Can you see it?
A changing downtown skyline is on the horizon
Friday, October 11, 2013 7:00 AM
Here is some future talk: The downtown
Des Moines Redevelopment Co. is growing
The 24 member nonprofit group has gained traction among influential businesses and business leaders and has added seven new members. Here is a list of its current makeup:
Casey’s General Stores Inc.
Hubbell Realty Co.
GuideOne Mutual Insurance Co.
Nationwide Mutual Insurance Co.
The Weitz Co.
Denny Elwell Company LC
Employers Mutual Casualty Co.
JSC Properties Inc.
Kum & Go LC
Michael G. Gartner
MidAmerican Energy Co.
Principal Financial Group Inc.
The Graham Group
The Waldinger Corp.
Wellmark Blue Cross and Blue Shield of Iowa
William C. Knapp LC
Source: Downtown Community Alliance
Des Moines skyline is on the verge of a change the likes of which hasn’t been seen since the 1990s, when Principal Financial Group Inc. constructed the tallest building in the city at 801 Grand Ave.
An announcement last month that the Riverfront YMCA at 101 Locust St. is on the market for $5.5 million has triggered talk of dramatic change downtown, from the 56-year-old building’s location along the Des Moines River north to the Iowa Events Center.
That’s because of a chain of events set in motion in November 2012, when a land deed was filed that revealed what city leaders knew had been afoot for the previous two years. Bill Knapp, who had been instrumental to development efforts downtown since buying the Hotel Savery in the late 1970s, had succeeded in negotiating a complicated real estate deal that was going to solve problems and create opportunities.
The deal would place the former J.C. Penney’s Co. Inc. building in the hands of Polk County, the county’s former convention center, called the Plex, in the hands of the YMCA of Greater Des Moines, and the YMCA’s headquarters along the river in the hands of a developer. Many consider the YMCA site the jewel of downtown properties, a little more than 1 acre where city leaders picture a grandiose high-rise apartment and commercial building.
Knapp is the first to say that he was not the lone soldier in the deal. Along with Jim Cownie and others, he persuaded other influential business leaders and the city’s most vital corporations to form a nonprofit called the Des Moines Redevelopment Co., a throwback to a similar organization first formed in 1961, that would buy and hold land for future development.
The development group filed the deed that drew so much attention last fall. The group had bought the former Allied Insurance Co. building just southwest of the Iowa Events Center for the eventual construction of a four-star hotel and convention center complex, a project city leaders considered crucial to downtown’s evolution into a 24-hour city teeming with residents, workers, shoppers, casual tourists and revelers.
City leaders are busy interviewing potential developers of such a hotel.
“The events center hotel will change the skyline. Des Moines will look and feel different when it is done,” said Matt Anderson, who joined the city of Des Moines a little more than a year ago as assistant city manager in charge of economic development.
During his time on the job, Anderson has seen a rash of significant development projects, some large, some small, even some head-scratchers, that have added or will add more downtown housing, restaurants and cultural amenities.
Downtown is in a growth period that is championed by downtown and regional leaders who believe the area’s growth is vital to economic progress in Greater Des Moines.
Projects are being completed, launched and announced. Symbols of downtown’s decline and resurgence are getting attention.
Renovation of the Younker’s building is underway; the nearby Hub Tower is gaining office tenants after standing nearly vacant just three years ago. The county will expand its courts and some administrative operations into the J.C. Penney’s building. (The company whose flight from downtown in 1986 signaled the withering of retail in the central business district.)
A renovation of the Hotel Randolph has been announced, a project that has confounded developers for more than a decade. An industrial wasteland south of Martin Luther King Jr. Parkway is set for development that could reach hundreds of millions of dollars. And, a historic row house has been saved from the wrecking ball and will contain apartments and a restaurant in the East Village.
Kevin Crowley, who leads Iowa Realty Commercial, doesn’t hesitate to say downtown, stretching from the Western Gateway to East Village, from the Raccoon River to Interstate 235, is on the cusp of a “golden age.”
In the beginning ...
If there is a starting point to a year’s worth of significant startups, look no further than the $238 million remodel of Principal Financial Group’s downtown campus, Anderson said.
To be accurate, even during the recession and into the slow recovery, there were plenty of signs of life downtown, most notably in the rehabilitation of historic industrial and office buildings, some in various degrees of financial stress, into apartment buildings. Some big projects were wrapping up. The Davis Brown Tower opened in 2008, and Wellmark Blue Cross and Blue Shield moved into its corporate headquarters in March 2011.
Then late last year, a couple of property sales drew attention to what community leaders had known for some time was brewing under the surface. A colossal land swap was being negotiated that would result, eventually, in renewed vitality downtown and a dramatically different skyline.
When Des Moines Redevelopment, a nonprofit that is made up of local businesses and community leaders, bought the former Allied Insurance Co. building and a majority interest in a nearby parking lot in November 2012, the big-picture thinking began to come into focus.
Just as important, a range of smaller developments that are either under construction or in the planning stages could help add substance to dreams of downtown becoming a 24-hour city.
The following is a look at projects large and small that will change the face of downtown and, according to Anderson, forever alter its skyline. First, we start with how we got here.
Enter a consummate deal-maker
Des Moines Redevelopment’s articles of incorporation were filed on Aug. 22, 2012, by Des Moines attorney Steve Zumbach, who was told to put the legal trappings on an organization of local business leaders that had been two years in the making. Property deals were about to be filed.
The call came from Gerry Neugent, president and chief operating officer of Knapp Properties Inc. It seems that his boss, Bill Knapp, was on the verge of pulling off a deal that had been in the works for two years. By the time Des Moines Redevelopment came together, Knapp was not standing alone.
“There were meetings going on with the city, and different people for years talking about having an organization, like in the old days they had the Des Moines redevelopment corporation,” Neugent said. “It just wasn’t getting anywhere. Bill got involved and it just got traction.”
Knapp said every project needs a leader; that’s just the way things get done.
“Anything that happens, you need someone to be the leader who gets it going because everyone is busy,” Knapp said. “No one person gets anything done. This is a great city to go to for support for a project that is for the good of communities.”
When Knapp got involved, there were big issues standing in the way of downtown development plans.
PROBLEM ONE: The aging Riverfront YMCA was in need of new downtown digs that would help boost its membership and help it to draw young professionals who worked downtown.
PROBLEM TWO: Polk County’s court system had outgrown its historic, but cramped, courthouse at Fifth Avenue and Mulberry Street. Polk officials needed help finding space and rehabilitation dollars to expand.
A solution to both problems seemed obvious, to Knapp at least.
The former J.C. Penney building is conveniently located due north of the Polk County Courthouse on Fifth Avenue. At the time, it was owned by Wellmark Blue Cross and Blue Shield.
“The first thing that had to be done was that the county needed that building for expansion. It took a couple of years to get this done,” Knapp said. He noted that Wellmark Chairman and CEO John Forsyth was a tough negotiator.
Knapp found himself in an old-fashioned real estate transaction. This ended with Wellmark deeding the J.C. Penney building to Polk County for $500,000, provided that Polk County would give its abandoned Polk County Convention Complex at Fifth and Grand avenues to Wellmark. Wellmark then sold “the Plex” to the YMCA for $4.5 million. A big perk: Wellmark gets the naming rights to the new Y, a value that Knapp figured might be priceless. Wellmark also deeded a nearby parking lot to the YMCA for the construction of a 50-meter swimming pool.
“This Y is really something that will set the stage,” Knapp said.
Rick Tollakson, president and CEO of Hubbell Realty Co., has been in the thick of downtown development efforts for the better part of four decades. He believes the need to find a home for the YMCA was a key to making the land swap happen. Tollakson is one of several people credited with putting the complex deal together.
“We’re taking the Plex and turning it into a major tourist attraction,” said Tollakson, a YMCA board member who noted its pool will attract big swimming events.
Running a close second in elevating the downtown profile was the leadership that put together the purchase of land for a convention center hotel.
“You had all of these things working independently of each other, and the group said, ‘How can we make all of this happen?’” Tollakson said.
Two more important puzzle pieces
If all of the pieces come together according to plan, construction on a convention center hotel could begin by the end of 2014, Tollakson said.
Those pieces include finding a hotel developer, and interviews are underway to find that company. In addition, the city hopes to use a law that was approved by the Iowa General Assembly to defray development costs. Des Moines will enter into a competitive process to have land near the Iowa Events Center qualify for the reinvestment tax credits.
Qualifying projects need to be “game changers,” Tollakson said, and he clearly believes the convention center hotel fits that description.
But there are other pieces falling together.
CBRE/Hubbell Commercial recently listed the Riverfront YMCA for sale for $5.5 million. If a buyer isn’t found soon, Des Moines Redevelopment will pick up the property under a call contract that was filed in June.
The Riverfront YMCA occupies what many consider the premier development spot in Des Moines, overlooking the Des Moines River and the Principal Riverwalk, with a view of the World Food Prize Hall of Laureates.
The YMCA property is drawing interest from local developers and investors from around the world, said Tim Sharpe. Sharpe and Linda Gibbs, who manage the private capital group in Iowa for CBRE/Hubbell Commercial, have the listing on the property.
Leaders envision a piece of eye-pleasing architecture that will rise several stories and include restaurants and possibly other retail spaces, with upper floors filled with apartments carrying pricey rents.
“The higher you go, the more people will pay,” Anderson said.
High rents will be needed to support development costs.
Knapp said the site is worth more without the Riverfront YMCA building, which was built in 1957 on the site of the former Des Moines Coliseum, than it is with it.
“The one thing that is missing downtown is higher-end rents of $2,000 to $2,500 a month,” he said.
Another big move by Principal
Not to be lost in land swaps and visions of tall buildings are other projects that fit the sensibility of a 24-hour city. Some will add more apartment buildings and hotels on what for years has been wasteland south of downtown. Others just trigger the imagination because of their novelty.
But there also was the very significant announcement of Principal Financial Group’s plans for a $238 million facelift at its downtown campus.
“It represents so much more than bricks and mortar,” Anderson said.
The Principal renovation makes the statement that the company, with its worldwide reach, is committed to staying downtown. The changes it has planned have much to do with its changing workforce. A company that once employed primarily claims processors has a business model that relies on Internet technicians, asset managers and attorneys.
“That is an important demographic shift,” Anderson said.
For one thing, it brings the promise of a workforce that will want to live and work downtown, where community leaders hope for a population boom that will lead to more retail offerings.
“Retail is not something you can choose,” he said. “It will come when it sees the buying power.”
The Principal investment is an important recognition that the city holds promise for the future.
“Businesses will spend money in an area that will be good for their future,” Knapp said.
Kyle Gamble, managing director of CBRE/Hubbell Commercial, sees significant change at all corners of downtown.
Office buildings such as the Ruan Center, Hub Tower and Capital Square are picking up tenants, he said. For example, Hub Tower has gone from 82 percent vacancy down to 45 percent, Iowa Realty Commercial’s Crowley said. The Kaleidoscope at the Hub also is picking up new retail tenants. Both buildings were developed by Hubbell and are now owned by EMC Insurance Co.
“As a Greater Des Moines business person, I’m excited by it,” Crowley said.
Gamble also points out that changes planned for city parking garages at Seventh Street and Grand Avenue and Fifth Avenue and Walnut Street are important to “making sense” of how downtown buildings tie together.
He is bullish on streetscape plans for Walnut Street and the renovation of the Younkers building.
All of the activity, makes it “fun to be in business and to be part of it,” he said. “When we get people in town, I love talking about it … it sells itself.”
A welcome sign to the region
Des Moines Redevelopment Co. has grown in the little more than a year since it was incorporated, a reflection of its importance to the city and the growth of Greater Des Moines.
Denny Elwell Co., possibly more noted as a key player in Ankeny and the western suburbs than in downtown Des Moines, was among the first businesses to join the organization.
“If our downtown is not vibrant and active, it immediately sends a message that our capital city is regressing instead of progressing,” said Chris Murray, president and CEO of Denny Elwell Co. “We view economic growth as a regional and state goal. By communities and stakeholders working together to support each other, we all win. With a progressive, evolving central downtown area, industry growth creates jobs and thereby aids in stable suburban expansion.”
Curtis Brown, economic development director for the city of Urbandale, agreed.
“When you look across the Midwest, we are in an important position of strength,” he said. “Being part of that metropolitan area increases every individual community’s opportunities.”
For Knapp, it’s always been about bringing more residents, workers and dollars downtown.
“I think Des Moines is one of the best cities for its size in the country,” he said. “The convention center and restaurants create lots of action to make downtown Des Moines the center of attraction.”