The completion of six industrial projects in the Greater Des Moines area added over 2 million square feet of warehouse and flex space to the market, increasing vacancy rates in the sector, first-quarter market reports from CBRE Inc. and JLL show.

In 2023’s first quarter, over 2.7 million square feet of the Des Moines area’s nearly 65 million square feet of rentable warehouse, manufacturing and flex space was vacant, CBRE’s report shows. The 4.2% vacancy rate was significantly higher than the 2.5% reported in the fourth quarter of 2022.

“Vacancy is expected to decline throughout 2023 as the construction pipeline is starting to shrink,” CBRE’s report said. Even though thousands of square feet of new space has been constructed in the past year “prospective tenants and new absorption to the market remains strong. We believe the increase in vacancy is likely to be temporary.”

Over 1.9 million square feet of industrial space is currently under construction in the Des Moines area, according to JLL’s first quarter report, which lists the area’s vacancy rate at 4.8%.

Carlisle, located southeast of Des Moines, is likely to see an increase in industrial developments, the JLL report said. ATI Group has purchased land at U.S. Highway 65 and Southeast 64th Avenue for industrial projects. The site will be able to accommodate up to 1.7 million square feet of industrial space, the report said.

In addition, McGough has proposed building a 330,000 square foot speculative warehouse in Carlisle’s Scotch Ridge Business Center. Construction is expected to be completed in spring 2024. A second phase would include a 300,000-square-foot warehouse, the JLL report said.

Asking rents are expected to rise, JLL’s report said. In 2022’s fourth quarter, direct asking rents averaged $5.81 per square foot. In the first quarter of 2023, they averaged $5.97 per square foot.

To read the CBRE Q1 industrial market report, click here.
To read the JLL Q1 industrial market report, click here.