By Jon Gaskell

While downtown continues to build up its image with permanent attractions, award-winning festivals and thousands of new jobs in massive new buildings, the questions remain: Are the housing developments in the pipeline to create an actual neighborhood our best bet, and will they eventually be filled with residents?

Catch the last hour of the Dam to Dam road race on a Saturday morning in Nollen Plaza with a packed-to-the-gills farmers' market a block away, or the late Friday afternoon kick-off of our world-renowned Arts Festival, and one could likely assume that downtown Des Moines is the hottest neighborhood between LoDo in Denver and Wrigleyville in Chicago. Wait an hour, though, and like the old weather joke for these here parts goes: It'll change. A tornado of minivans heads west. A ghost town is left in its wake.

There are inhabitant stragglers, true, and the restaurants and bar scene can be somewhat lively if not downright impressive. But unlike LoDo and Wrigleyville, downtown Des Moines is an exercise in inconsistency. Court Avenue joints feel it when the I-Cubs are in town - and they feel it when they are not. The five-star seafood restaurant Splash can be an impossibly frantic get when "The Lion King" is playing, yet a quiet place for an after-work drink or date during the off-season. And the list of examples goes on and on - some feast, some famine - most mere snapshots of a bigger, more troubling picture: a downtown that swells to a population of 71,528 during weekday work hours before the ebb tide carries more than 95 percent of them away for the nights and weekends.

Over the next five years, however, 31 new housing developments will attempt to make this fluctuation a thing of the past. The projects combined will cost more than $500 million, and leave downtown sitting on close to $1 billion in residential real estate when all is said and done, with the number of downtown units (owner-occupied and rental combined) estimated to be 5,755.

But are the downtown housing developments in the pipeline and on the drawing board the most suitable for obstinate Central Iowans; and will the units eventually be filled with residents, creating a true neighborhood in a place that tends to, for the most part, go dark after 5 p.m.? Developers of every ilk, with projects like the six-unit row house Alchemilla in Sherman Hill, the 90-unit Gateway Lofts being urbanized at the old Meadow Gold building site and the behemoth George Sherman project, the 300-acre, 600-unit Riverpoint West, are answering in the affirmative.

Whether that means downtown Des Moines is finally on the verge of hitting a housing homerun remains to be seen. The optimism can be somewhat guarded. And everyone involved, from developers, to lenders, to city leaders, understands the balance to be a delicate one, with many factors like jobs, events, attractions and a wide-range of diverse projects poised to help dictate the future of the area.

"It's not as hot as people might be led to believe, as in everything will move right when it comes on the market," says B.J. Knapp, who is selling both the Equitable Building project and Mulberry Lofts. "Some will take longer than others. Some won't move at all. In the end, there will be so many variables involved. But the notion that there is too much development going on is unfounded. I don't buy it. The last completed deal [on the west side of the river] was Waterstreet two years ago. It's full. People are waiting for what's next. People are on waiting lists for rental units, too."

Knapp says he would take eight Mulberry-type developments (of which 30 of 48 units have sold thus far - without even so much as drywall in place) if he could because they are quality units and the price is right - from $85,000 to $340,000. Young professionals, just out of school, can get in on top-floor units for less than a $1,000 a month including parking.

"Most of the press has gone to the bigger units in the more upscale developments (Knapp says the Equitable building has a $2.3 million 7,000 square-foot unit that has been recently "shopped"), but the spectrum is a wide one," says Knapp. "Nobody is priced out of living downtown. It's clichŽ, but there is something for everyone."

If there were not, Des Moines Mayor Frank Cownie says, downtown would fall flat on its face.

"The diversity of what's being built has to continue," says Cownie, who has a kid living in the Hubbell Tower Apartments where rents range from $450 to $600 a month. "If we don't keep it balanced, we'll have real problems down the road. Industry is dependent on any number of income levels. Downtown residential needs to follow suit."

So far, the developers are listening. In fact, of the 5,755 units either finished, in the construction process or on the drawing board, 2,015 of them are considered to be "affordable," whereas the rent can be subsidized. Thirteen hundred more will be apartments rented at market value, while the remaining units (some 40 percent of all available units) are classified as condominiums.

"The idea is to mimic the downtown workforce," says Matt Anderson with the City of Des Moines Department of Economic Development (DED). "That's our best chance at having across-the-board success. The national trends say we're doing it the right way."

Residential growth in the downtown areas of smaller cities like Omaha and Louisville is hot - has been for about a decade. And about 10 years ago, according to Cownie, Des Moines decided that it, too, needed to get in the game. Cownie was heading up the city's Plan and Zoning Commission at the time, and after studying many parts of the metro, the group reached the conclusion that the area most ripe for growth was downtown.

"We decided that we needed 11,000 units in the downtown area if we were to fully capitalize on the opportunity," Cownie says.

Why take a decade to capitalize?

"It's the old question of 'what comes first?'" Cownie says. "The big businesses wanted retail to keep their people close to work, but the retailers know people typically shop where they live. And the developers want amenities that will interest prospective buyers. That's a lot of people waiting for other people to jump first."

But "jumping" is not something that is done around here with great regularity, national trends or not.

Jackie Nickolaus, project manager for Sherman Associates, which built Waterstreet Brownstones (condominiums) and Vine Street Lofts (rental units) and is slated to build Riverpoint West and the Metro Lofts (between Second and Third streets) says it took some doing and the actions of "pioneers" with a track record like her boss, George Sherman, to make it go.

"There is a great deal of excitement, but it's always a gamble," says Nickolaus, who was formerly with the City of Des Moines DED. "That isn't to say we are not familiar with the markets we get into and excited about the future of downtown. But this is a conservative city."

Nickolaus is proud of the success of the Waterstreet and Vine Street projects, but the lot where Metro Lofts will be built sits empty, a hole half-filled with water and a plywood sign bearing only the promise of construction. Nickolaus says it is plausible to think there is a little "too much, too soon" going on in the downtown marketplace, and that the stalled Metro Lofts is proof.

"I think (Metro Lofts) is a good example of how all the projects on the market impact the others," she says. "We are struggling with costs. They have increased, but the sale prices have not kept pace. So I don't honestly know how the project will be configured. It is too tight because of cost increases."

There is a waiting list for Vine Street, Nickolaus says, and Waterstreet sold out. That, along with the dazzling success of Browncamp Lofts (which struggled mightily at its onset), helped to create a buzz that drew the attention of any number of developers, and made bankers more bullish on downtown Des Moines.

"But we have to be reasonable and we need a certain number of presales. It's a delicate balance," she says. "We can't say that once we get it under construction everyone will love it, even if we believe they will. There's too much going on, and [Central Iowans] will sit back and wait so they can compare. It's good for them, not so good for us."

Anderson agrees, noting that the bellwether for him will be Knapp's Mulberry development, as well as Nelson Development's project at the Liberty Building at the corner of Sixth and Grand.

"I'm holding my breath," he says of the projects that are both primarily mid-range condo developments. "But I think it's safe to say that in nine months we'll have a better understanding of where we're heading."

Anderson says both projects are ahead of projections with regard to sales, but he is concerned that if more projects in the same range come online (as planned) before those two have reached capacity the market could be affected.

Jim Hubbell, Chairman of Hubbell Realty, says to count on it.

"If you have $200,000 to $300,000 and want to live in Central Iowa, you have some choices," he says. (Some 1,000 active listings as of last Friday, to be exact.) "The same can be said of what's going up downtown. I'm not so sure that's a good thing with the type of buyer downtown is trying to attract."

Hubbell thinks downtown will be a tremendous success, but says, "There is no such thing as everyone being in the right place at the right price. There are lots of people going after that particular market [$200,000-$300,000] with more house to show you in Pleasant Hill and Clive.

"A lot of people are doing condominiums because they want a better buyer, but with so many units coming on, it's going to be interesting to see what price points will really work."

Hubbell developed the low-income Hubbell Tower Apartments (nearly three-fourths full), is building the half-subsidized/half market-rate Spaghetti Works apartment building with Harry Bookey on Court Avenue, and will complete a very high-end townhouse project near the Iowa Events Center, as well as a handful of other developments downtown. Hubbell says each one helps to fill a niche.

"We're not entirely sure where the people want to live or what they are willing to pay, but we're all going to find out," he says, adding that he feels downtown is primarily interesting for people looking for a new start (Empty nesters, divorcees, young professionals just out of college, etc.).

"It is not," he says, "like moving from one neighborhood to another. This involves a complete lifestyle change. That's part of the challenge. In the overall scope of things, the number of units developers want to move isn't that large. But this takes a special buyer. This is way different."

"Way different" has always been thought of as a tough sell in Central Iowa, but Tim Leach, a director with the Downtown Community Alliance, says that is not the case anymore - at least not with regard to downtown. He lists projects like the IEC, the new library, the Principal Riverwalk, the Science Center of Iowa, Gateway West and numerous festivals and seasonal events as being part of the "different" downtown experience.

"I don't think there can be enough development," Leach says. "The cycles will catch up with themselves. A few people visit and then move. More people follow them. More projects are needed. More people follow those. More attractions are built. It feeds off of itself."

Knapp shields his eyes from the sun outside the Mulberry development and points down the block at three other residential projects.

"Full, full, full," he says, his finger bouncing along the buildings that sit in the distance. "You think they all just decided to up and move down here just to do it? No. They bought into the lifestyle, and how couldn't you? These were people looking for a change."

When asked if he thinks there will be enough people seeking that change to go around, Knapp answers "absolutely."

When asked if he is concerned whether the market can bear the number of projects coming online, he says, "No more concerned than I would be if I had a big development in the western suburbs.

"And in the western suburbs you don't have the Des Moines Arts Festival to get people excited, and in a few years you won't have a riverwalk," he says. "This isn't about showing a family of four a house in Pleasant Hill, one at Easter Lake and one in Clive and letting them pick. This is about the lifestyle."

But isn't $1 billion a pretty substantial bet to wager on people simply wanting a lifestyle change?

"We have the quality-of-life projects we didn't have before to lessen the risk," says Anderson. "And we have a few major developments under our belt that prove this isn't a long-shot, and there is momentum and the backing of financial institutions that wasn't there before. And the people want to see it work."

And if it doesn't?

"It will work itself out one way or another," Anderson says.

Cannibalization?

"I'm not expecting that because the projects are so very different and we are covering such a wide spectrum with the units online and coming online, but that would be the worst case scenario, yes" he concedes. "Fire sales. You have to price things right, but you also can't give them away."

Sherman Associates' Nickolaus, however, says developers get nervous.

"Des Moines is a community that wants to touch it, smell it and feel it," she says. "In other communities all you need are the materials. People here think it's a great thing and are interested, but they don't care if they move six months from now or three years from now. With so much money wrapped up in these projects, developers don't have the luxury of waiting."

Adding to the challenge is the fact that building downtown can cost 10 times as much as developing a soybean field in Waukee. Prime real estate can fetch north of $50 per square foot. (In the suburbs it can be $50,000 per acre.) There is wondering what is underneath the surface - and dealing with it. There is soil remediation. There is build out. There is making sure not to price one's self out of the game. There is, in fact, little room for error. Not to mention: Where will all the people come from?

The word "boom" does not come into play when speaking of Des Moines' population growth. In fact, according to the U.S. Census Bureau, Des Moines' population shrank 1.3 percent from 2000 to 2004 (from 198,682 to 196,093), while its western suburbs enjoyed sizeable growth (much of it from individuals leaving the center city). The value of commercial construction in West Des Moines alone in 2004 topped $235 million, while the value of residential construction topped $68.1 million. And, like downtown, strong development continues in West Des Moines, despite predictions that new-home sales are expected to be 10 percent lower this year nationwide.

So will something have to give? Do people have to change their mindset if downtown is to work? After all, it won't happen without the bodies.

"We focus on the urban transplants from other urban areas who are used to this lifestyle," says Tony DeAngelo, who developed the SOHO Lofts project in the East Village. "They like the opportunity to live the way they are used to living, but in Des Moines."

SOHO has sold 13 of 32 units since opening in 2005 - a number his realtor Marcia Wanamaker calls "not what we were expecting" - and DeAngelo says, despite believing in his project and its having "great buzz," he's not overly enthusiastic that there are a lot of "converts" out there.

"I just don't know if you can change people," DeAngelo says. "Unless you've lived in an urban area, it might seem a little too different."

Developer Jack Hatch, however, whose East Village Square is a low-income to moderate-income apartment development that sits across the street from SOHO, has people renting the units sight unseen, has done no marketing and is five months away from a ribbon-cutting ceremony.

"It all depends on the project," says Hatch, whose other apartment complex, in Sherman Hill, Woodland Avenue Brickstone, is 100 percent occupied. "But you have to have quality.

"I think downtown could use twice as many apartments, if not three or four times. In the next five years, you can't build enough for downtown."

Hatch says the jobs are there, and, simply put, the interest follows the jobs. But to what extent?

Cownie says studies show that the number of jobs in downtown Des Moines should grow to as many as 90,000 in the next decade, calling the employment base "ever-expanding."

"And those jobs aren't just going to be filled by executives at Wells Fargo or Meredith," he says. "The majority of them will be, and are, entry-level jobs for recently graduated college-aged kids - the people we want living downtown, the people whose first real homes will be in an urban setting. I keep going back to diversity, but if we're building the right mix of projects, they'll be successful. It's as simple as that. The trend points to people moving into the urban areas, moving closer to where they work."

So what, then, of DeAngelo's assertion that people likely cannot change - that newcomers should be the primary targets?

Anderson says that's only a sliver of it.

"There is some recruitment needed," he says. "But larger pieces, I think, are rural Iowans moving to the bigger cities, former Iowans used to being in urban areas after college returning home, and most importantly, the job growth. Companies like Wells Fargo, Allied, Principal, they are adding thousands of jobs paying great wages and they are showing no sign of slowing down. This is all pointing toward success."

It just won't be shared by everyone.

"We'll have to make adjustments, of course," says Anderson. "[The planned residential developments] won't all work at the price the developers want."

Wonders Leach, "Did Tony DeAngelo misgauge the market? Does he need to redo some of those units? Is he overpriced?"

Knapp says he has never tried to sell East Village, but that downtown cannot be sold as simply "downtown."

"There are pockets," Knapp says, "and they need to be treated as such. Some people may want the Gateway, some may want a river view, some may want to be on the skywalk, some may want to be in Sherman Hill or East Village. I'm not certain if everyone has considered that before figuring a price point."

Knapp says that East Village isn't going to command the price of Whiteline lofts (SOHO units are priced up to $364,267), just as Sherman Hill won't command the price of the Equitable building. This, he says, makes the diversity of the projects the most important ingredient when it comes to creating downtown success stories, because the people will be there if it's "done right."

Anderson says it is.

"We have a good balance of lower-income rental, moderately priced rental and condominiums," he says. "The right mix."

Add to it the number of ways for a project to make financial sense for developers - from the city helping build parking ramps for upscale condos, to deeming unused land as enterprise zones, to historic designations for empty buildings, to tax credits, to federal subsidies - and the competition can get fierce. Everyone, it seems, wants in on the action.

Bob Mickle, a neighborhood activist, hopes too many developers aren't already "in on the action."

"It happens, this overbuilding, in downtowns, in the suburbs, in business parks," he says. "And in order for it not to happen here, [developers] need to be paying very close attention to trends that would suggest a tightening of the market. People get excited, but you can't get emotional about it. Emotion will kill it."

Mickle, who can be the city's biggest critic, says downtown housing has been a number-one priority for many, many years, but the city was never able to get the right ingredients together to attract developers despite there being a "real market."

"But I think they have it in place now," he says. "You just have to proceed with caution."

Mickle says it seems like the right pieces are "falling into place" and that he doesn't see why downtown cannot be successful, but all one can do it is watch it play out.

"First you have the jobs - tons of great, new jobs. Then you have the fact that downtown has become a center for culture and is rapidly improving. Then you have a fairly good use of the city, state and federal funds and tools. Not to mention, the banks are developing an attitude that these are good investments. But again, don't bite off more than you can chew."

DeAngelo thinks it's already happened.

"A lot of people have jumped on the bandwagon and don't have the housing experience," he says. "I think the competition is fine, but we have to keep our eye on it. Overall, we're pleased and our lenders are pleased. Of course, I want them all sold yesterday."

Don't count on it, says Nickolaus.

"There is a market for these projects, but I think the number will affect the absorption rate," she says. "I think there is enough in the pipeline. Now we need momentum. We can't have empty units when the doors open. We need to do some selling."

Nickolaus says as far as renting goes, that market is there, the need is there, and she agrees the area could support many more units. She is also interested to see the response Mulberry, White Line and Liberty will get (which will likely determine how Metro Lofts is configured). But it's time, she says, for a bit of restrained confidence.

"It's an interesting time for Des Moines. The economy is healthy. People are interested in all that's going on. But construction costs are high, housing is affordable and there's a lot more on its way. That creates a challenge," she says, pointing out that making money is obviously essential, but will it be possible with the more upscale projects?

Hatch says it is. His six-unit, upscale Alchemilla project has three units sold, one sale pending and one buyer meeting with architects on another. Says Hatch simply, "Success will create more success."

Anderson agrees, pointing out downtown residents, developers and business leaders cannot be bashful in their approach.

"We just need to do a good job telling our success stories," says Anderson. "We have to maintain the level of excitement. It's now a real option. Downtown has many things to offer that no other neighborhoods have."

Hubbell agrees.

"We, as a city, have been working so hard on physical improvements, and they have made an enormous impact, and they will only continue," he says. "People don't just come down here for work, they come down for a ballgame, or to the Civic Center or to a festival or from Gray's Lake, and they say, 'Well, this is interesting. This is neat.'

"The key is looking at other cities, learning from them and emulating their successes," Hubbell says. "We're doing a good job of that. Does it take longer for a person or a couple to decide to move downtown? Absolutely. It's a lifestyle change - completely. But people can't say the city and private money and big corporations and developers aren't doing what they can to help sell it. And there are so many ways to make it work."

Leach says, "We're kind of building and identifying the market as we go." He says there really isn't another way to do it.

"We have done a good job balancing the types of projects, but it's impossible to tell if we got it perfect," he says. "I don't know how you can until it's complete. If it's not, we adjust."

Leach recalls the initial Waterstreet project burning down before opening, and everyone, in turn, lining back up to resurrect it. He points out how the fire could have been the death knell for downtown residential development. George Sherman could have just given up and moved on.

"But he didn't, and that showed the level of commitment," Leach says. "That's a city that believes in itself."

Hatch says it's more like a city that is ready to explode.

"Des Moines has the largest gap of any major city when it comes to the people who work downtown versus the people who actually live downtown," he says. "We have so much to offer. People are impressed. Everyone who needs to be is at the table. There are so many jobs coming open, more amenities, more action."

Enough to make it work?

"From a market study point of view from a national perspective the need is there," Hatch says. "Is there enough interest here? Our analysis on that is unclear."

But Hatch says he is pleasantly surprised at the number of outside developers who believe in the city, and says he couldn't be happier with how the developments he is involved with are going.

Says Anderson, "It's all about keeping the buzz alive. Like with any project, it's all about those first five or six people who move in, who get others excited. The word of mouth spreads. People want to get in on it."

Knapp says he's getting 30 to 40 calls a week on Mulberry alone, and notes, "While we have to market, we don't have to knock on any doors in Clive to get people through. They want to save $50,000 in property taxes over the next 10 years. They're tired of wasting space. They are tired of their yards.

"Then they come in and can see their office from the unit they like, and they can see Raccoon [River Brew Pub], and other condo developments and apartments, and know about the Meredith Trail and can walk to the ballpark or the farmers' market," he says. "You don't get that type of vibe anywhere else. Living near Target might be convenient, but it doesn't change your life."

And that's what people making the jump to downtown living can expect: their lives changed.

"You park your car," says DeAngelo. "You get your cup of coffee in your building. You know the guy who pours it. You walk to work and to shop and everything else - just like the big cities. Really, it's happening here."

Add to that the fact that gas is heading toward $3 a gallon and beyond, says Mickle, and people can even put a "green" spin on living in the city center.

"There are just so many reasons for so many people to move [downtown]," says Cownie. "It is a life-changing decision. But while that may sound daunting, it's also part of the allure."

Cownie says how it will all shake out is not for him to predict, but he likes the city's odds of following other cities our size that have had success.

"In the end all we can do is get as many of the right people involved as possible, make it as diverse as possible, encourage our employers to grow, keep pushing for more entertainment options and be a good partner to everyone involved. Then we wait and see." CV

Comment on this story | Return to top