatha city manager: Our warehouse activity and light industrial activity has gone very well. In fact, we have very little warehouse space left, and part of that is due to the derecho effect in some of these areas, people needing to find that warehouse space. Flex building still is a positive infrastructure for our area. We did see some of those projects get put on hold. But again, this last week, we had the developers in our area back to the table looking to build, and they will start building this fall and next spring. We certainly have seen expansion with the Home Depot distribution center in Hiawatha, along with BDC’s expansion. The other positive thing we’re seeing is multi-family units. We did a study last year, and just in the next five years, we are about 400 units short of multi-family housing. And then the next five years, the study represents another (shortage) close to another 400 units, single-family and multi-family housing. We have a new developer coming into town, Hodge Construction, they call themselves Hiawatha Village Center LLC. And this is something you’ve certainly seen us talk about before, our desire to create that downtown that Hiawatha really does not have. We have two developers that are working in this particular area – North Center Point Road, Emmons Street and Robins Road. We’re seeing employees slowly returning to the office. I would say that probably 25 to 30% of our office spaces are vacant, but that’s not really much different than what we’ve seen in the past. Hiawatha is certainly not a heavy retail base. It’s a very small portion of our businesses and our community. But they’re starting to see about 75% of their normal business coming back. They are projecting in the second quarter and third quarter, that they’re 90% back to full capacity. Kelly Hayworth, Coralville city administrator: Despite all the activities that are happening right now with the pandemic and other things, people and developers have built right through that. At Coral Ridge Mall, we’ve got two new stores going in, [including] H&M — a large store with 20,000 square feet — that’s remodeling space. Scheels just completed their expansion and Target is undergoing a major remodeling right now. In the Iowa River Landing, we have four new commercial businesses coming in this summer. Anthropologie is one that we’ve worked on for seven years. It’s kind of like Trader Joe’s. They are going to be opening this fall. Some of our older box stores that were empty are being filled up — the old GEICO space, the Art Van space, and the old Dress Barn space, all have projects going right now. Surprisingly, despite the increase in number of hotel rooms in our market, we have two new hotels that are under construction and will be open this fall. The Staybridge in the Iowa River Landing attached to the GreenState Fieldhouse will be opening in April. Then later this summer, the new Best Western in the western part of Coralville will be opening. We do have a soft market from the office standpoint. I think that’s our biggest concern — how many of the companies that are working from home will be coming back. From a residential standpoint, we have over 3,100 units being planned for and started currently. That’s everything from multi-family to single family and everything in between. Geoff Fruin, Iowa City city manager: We were coming off from 2015-2019, just unprecedented growth in a number of different sectors, particularly in multi-family and commercial. We did see a slowdown. We looked back on our building permit valuations, and we took a step all the way back to about the levels we were at in 2011, which are still very strong, but didn’t keep up with those tremendous years we had prior to COVID. There are still a lot of people with project and redevelopment ideas that are coming through the funnel. I expect that we’ll have a good strong rebound here in Iowa City. We have had some folks approach us about conversions of office to residential, particularly in the downtown area. I expect that we’ll continue to field those kinds of inquiries and work through those project ideas with our developer partners. Jeff Pomeranz, Cedar Rapids city manager: In the area of industrial development, we’re seeing an explosion in the warehousing area. These are very large projects. That is an area that is going to continue to grow and develop. Another area that we’re really excited about is a new company that has joined the city of Cedar Rapids but will also be a key player in our entire area – BAE. Obviously, Raytheon Technologies has been very important to development in our entire area, particularly Cedar Rapids. And this new company, a new international aerospace company, has purchased a portion of the Raytheon Technologies business, and is building a very high-tech building out by The Eastern Iowa Airport. They’re retaining a large number of jobs, but also expanding the market as well. As far as our office market, that’s obviously something that we’re watching. Our vacancies are of concern for the future. At this point, we haven’t seen any major change in our vacancy level. One of the things we could see in the future is perhaps taking a portion of retail space and developing that into housing. We also see in the office market some exciting opportunities. At The Fountains in Cedar Rapids, we’re seeing a new office building being developed. You can come up with lots of examples about how retail is stressed. But there are lots of bright spots. Some of it involves reuse. We look at Westdale, for example. It was listed as one of the dead malls in America on the internet for a number of years, but it’s really coming back strong. We’ve got lots of restaurants, most of them of national character. But also, you’ve got the storage facilities, maybe not that exciting from some perspectives, but very good tax base for the community. We also have housing that is being built at Westdale. We’ve got a hotel, and there’s going to be another hotel, coming, and we think there’ll be some senior housing. When you look at reuse, we have a veteran’s health facility that was a prior retail store. The Banjo Block across from our (downtown) library was a very deteriorating commercial area that’s being redeveloped into housing. It’s a $60 million project and is going to have a small retail component as well.