U.S. Bank building sale offers challenging, exciting opportunity

The sale of the former U.S. Bank building in downtown Cedar Rapids, and its associated properties, is an exciting but challenging opportunity – for the right developer, according to the property’s owner. “This property is really prime for redevelopment,” said John Breitinger, executive managing director of Cushman & Wakefield, the commercial real estate firm that owns the former bank at the corner of Second Avenue and Third Street SE. “But it’s a complex deal. We just need to find the right buyer to take it on.” The main portion of the U.S. Bank building at 222 Second Ave. SE has been vacant since the bank closed its retail branch in the building in September 2023, ending the building's 98-year consumer banking history. Plans now call for three separate facilities to be included in the sale – the original 12-story, built in 1926, with additions completed in 1964 and 1980, totaling just over 186,000 square feet; a surface parking lot at the intersection of First Avenue and Third Street SE, across from the Alliant Energy PowerHouse convention facility; and a 256-space parking garage east of the original bank building, connected to the main building by a second-story skywalk. The properties are proposed to be redeveloped as a package, Mr. Breitinger said. “The pieces are worth more together than they are separately,” he said. The ideal plan, as Mr. Breitinger sees it, will include a combination of hospitality and upscale housing elements, with on-site amenities not generally available in recent developments. He said housing demand downtown has been strong in recent  years, and despite the ongoing construction of a new AC by Marriott Hotel in the Kingston Yard development, “there appears to be strong demand for hospitality in the market” as well. “I think that the highest and best use for the property would likely be a hotel with potentially some upscale apartments on the surface parking lot, sharing an amenity package between the two, and then the parking is there as well,” Mr. Breitinger said. “But the structure works for office, works for residential, works for a hotel. So we're talking to the developers and trying to get a sense of what people who do that think the market will support.”

About 45% of the space on the bank’s upper floors are leased, primarily by U.S. Bank for its Business Banking, Wealth Management and other offices, and by the Simmons Perrine Moyer Bergman law firm. “They both have leases, and we’re in talks with both of them about redevelopment,” Mr. Breitinger said. “That’s one of those issues that’s going to have to get worked out.” The Gazette also has a long-term lease for its offices on the first floor of the U.S. Bank parking ramp, and there’s been no indication that they plan to relocate from that space any time soon. “We’re glad to have them there,” Mr. Breitinger said. “I suspect it’ll depend on what happens with the property.” Market conditions may end up playing a significant role in redevelopment plans, Mr. Breitinger said. “Costs have risen, interest rates have risen, capitalization rates have risen, all of which is really tough,” he said. “With all that uncertainty, it has made developers more cautious. There's been an awful lot of housing built downtown, and it’s sold well. That market seems to be slowing, so somebody would have to feel comfortable that the market's ready for and would support a differentiated product. And the same thing is true of hospitality.” A specific asking price hasn’t been set for the properties, Mr. Breitinger said, but according to city assessor’s office records, the bank building sold for $8.4 million in October 2021. In terms of redevelopment, the historic significance of the properties, particularly the main bank building, can’t be overlooked, Mr. Breitinger said, adding that he’s well aware of the building’s significance to the community. “It’s an asset here,” he said. “With the history and character of this building, everyone we’ve talked to has said this is a community treasure, and they’d like to be a part of it. Typically in these historic structures where there’s a good structure that can be reused, city and federal historic tax credits help get these projects done.” The original 12-story building, a prominent structure at the corner of Second Avenue and Third Street SE, was designed by the Weary and Alford architectural firm of Chicago and constructed in 1925 for the Merchants National Bank, according to a post by the Society of Architectural Historians’ Archipedia. It has become well-known in the community, especially for its ornate, multi-story lobby. The building “was the city’s most distinguished skyscraper of the twenties,” the post says. “The architects employed the traditional tripartite design in the building; there is a base articulated by three-story arcades, a neutral shaft of paired and single double-hung windows, and then a terminal attic composed of arched windows, decorative cartouches, and a strongly cantilevered roof. The most unusual feature here is the way in which the three-story base has been designed to be experienced almost as a separate podium upon which the rest of the building has been placed.”