No new office construction was brought to market in the first quarter of 2025, with vacancy rates remaining high in the central business district as tenants either consolidated locations or moved but did not expand.

That has resulted in either stable or higher vacancy rates, reports from commercial brokerage firms showed.

Brokerage firms CBRE, Cushman & Wakefield and JLL recently released their office market reports for the first quarter of 2025, analyzing the state of the office market in Central Iowa.

Here are some of the highlights from each firm’s report:

CBRE

• Q1 vacancy rate was 15.8%. The Des Moines central business district had the highest rates at 27.5%.The western suburbs ended the first quarter with an 11.8% vacancy rate.
• Des Moines’ net absorption was negative 101,057 square feet.
• The overall market average asking lease rate was $14.78. Ankeny recorded the highest lease rate at $20.01, while the south submarket had the lowest rate at $7.05.

In its report, CBRE said the trend of tenants “exiting or consolidating locations has greatly impacted the downtown vacancy rate over the last couple of years.”

Negative net absorption was seen across the metro, with three of the six submarkets posting negative absorption numbers in the first quarter, according to CBRE’s report.

“The lowest net absorption for the quarter was recorded in the [central business district], which recorded negative 76,663 square feet,” the report stated.

The western suburbs recorded negative 15,842 square feet of net absorption, while the northwest submarket recorded negative 8,552 square feet of net absorption, the report read.

CBRE also reported no new office construction was delivered in the first quarter.

According to its report, CBRE updated its criteria for office tracked buildings in Des Moines to reflect buildings with a net rentable area of 10,000 square feet or higher. The firm said the change will enhance its reporting and depth of data for the market’s most competitive buildings.

Cushman & Wakefield Iowa Commercial Advisors

• First-quarter office vacancy rate was 17.2%.
• Net absorption was 32,000 square feet.
• Average rent in Q1 was $20.75 per square foot.

In its report, Cushman & Wakefield said the positive net absorption in the first quarter was the first time since the beginning of the COVID-19 pandemic that the Des Moines office market saw a quarter-over-quarter positive net absorption.

“The issue the Des Moines market has faced … is that office users that move have generally not expanded, which means vacancy stays the same or rises,” Cushman & Wakefield said in its report.

According to the report, the big lease that was signed in the first quarter was Holmes Murphy moving into 75,000 square feet in the renovated Arcadia building at 7000 Vista Drive in West Des Moines while maintaining its existing space in Waukee.

Cushman & Wakefield anticipates positive net absorption will continue as the return-to-office trend continues.

JLL

• Q1 vacancy rate was 16.8%.
• Net absorption in the first quarter was 61,952 square feet.
• Overall average rent was $21.93 per square foot, with Class A rent averaging $26.45 per square foot.

In its report, JLL said the Des Moines market has experienced positive net absorption of 165,000 square feet over the past two quarters.

“This level of occupancy gains hasn’t been seen since the second and third quarters of 2022, which recorded a modest 22,000 square feet of positive absorption during that period,” the report stated.

Only two office projects were under construction in the first quarter, one being Community State Bank’s new headquarters in Ankeny, JLL reported.

The firm also noted the Holmes Murphy lease in the Arcadia building as significant for the local office market.

JLL’s report also mentioned the listing of the historic federal courthouse building in downtown Des Moines, and the expanded scope of the Financial Center project, which now includes turning 17 floors into multifamily space, adding 20 additional apartments. Eight floors will remain office space, the report said.

In its report, JLL forecast that the office market in the Des Moines metro “is expected to maintain its upward trajectory, driven in part by the presence of several major occupiers actively seeking space in the coming months.”

“Significant lease announcements are anticipated in the [central business district] and western sub markets, which should contribute to the overall market momentum.”