Three warehouses located in northeast Des Moines and occupied by Jacobson Cos. were sold last week, according to commercial real estate brokers with JLL. The buildings, with a combined value of $16.67 million, sold for $24.5 million, according to Marcus Pitts, managing director at JLL's Des Moines office. "People are still making decisions on commercial real estate even with this global health crisis going on," he said. The buildings that were sold are located at 3901 Dixon St. (top photo), 3811 Dixon St. (bottom left), and 1675 N.E. 51st Ave. Photos from Google Street View
 
The economic outlook appears grim, as retailers like J.C. Penny and Pier One Imports plan to close stores, hotels remain mostly empty and millions of Americans are unemployed.

But bright spots exist, including in Central Iowa where large commercial real estate transactions are being completed and planned new developments are moving forward.

Late last week, a $24.5 million transaction involving the sale of three large industrial buildings in northeast Des Moines was completed. This week, the Ankeny City Council set a public hearing to discuss a development agreement involving the construction of a 350,000-square-foot warehouse; the Waukee City Council approved the site plan for a building that will include offices and an event and fitness center; and the West Des Moines City Council gave the green light for site work to begin on a small warehouse project.

"Even during a pandemic, we’re not closed," said Derek Lord, Ankeny’s economic development director. "There are many companies and developers that have not stopped planning for capital expenditure projects because the current economic conditions are not going to last forever."

Central Iowa, located around the intersection of two heavily traveled interstates, likely will continue to attract investments and new developments tied to the industrial warehouse sector, Lord said.

"Iowa is in a strategic location," he said. "As you see more and more online shopping, there’s going to be more desire to have warehouses in areas that can get products to consumers quickly."

The transaction involving the sale of three warehouses in northeast Des Moines was 10 years in the making, said Marcus Pitts and Justin Lossner, both managing directors at JLL's Des Moines office. The global pandemic, which hit as final details of the deal were being worked on, could have derailed the transaction but didn’t, they said.

"What I found to be really interesting is that tenants are still making major decisions, banks are still making major decisions, and buyers are still making major decisions, which is necessary for a $24.5 million deal like this to come together," Lossner said.

Before the pandemic, the industrial sector nationwide was expected to grow as more and more consumers turned to e-commerce to purchase material goods. Now, with consumers limiting their exposure to the novel coronavirus by avoiding places with large numbers of people, online shopping is growing at an even faster pace.

Businesses, too, are wanting supplies delivered quickly to them so they can provide products and services to their customers, Pitts said.
 
 
 
COVID-19 caused a disruption in the supply chain, he said. "I think that has helped to accelerate the demand to have supplies closer to customers, and that means there’s going to be a lot of demand in the industrial field" for more warehouse space.
The real estate transaction Pitts and Lossner closed last week involved three industrial buildings occupied by Jacobson Cos., a Des Moines-based third-party logistics group that provides end-to-end supply chain management services.
 
The three buildings were sold to a group of Iowa real estate investors, Pitts and Lossner said. However, they declined to identify the investors and the transaction has not yet been made public by the Polk County recorder.

The buildings sold include:

• A 422,212-square-foot industrial building at 3811 Dixon St., which is listed as the headquarters for Jacobson Cos. The building, which sits on 20.5 acres, was constructed in 1970. The property in 2019 was valued at $7 million, according to the Polk County assessor.

• A 199,180-square-foot industrial warehouse building at 3901 Dixon St. The building was constructed in 1995, and in 2019 was valued at $6.57 million, records show.

• A 131,160-square-foot structure at 1676 N.E. 51st Ave. The building was constructed in 1965 and is valued at $3.1 million, records show.

The buildings had been owned by a California-based investment group. According to the listing on LoopNet, 10 years remained on leases for each building.

In Ankeny, the City Council this week set a June 1 public hearing to discuss a development agreement with Ryan Companies US Inc., a Minneapolis-based construction company that is proposing to build a 350,000-square-foot warehouse on 35 acres in the 5800 block of Delaware Avenue.

The land, currently owned by Chapman Bros. Farm LC, is directly south of the Toro Co.’s distribution center at 5500 S.E. Delaware Ave., which was constructed by Ryan.

Lord said Ryan Cos. is working with a potential tenant for the proposed warehouse. Officials with Ryan Cos. didn’t respond to requests for information on the project.

Construction is expected to begin yet this year with completion in 2021, Lord said.

In West Des Moines this week, the City Council agreed to allow Allied Construction Co. to begin site work on ground at 2825 S.E. First St. where a 32,500-square-foot ware is planned.

RELATED: Read the Industrial Roundtable Q&A  included in the 2020 Annual Real Estate Magazine and watch the video of the discussion.