This story is a part of the CBJ’s Newsmakers edition. This year-end wrap-up from the staff of the Corridor Business Journal is a compilation of the year’s most noteworthy articles and projects, as told through stories that appeared in the bi-weekly issues of the CBJ. This story was originally published in August 2023. Employers and […]
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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.
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.”
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.
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.
“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.”
Newsmakers update
Corridor downtowns continue to adapt to an economic environment altered by post-pandemic hybrid work routines.
“We’re changing, we’re evolving; we’re getting more people living down there,” said Nikki Wilcox, director of strategic development for the Cedar Rapids Metro Economic Alliance.
Those efforts are reflected in a new downtown master plan formally adopted by the City Council Dec. 5. A collaboration between CRMEA, the city, and the downtown Self-Supporting Municipal Improvement District (SSMID), the plan will guide area development for the next five years. A Denver-based consultant surveyed 1,600 residents for the plan.
“The overwhelming number-one thing that people want is to activate the river,” Ms. Wilcox said. “We have this amazing asset in our backyard, let’s utilize it.”
A first step will be developing Second Avenue across Mays Island “into some kind of festival street,” Ms. Wilcox said. To test the concept, the bridge will be temporarily closed to traffic to accommodate an event next summer.
“We don’t know yet what that event is,” she said.
In Iowa City, the purchase of a lot at 21 S. Linn St. will drive neighborhood development, although its direction remains to be determined.
“The city in the next year or years will be looking at what they want for that property,” said Betsy Potter, executive director of the Iowa City Downtown District. “That’s getting closer to a real conversation on what that pivotal corner will look like and what the community is looking for. It takes a while to get the process underway, but we’re excited to be talking about it.”
“The city has a good process established for that,” said Austin Korns, director of economic development for Greater Iowa City, Inc. “Whatever they end up moving forward with there, I’m sure it will be positive. The Chauncey, that’s the result of a similar process.”
Mr. Korns said downtown Iowa City benefits from regional projects, citing the University of Iowa Hospitals expansion, and Steindler Orthopedic Clinic’s new facility in North Liberty as examples.
“Seeing some stability in the cost of construction has kept things moving along, although interest rates are still difficult,” he said.
