Fewer building permits were issued for new Des Moines area commercial projects in the first six months of 2023 compared to a year ago, a sign higher interest rates and worries about the economy have cooled development.

Between January 1 and June 30, 76 building permits were issued for new projects in Polk County and 13 other communities surveyed by the Business Record. The value of the permits totaled over $735.1 million. During the same period in 2022, 124 permits were issued for new commercial projects. The value of those permits was over $817.8 million.

“We’ve been on a trend where interest rates have been increasing, and I think that has caused a lot of investors to pause in investing in new construction projects,” said Cody Christensen, Des Moines’ Development Services director. “As the market becomes more stable, as we see interest rates level off, I think that is going to give more confidence to investors. … When there’s market volatility, [investors] are a little more reserved. When there’s more stability, then there’s more investments.”

Des Moines has issued fewer permits for new commercial projects in the first half of 2023 compared to a year ago, a review of permit data shows. However, Christensen said there are projects being reviewed that could receive building permits yet this year. Among them are Heart of America Group’s 186-unit residential and commercial project planned at 603 E. Sixth St.; a 216-unit apartment project proposed at 214 Jackson Ave.; and a 33-story mixed-income residential tower proposed at 515 Walnut St.

In addition, Christensen said Des Moines will likely see an uptick in smaller commercial projects, both new and remodels.

“I think what we’re seeing is a shift to more smaller projects,” he said. “I don’t think we’re going to be seeing a lot of really big, new development projects coming through. But as those projects ease back, we will see an increase in those smaller projects and maybe remodels and additions.”

Three, 60-unit apartment buildings with garages are under construction in northwest Waukee. Hubbell Realty Co. is the project's developer. Photo by John Retzlaff

Three, 60-unit apartment buildings with garages are under construction in northwest Waukee. Hubbell Realty Co. is the project's developer. Photo by John Retzlaff

A multi-tenant retail center is under construction in Norwalk Central. Photo by John Retzlaff

Construction has begun on a new Fareway grocery store at 2200 Sunset Drive. The 24,231-square-foot store is expected to open in spring 2024. Photo by John Retzlaff

Construction has begun on a new Fareway grocery store at 2200 Sunset Drive. The 24,231-square-foot store is expected to open in spring 2024. Photo by John Retzlaff

Construction is underway on the second phase of Jordan Creek Point, a retail development by Accurate Development Inc. at 6840 and 6880 E.P. True Pkwy. in West Des Moines. Photo by John Retzlaff

Construction has begun on a four-story, 76-room GrandStay Hotel in Johnston. Photo by John Retzlaff

Construction has begun on a four-story, 76-room GrandStay Hotel in Johnston. Photo by John Retzlaff

Work is underway on foot surgery center and medical campus for Iowa Orthopedics at 3201 S.E. 37th St. in Grimes. The project is valued at $26 million. Photo by John Retzlaff

Work is underway on foot surgery center and medical campus for Iowa Orthopedics at 3201 S.E. 37th St. in Grimes. The project is valued at $26 million. Photo by John Retzlaff

A four-story, 126-unit Aloft Hotel is being built at 2848 Grand Prairie Parkway in Waukee. Aloft Hotels are part of Marriott International Inc.’s chain of hotels. A permit valued at $14.9 million was issued for the project in March. Photo by John Retzlaff

A four-story, 126-unit Aloft Hotel is being built at 2848 Grand Prairie Parkway in Waukee. Aloft Hotels are part of Marriott International Inc.’s chain of hotels. A permit valued at $14.9 million was issued for the project in March. Photo by John Retzlaff

Construction is underway on the second phase of Jordan Creek Point, a retail development by Accurate Development Inc. at 6840 and 6880 E.P. True Pkwy. in West Des Moines. Photo by John Retzlaff

While some communities are seeing a slowdown in new construction projects, others are continuing to experience a flurry of activity. In the first half of 2022, Waukee issued 13 building permits valued at nearly $95 million for new commercial projects. This year, 25 permits valued at over $165 million have been issued for new projects. New projects underway in the Dallas County community include a hotel, eight apartment buildings, two medical facilities, restaurants and a school for sixth- and seventh-grade students.

“We’ve gotten to the point where we’ve got the rooftops, which means more residents,” said Andy Kass, Waukee’s community development director. “More commercial businesses, more retailers are interested in locating in our community because of the number of residents we have.”

In past years, retail buildings were constructed in Waukee without specific tenants in mind, Kass said. “Now we’ve hit a bit of transition. We know now who will occupy a building. We have a stand-alone Chipolte building that will be constructed; a stand-alone Starbucks and McDonald’s.

Residential construction in Waukee hasn’t slowed, Kass said. “As long as residential remains strong, commercial projects will still be going on.”

What projects are underway in Des Moines area?

The following are among the new commercial projects underway in the Des Moines area:

· A data center at Microsoft Inc.’s campus at 11100 Booneville Road in West Des Moines. A permit valued at $339.7 million was issued in May for the project. Turner Construction is the project’s general contractor.

· A foot surgery center and medical campus for Iowa Orthopedics at 3201 S.E. 37th St. in Grimes. A permit was issued in April for the foundation and footings for the project. Another permit was issued in June for the remainder of the center, which will be 58,580 square feet. The project is valued at $26 million. Downing Construction Inc. is the project’s general contractor.

        A four-story, 126-unit Aloft Hotel (pictured) at 2848 Grand Prairie Pkwy in Waukee. The hotel will have 67,982 square feet of space. Aloft Hotels are part of Marriott International Inc.’s chain of hotels. The project is located in the 40-acre KeeTown Loop development where a Live Nation entertainment venue is under construction. A permit valued at $14.9 million was issued for the project in March.

·        A two-story, 14,000-square-foot building for Iowa Trust & Savings Bank at 15591 Hickman Road in Clive. A permit valued at $7 million was issued for the project in January.

·        A 24,231-square-foot Farewaygrocery store at 2200 Sunset Drive in Norwalk. The store, which is expected to open in early 2024, will replace one at 1711 Sunset Drive. A permit valued at nearly $2 million was issued for the project in May.

Interactive map, spreadsheet

To view the 2023 interactive commercial building permit map, click here.

To view a spreadsheet with information about building permits issued in 2023, click here.

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