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Commercial Real Estate Weekly | January 27, 2021
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PROJECT UPDATE: Mainframe Studios
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Work is expected to begin in May on a colorful mural that will transform the exterior of Mainframe Studioes at 900 Keosauqua Way in downtown Des Moines. Rendering by Molly Spain
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Mainframe Studios makeover expected to begin
in May and include light display, exterior painting
By Kathy A. Bolten | Senior Staff Writer
What: Mainframe Studios, which houses affordable workspaces for artists and low-cost office space for nonprofit
arts groups.
Where: 900 Keosauqua Way, Des Moines.
Project costs: Over $4 million, which includes build-out of two floors and exterior makeover.
Update and background: Nearly 11 months ago, Mainframe Studios unveiled plans to transform the drab-looking concrete building in which it is housed into an eye-catching display of colors that would catch the eye of passers-by headed into downtown Des Moines.
The plan originally was to have the exterior repainted last fall.
But, as
happens with many projects, complications arose.
"We wanted to make the building as maintenance-free as possible," said Siobhan Spain, Mainframe Studios’ director. "We talked with a lot of different paint companies and found out that the caulking we had done around the building … well, the paint won’t stick to it so the caulking has to be treated."
The discovery meant delaying the work until spring when warmer weather will allow the caulking to be treated and the rainbow of colored paint applied to the building’s exterior.
A May 1 start date is now being eyed for the work, Spain said.
Molly Spain, Siobhan’s sister and an artist who has a studio at Mainframe, has been talking with contractors and paint suppliers on the type of paint to use on the building’s exterior.
"She has a long experience with painting, so she was a great pick
to work with contractors because she knew what question to ask," Siobhan Spain said.
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 Molly Spain has also been working with local artist Jordan Weber on a light installation that will be placed on top of the five-story concrete building that opened in 1983 and originally housed Northwestern Bell Co.’s data center.
Weber, who Siobhan Spain describes as "Iowa’s most recognized contemporary artist," has had his work exhibited in New York City, Omaha, St. Louis, Minneapolis, Los Angeles, Chicago and Des Moines. He’s received several awards and fellowships, including the New York City-based A Blade of Grass Fellowship.
The
light installation at Mainframe Studios is being designed around the words "inhale" and "exhale," Siobhan Spain said. "It’s all about healing and that the breath is healing. … It’s a reminder of maintaining that breath."
The artwork, which will be installed in the spring, will point north to the Oakridge Neighborhood and to Interstate Highway 235, she said.
While work on the exterior of the building was delayed, progress has been made on interior renovations. Three floors of the building’s five floors were previously renovated. This past year, a fourth floor was completed, Siobhan Spain said. In March, 58 new studios will open with 50 of them already pre-leased. Spain said she expects the remaining eight studios to be leased in the next month.
Once that floor is completely leased, the studio will start breaking even financially, Spain said. When the entire project is finished, the
additional revenue will fund an endowment, she said.
Spain said it will cost about $1.5 million to renovate the final floor as well as complete the exterior painting. The figure also includes costs related to replacing elevators and the roof.
"That extra income will help us take care of those large expenses that will need to be done sooner than later," she said. The renovation of the final floor is expected to be completed in early 2022.
Mainframe Studios this past year has received large donations from philanthropists Nix and Virginia Lauridsen, as well as Fred and Charlotte Hubbell and Fred and Emily Weitz.
"They all have fulfilled their pledges," Spain said. "The outbreak of COVID changed a lot of things. These people all said, ‘Go ahead with your plans. Our support is still committed.’
I think it sends a positive message to the
community."
PREVIOUS COVERAGE: Mainframe Studios to get colorful makeover; large pledge to help complete renovations
Project Update is a Commercial Real Estate Weekly feature in which the status of projects underway in the Greater Des Moines area are updated. Want to include an update about your project or suggest a project to include? Email: kathybolten@bpcdm.com.
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| Jordan Weber and Molly Spain, last August, discuss the light exhibit and exterior mural planned for Mainframe Studios. Photo by Siobhan Spain
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History of 900 Keo Way building
The five-story concrete block building at 900 Keosauqua Way was designed by Des Moines architect Charles "Chick" Herbert, whose credits include the Des Moines Civic Center and Iowa State University’s College of Design.
The building, which opened in 1983, housed Northwestern Bell Co.’s data center for about 10 years and then became a call center for Qwest and later
for CenturyLink. In January 2011, a fire broke out on the building’s fourth floor, causing significant smoke and water damage. At the time of the fire, about 250 people worked in the building.
Developer Justin Mandelbaum, through Des Moines Arts Inc., bought the building and other adjacent properties in late 2014. One of the parcels was sold to QuikTrip Corp. and money from the sale was used to help pay for renovations of three floors at Mainframe Studios, which opened in late 2017.
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LEGISLATIVE NOTES
Construction-industry bills to watch in Iowa Legislature
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 Jodie McDougal, a shareholder at the Davis Brown Law Firm in Des Moines and chairperson of the firm's construction department, has compiled a list of bills to watch in the 2021 Iowa legislative session that are of interest to those in the construction industry. The bills include: SSB1006: According to McDougal, the
bill would amend the Iowa Code by eliminating the current practice of attorneys posting duplicative mechanic’s liens in each applicable county. The bill would also allow recovery of attorney fees by prevailing contractors in all mechanic's lien actions, including where liens are discharged by bond, according to McDougal. SSB1018: The bill would allow most government entities to use the alternative project delivery contract method of construction manager-at-risk without the normal competitive bidding process, a substantial change for public projects, according to McDougal.
A similar bill passed the Iowa Senate last year but failed within the Iowa House. SF69: The bill would require contractors and subcontractors on public projects to provide certain additional information. HF194: The bill would require state agencies to consider using a project labor agreement for projects that cost $25 million or more.
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LOCAL NEWS
Illinois firm acquires Iowa-based Gilcrest/JewettUS LBM, a leading U.S. distributor of specialty building materials, has acquired Gilcrest/Jewett Lumber Co., a building products dealer and manufacturer with five Iowa locations, including Waukee, the companies announced. US LBM is headquartered in Buffalo Grove, Ill. Gilcrest/Jewett has done business in Iowa for more than 165 years, providing a range of specialty building products to professional builders as well as do-it-yourselfers. Gilcrest/Jewett's leadership team will remain with the company, including Sumner Worth, who will serve as president and general manager, and Rick Thompson, who will serve as senior vice
president of sales. "US LBM and Gilcrest/Jewett both share the values of putting people first, innovating through technology and delivering superior products and service," Worth said in a prepared statement. "We’re excited for the new opportunities this partnership brings for both our employees and customers." Survey: 14.7% of competitive office space is vacant in Des Moines areaAt the close of 2020’s fourth quarter, 14.7% of competitive office space in the Greater Des Moines area was vacant, according to CBRE|Hubbell’s quarterly survey. That’s up more than 2 percentage points from a year ago when the vacancy rate was 12.4%. The survey showed that more than 1.3 million square feet of vacant office space was located in
the western suburbs and that there was more than 1 million square feet of vacant office space in Des Moines’ central business district. In addition, the competitive office market experienced 400,389 square feet of negative net absorption in 2020, according to the survey. "The deterioration of fundamentals through 2020 was largely underpinned by surges in new supply from user-driven reductions of existing office occupancy just prior to the pandemic," the survey said. "These high levels of new supply were met with historically low demand in 2020 as new leasing activity fell approximately 38% year-over-year." The survey predicted that office vacancies will remain "stubbornly high" at least during the first half of 2021 with higher lease rates difficult to achieve. However, as vaccines for COVID become more readily available in the second half of 2021, "we are
optimistic office fundamentals will begin to stabilize in the second half" the year, the survey said. Office projects currently underway in the metro area include: • The renovation of 611 Fifth Ave. in Des Moines. Construction is expected to be completed in July. The Weitz Co., an architectural, engineering and construction firm, is relocating its corporate headquarters and other company divisions to the building. • Gray’s Landing office building at 220 S.W. Ninth St. in Des Moines. Construction is expected to be completed in February on the three-story, 72,852-square-foot-office building. • The two-story, 60,000-square-foot new office building for the Iowa Bankers Association and its affiliate Iowa Bankers Insurance and Services Inc. at 8901 Northpark Drive in Urbandale. Construction is expected to be completed by midsummer. • The Encompass Building at 2565 S.E. Encompass Drive in Waukee. VizyPay, a credit card processing company currently located in West Des Moines, will move its headquarters into the building when construction is completed later this year. To read the entire survey, click here.
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| COMMERCIAL BUILDING PERMITS
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December commercial building permits
Commercial building permits valued at more than $50 million were issued for projects in 13 Des Moines-area communities and Polk County in December 2020, data from the permits shows. Click here or on the map to find out what commercial building permits were issued in the Des Moines area between Jan. 1 and Dec. 31. To view a spreadsheet that includes the commercial building permit information, click here.
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NOTABLE TRANSACTIONS
The following real estate transactions were recorded in Polk and Dallas counties Jan. 18-22.
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| A Fleet Farm retail store at 1300 S.E. Kettlestone Blvd. in Waukee opened on Aug. 28 in Waukee. The property has been sold for $38.1 million, recent real estate transactions show. Business Record file photo
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Fleet Farm property in Waukee sold for $38.1 million
A South Dakota manufactured housing company has bought property at 1300 S.E. Kettlestone Blvd. in Waukee that includes the Fleet Farm retail and convenience stores, Dallas County real estate records show.
The company, Terveen Manufactured Homes LLC, paid Hurd Kettlestone LLC $38.1 million for the 19.8-acre parcel, records show. Terveen is based in Sioux Falls, S.D.
The 189,660-square-foot Fleet Farm retail store opened in August, as did a Fleet Farm convenience store with gas pumps. Hurd Kettlestone is managed by developer Richard Hurd.
The Fleet Farm development project was valued at $25.4 million.
The transaction was recorded Jan. 21.
In other real estate
transactions:
Genesis Homes Inc. paid Kenyon Hill Ridge LLC $2.6 million for 37 residential lots located south of Southeast University Avenue and west of Grand Prairie Parkway in Waukee, records show. The transaction was recorded on Jan. 20.
Mark and Rori Mankins paid Chad and Emily Baker $1.29 million for property at 924 Briar Ridge in West Des Moines, Polk County real estate records show. The 1-acre parcel includes a single-family house constructed in 2009. The transaction was recorded Jan. 19.
Albia-based University Park Place LLC paid University Park LP
$2.91 million for property at 3725, 3727, 3807, 3809 and 3811 University Ave. in Des Moines, records show. Each property includes a two-story apartment building, each constructed in 1965. The properties, collectively, were valued at $1 million in 2019. The transaction was recorded on Jan. 19.
RJW LLC, based in Clive, paid Springwood Car Wash LLC $625,000 for property at 421 S.E. Oralabor Road in Ankeny, records show. The property includes a six-bay car wash constructed in 2001. The property in 2019 was valued at $238,000. The transaction was recorded on Jan. 21.
Kwik Trip Inc., based in La Crosse, Wis., paid Temple Holdings LP $1.5 million for property at 10103-10193 Plum Drive in
Urbandale, records show. The parcel includes 2.3 acres. The transaction was recorded on Jan. 21.
Donlin Investing LLC paid Section 3 Properties LLC $1.2 million for property at 1490 N.W. 86th St. in Clive, records show. The property includes a retail and warehouse development constructed in 1985. The property in 2019 was valued at $1 million. The transaction was recorded on Jan. 22.
Bradley and Amy Brody paid Stuart Lehr II and Stacey Lehr $1.3 million for property at 3870 Timberline Drive in West Des Moines, records show. The property includes a one-story single-family house built in 1997. The transaction was recorded on Jan. 22.
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NATIONAL/REGIONAL NEWS
18% of U.S. renters behind on lease payments: About 10 million people, or about 18% of renters in the U.S., were behind on their rent payments at the start of January, reports Diana Olick for CNBC.
The number far exceeds the estimated 7 million homeowners who, over a five-year period, lost their properties to foreclosure during the subprime mortgage crisis and Great Recession more than a decade ago, Olick reports. Currently, the typical delinquent renter is nearly four months behind on rent payments and owns an average of $5,600, a new analysis from Moody's Analytics and the Urban Institute shows. Overall, more than $57.3 billion in back rent, late fees and utilities is owned by delinquent renters, according to the analysis.
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FINANCIAL UPDATE
Click here for up-to-the-minute stock prices.
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