For several months in 2023, Ryan Wiederstein thought he was out of contention to buy a West Des Moines office building that Wells Fargo was selling at a heavily discounted price.

Wiederstein, the owner of Clive-based WB Realty Co. had submitted a bid for the six-story, 415,636-square-foot office building at 7001 Westown Parkway that was lower than other bids received by Wells Fargo. The company is shedding many of its Central Iowa real estate holdings as it relocates employees to its 160-acre Jordan Creek campus.

The financial institution accepted a higher bid from another group, pushing Wiederstein’s offer to the sidelines. The winning bidder had hoped to convert the 23-year-old building into multifamily residences, Wiederstein said. However, the deal wasn’t able to be finalized and Wells Fargo again began looking for a buyer for the property.

“We just waited,” Wiederstein said. “When the second prospect backed out right before Thanksgiving, we were able to come back with our offer.”

The $16.5 million deal closed 20 days after an agreement was reached with Wells Fargo to acquire the property. The short due diligence period was an unheard-of time in a commercial real estate transaction, Wiederstein said. “We had to move quick because [Wells Fargo] wanted to close before the end of the year.

“We didn’t have time to get an appraisal. We wanted title and property insurance on it, which isn’t exactly like calling an insurance agent and asking to buy insurance in an afternoon.”

Some hiccups occurred during the due diligence period that gave Wiederstein pause, he said. Several people involved in the transaction were on vacation during the week leading up to the closing. Offices were closed one or more days between the Christmas and New Year’s Day holidays, making getting paperwork completed a slow process. When it was time to finalize deal, the office from which money was being wired had a power outage.

“It was not a good time to close a deal,” said Wiederstein, who with some capital investors, paid cash for the 28.12-acre parcel that includes an underground data center.

The acquisition is the largest Wiederstein has made. It is also in a commercial real estate section that is struggling. The COVID-19 pandemic sent many people who worked in offices home, where they worked remotely. The return to working in the office has been slow, prompting some companies to shed unused office space. The new flexibility provided to employees in where they work has also meant that there are fewer office users looking for space to lease. Those who are looking want smaller spaces.

“If you’re trying to attract people back to the office and you’re downtown now, you might have a better chance of getting people back if you bring your office to where they live,” Wiederstein said. “That’s why I feel like the suburban market probably is coming back better than downtown.”

Wiederstein also believes that the competitive leasing rates he is offering will draw interest from companies considering leasing office space. Wiederstein and his investors paid Wells Fargo $16.5 million, considerably less than the property’s assessed valuation of $73.2 million.

Leasing options for potential tenants will range from 4,000 square feet up to the entire building for a single tenant.

“We bought [the property] at a price point that we think can be very competitive in the Class A office market in the western suburbs,” Wiederstein said. “If office is coming back anywhere, it’s coming back in the western suburbs.”

In 2023’s third quarter, 19.1% of the over 8 million square feet of office space in the western suburbs was vacant, according to Cushman & Wakefield’s market report. The average asking rent for Class A space was $28.10 per square foot.

Wiederstein said he expects to lease space in the building for up to $20 a square foot. He also said he hopes to have much of the building leased within the coming 18 to 24 months. The low acquisition price is allowing Wiederstein and his team to market space in the building for less than other spaces are being leased for in the area. The lower price has prompted several inquiries, including from out of state.

The building needs few upgrades, said Dan Carlson, project and property manager and real estate agent for WB Realty. “Wells Fargo has corporate standards that are far above what most property management companies have for their building maintenance. So, the building is in pristine condition.”

The fitness center in the building will be kept as an amenity to the building’s tenants, who will also have access to several large conference rooms.

The building also includes a full kitchen and restaurant-style cafeteria that seats 450 people. “We’ll probably lease that space to someone that can serve the building and the public in that location,” Carlson said. 

The transaction included a stipulation that allows Wells Fargo to continue to occupy the building for an additional 60 days, Wiederstein said. The financial institution will also continue using the data center until mid-2024, he said.

The 60-day period is providing WB Realty time to market the building and show it to potential tenants, said Brittany Freund, the firm’s senior vice president of commercial real estate. The company is working with JLL’s Des Moines office, which listed the property for sale. “We’re reaching back to folks [who were interested in the building when it was for sale] and seeing what their interest level is in leasing space in it.”

An open house will likely be held in the spring, Freund said.

“I think we’ll fill the building at a pretty good pace,” Wiederstein said. “But, we’re probably looking at 18 to 24 months as the market gets more stabilized.”