Western Gateway Park had its genesis in the mid-1990s, when an Amoco gas station was demolished to make way for Meredith Corp.’s headquarters at 1615 Locust St. Mario Gandelsonas of New York-based Agrest and Gandelsonas Architects LLP originally proposed the downtown civic space concept as part of his vision for downtown Des Moines about 20 years ago.

The area, which was once home to a slew of car dealerships and other automobile-oriented businesses, has been transformed over the past 15 years into an iconic capital city destination.

The city of Des Moines, ING Equitable of Iowa, and Nationwide Mutual Insurance Co. are among a growing number of entities that are making significant long-term investments in the 5-square-block area bordered by Grand Avenue and Locust Street on the north and south and by 10th and 15th streets on the east and west.

Now, as commercial real estate leasing activity ramps up in the midst of a recovering economy, one property owner and one tenant are working to cement their positions in the blossoming downtown Des Moines district.

Before the recession

In September 2006, Westgate Partnership LLC, an investment group managed by state Sen. Jack Hatch, purchased parcels at 1408 Locust St. and 1312 Locust St. with plans to convert the properties into the northern face of a multimillion-dollar condominium project.

Hatch’s ambitious plans included the construction of 48 condos in a glass-enclosed six-story tower. He was researching the estimated $18 million project shortly before the economy crashed.

“This concept was initially proposed and designed when the economy was strong in 2007,” Hatch said. “Since then, we have had to focus on building out our two historic buildings, because the condominium market was flattened and private financing is too difficult in today’s market.”

Though Hatch said he knew at the time that a park would eventually be located across the street, he had no idea it would be filled with an estimated $40 million worth of art donated by philanthropists John and Mary Pappajohn.

That project, which was completed last fall, and the upcoming completion of Wellmark Blue Cross and Blue Shield of Iowa’s $150 million corporate headquarters on Grand Avenue are furthering the area’s revitalization.

Hatch, the owner of Hatch Development Group and a staunch supporter of historic and low-income housing tax credits, was also devising the condo project before the launch of the Des Moines Social Club.

A cultural icon

The Social Club opened in March 2009 under the leadership of Executive Director Zachary Mann-heimer, a New York City transplant who moved here in 2007 to form the nonprofit arts and cultural center in a leased space at 1408 Locust St.

“We’re booked almost every single night for the next year or so,” Mannheimer said, referring to the success of his organization’s programming, which has attracted more than 500 artists. “That’s pretty much our mission: to serve the locals.”

A 19-member board of directors oversees the Social Club, which, since its inception has raised more than $700,000 from a plethora of local private and public donors.

An art gallery, a for-profit bar and a constant stream of artistic and theatrical performances saturate the Social Club’s eclectic space. It offers a diverse blend of professional networking and educational events, as well as live entertainment, such as professional wrestling and fashion shows.

The club also hopes to soon open a for-profit restaurant to employ the artists and volunteers who have found a home there, Mann-heimer said, adding that the organization is on track to meet its goal of becoming self-sufficient by 2015.

But the first step in the Social Club’s quest to find a permanent home is to decide whether to purchase and remodel the 29,000-square-foot building in which it resides.

The deal

“They’ve been trying to buy it,” Hatch said of his tenant’s offer about six months ago to acquire the asset. “The members of their board can’t agree with our price,” he said, noting that their offer was “significantly lower” than his $1.4 million asking price.

“It fits perfectly in our goals,” Mannheimer said of the club’s location. He noted that the sculpture park and his new corporate neighbors are helping to drive traffic to the venue. “We just need to make the building look nicer,” he said.

But Mannheimer, who said the Social Club is still negotiating a purchase of the property while weighing other options, isn’t necessarily waiting around for the price to drop.

“There are some properties in this district that would also work for us,” he said. “So we are negotiating that at this time. But it is still way early. It is at least six months away before anything comes to fruition.”

Mannheimer said he has viewed at least 20 other properties downtown, including sites in the Western Gateway and the East Village.

“There are other spots that are a little more attractive that are still in the core,” he said, including some vacant lots. “If we didn’t stay here, it would be more likely that we would build from scratch.”

Not that he is in any hurry to leave.

But the Social Club, which is anxious to open a long-planned restaurant, needs a grease interceptor before it can move forward.

“We’re ready to go now,” Mannheimer said. “The issue is that we don’t want to put a kitchen in until we own the building. Because if we end up moving, that’s not something we can take with us.”

The dealmakers

Shannon Morton and Aaron Hyde, brokers with Clive-based Ferguson Commercial Real Estate Services, listed the 1408 Locust St. property for sale in May.

The brokers have also been busy leasing up the Chamberlain Building, the site of a former Plymouth auto dealership east of the Social Club’s space.

“We’ve absorbed and leased more than 12,000 square feet in the past 90 days,” Morton said of his and his partner’s brokerage activities at 1312 Locust St., which houses Hatch Development Group’s office.

Zart 1312, Gigi’s Pilates Studio and Catchfire Media LLC are among the latest tenants to lease spaces there. Catchfire, a social media strategy and consulting firm that opened in November, is expected to relocate in September to the second floor of the Chamberlain Building.

Its move from West Des Moines will allow the company’s employees and clients to take in daily views of the sculpture park, which Morton said is a big draw to the area.

Three potential tenants – a church group, a restaurant and a wine bar – have also shown interest in the Chamberlain Building, which Hatch expects to have fully leased by the end of the year.

And though Morton and Hyde are also working to develop a lease rate for 1408 Locust St. – a lease rate that would generate needed cash for a new façade and an interior renovation – the brokers are more focused on selling the property.

“Maybe there is a way that the Social Club can stay there according to whatever lease rate is facilitated and what other type of users come in,” Morton said, adding that the entire second floor of the building is vacant.

“Aaron and I are both friends with Zach and hope that (the Social Club) can succeed, and do what they want to do there,” he said.

The building needs to be refurbished, Morton said. But the property’s location, in the heart of the Western Gateway and directly across the street from the Nomade sculpture, may command a higher price than the Social Club is prepared to pay.

“The location is really what pushes” the asking price, Hatch said.

“When I see a property like that, I see a significant amount of opportunity for somebody to come in and redevelop,” Morton said. “Aaron and I are both confident (that) in working with Jack – according to any timeline – we would be able to successfully complete the redevelopment.”

Morton said that 1408 Locust St. has more than 15 parking stalls and a company could squeeze in even more vehicles if it parked its executives inside of the former Kruidenier Cadillac dealership building.

“We can be very flexible,” Hyde said. “For the right user, we can probably do just about anything.”

What’s next?

Hatch said the condo tower concept is “still being discussed.” In recent years, Hatch has talked of the possibility of turning the area between Locust and Walnut streets from 13th Street to 15th Street into an “auto row” historic district.

Historic tax credits helped Hatch cover the cost of the 95-year-old Chamberlain Building’s approximately $6.2 million renovation, which was completed in 2008.

The 1408 Locust St. property, however, which was constructed in 1919, was deemed ineligible for the credits, Hatch said, because only about 40 percent of the building’s original façade is intact.

Hatch said that puts the building in danger.

“It could be torn down,” he said. “The land is very valuable, maybe more valuable than the building.

“The architectural significance of a building is not just the façade, but it’s the design, it’s the structure, it’s the materials and it is what’s left over,” Hatch said, adding that he has asked the state to change the law regarding the criteria for historic tax credit eligibility.

“He’s looked into it, we’ve looked into it, other groups have looked into it,” Mannheimer said. “I think every angle has been tried at this point to get historical tax credits. I don’t think they exist.”

Moving on

Hatch, Mannheimer and Morton would like to find a resolution that would suit all three stakeholders. And they are all optimistic about the budding opportunities in Western Gateway Park.

The Social Club, whose bar recently bolstered its selection of beer and wine and this month plans to open an outdoor patio, continues to raise funds and hopes to remain at 1408 Locust St. beyond Dec. 31, when its lease on the property expires.

Mannheimer said it has an option to renew.

“We’re looking at a three-year span, if we stayed here, of purchasing and renovating” the building, he said. “We like it here; we’d like to stay in this district. That’s ideal for us.

“I can’t tell you how many artists have said to me that they are staying in Des Moines because this exists and because of what this is going to spur,” he said. “We are becoming a cultural mecca. We are still five or 10 years away from being world-renowned, but I’d say we are on that route.

“One of three scenarios will happen,” Mannheimer said. “We will either renew for another year and still keep trying to negotiate the price or we’ll decide not to renew and move elsewhere or we’ll buy the building.”

“There have been conversations,” Morton said of other potential buyers’ interest in the property, adding that at least one proposal is on the table.