Drake University is collaborating with a Cedar Falls firm to redevelop two city blocks into a residential and commercial district that will boost the neighborhood’s vibrancy and return a large parcel of land back to the property tax rolls, officials are announcing this afternoon.

The project, valued at more than $63 million, includes the construction of apartment buildings, townhouses, commercial space and a parking garage in an area bounded by 24th and 25th streets and Forest and University avenues. Construction is expected to begin next summer with completion by 2023. 

Drake’s news conference announcing the redevelopment started at 1 p.m. Watch it live at www.facebook.com/DMBusinessRecord/.

“This is going to transform the Dogtown corridor,” Drake President Marty Martin said. Dogtown “is a great arts, culture, commercial district, and this is really going to supercharge that.”

Drake currently owns nearly all of the land in the development area. The university will sell the property to Cedar Falls-based Merge Urban Development, a firm that focuses on real estate development in Qualified Opportunity Zones, of which the Drake neighborhood is a part.

The two parcels the private university does not own – the building that housed the Varsity Theatre that recently closed and the U.S. Bank drive-thru – will be retained, Martin said.

The project, designed by Slingshot Architecture of Des Moines, will include the construction of six five-story apartment buildings between Carpenter and University avenues. The buildings will include an estimated 300 studio, one-bedroom and two-bedroom apartments. Rents will be a mix of affordable and market rates. In addition, four of the apartment buildings will have a total of 30,000 square feet of ground-level commercial space located along 25th Street and University Avenue. 

A parking garage with between 600 and 900 spaces is planned for the south side of Forest between 24th and 25th streets. Townhouses will be built along the east and west perimeters of the structure.

The sale by Drake of the parcels to Merge means that nearly 4 acres will begin to generate property taxes, although how much is not yet known. The property is now tax-exempt because Drake is a nonprofit organization.

“We’re pleased to see Drake continue to transition university-owned property by bringing it back onto the tax rolls,” said Erin Olson-Douglas, Des Moines economic development director.

Much construction activity around Drake

The area surrounding Drake’s campus at 25th and University is teeming with redevelopment:

Work at the $8 million Gregory and Suzie Glazer Burt Boys & Girls Club is in the final stages. The center, located near the southwest corner of 25th Street and Forest Avenue, is expected to open in August. It is the third Boys & Girls Club to be located on the campus of a private university. Up to 250 youngsters in K-12 are expected to be served by the center through its after-school and summer programs.

Work has begun on a $54 million hotel, apartment and retail development in the 2500 block of University Avenue immediately south of Drake. Nelson Construction and Development in spring 2017 announced plans for a five-story, 124-room hotel project that will include 11,000 square feet of retail space. The company began construction this spring. Next year, the company plans to begin work on an apartment building project.

A groundbreaking ceremony was held in May for the $8.1 million, 16,000-square-foot Harkin Institute for Public Policy & Citizen Engagement at the southwest corner of University Avenue and 28th Street. The facility is expected to open in fall 2020. 

Work is continuing on the University Avenue streetscape project between 25th and 31st streets. The project includes the addition of bike lanes, landscaping and new bus stops and shelters. Work is expected to be completed in early 2020.

In addition, the Drake neighborhood is among four pilot areas in which the city plans to begin a concentrated effort to rejuvenate by razing dilapidated structures and providing money to make improvements to houses.

“We have a lot going on right now, and this [new] project is a great complement to the others,” said Jennifer Sayers, president of the Drake Neighborhood Association. “All of these things will be bringing a lot of people into the area.”

Development company new to metro area

The project will be Merge’s first in the Des Moines area. The company, which has more than a decade of experience working on projects near university campuses, is currently completing an Opportunity Zone mixed-use project in Waterloo.

Brent Dahlstrom, a partner in Merge, said he has long wanted the firm to do a project in Des Moines, particularly one in an Opportunity Zone.

The Opportunity Zone program was created as part of the 2017 federal Tax Cuts and Jobs Act as a way to spur economic development and job creation in distressed areas as well as provide a tool for taxpayers to defer or reduce capital gains tax payments. 

Merge, whose capital partner is Chicago-based private investment firm Skydeck LLC, and Drake have worked together planning the project for about nine months.

“This is a great spot,” Dahlstrom said. “When students visit a campus, they are looking for more than just the education component – they want to be around areas that are vibrant. This [development] will provide that.”

Drake, founded in 1881, is an urban university with about 5,000 undergraduate and graduate students. 

“When you’re surrounded by urban amenities, that means lots of people,” Martin said. The proposed development will provide those amenities and more not only for faculty, staff and students but also for prospective students and their families, he said.

“It's one thing to live across the street and to see a parking lot. It's another thing to look across the street and see a hotel with a restaurant, or these housing units and people coming and going all the time,” Martin said. “That vibrancy is one of the great assets of being an urban campus.”

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Click here to read what Drake benefactor Bill Knapp said about the proposed project.