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Commercial Real Estate Weekly | September 16, 2020
The start of construction of a proposed 112-room Element Hotel by Marriott at 304 E. Walnut St. in Des Moines has been delayed. Rendering special to the Business Record
Construction delayed on $21.5M Des Moines hotel project
By Kathy A. Bolten | Senior Staff Writer

A developer who plans to construct a six-story hotel in Des Moines’ Historic East Village will be allowed to delay completion of the project until Dec. 31, 2023, the City Council decided this week.

Swaps Cash LLC, managed by Lincoln and Lisa McIlravey of Solon, has proposed building a 112-room Element Hotel by Marriott at 304 E. Walnut St. Construction was to begin a year ago, according to a development agreement approved by the council in August 2019.

Completion of the project, originally valued at $21.5 million, was slated for early 2021.

However, cost overruns and the economic effects of the outbreak of the novel coronavirus on the hospitality business have delayed the project, according to information provided to the council at its meeting this week.

The McIlraveys are "optimistic that future economic conditions with the local hospitality industry will be conducive for the project to move forward," according to the council document.

The project is expected to receive financial assistance from a 10-year, 80% tax increment financing economic development grant of up to $2 million, according to the development agreement with Swaps Cash LLC.

In a related matter, the council also approved an amendment to a development agreement that delays until July 1, 2021, the reopening of the Hotel Fort Des Moines at 1000 Walnut St.

The hotel, originally constructed in 1917, is undergoing a $50 million renovation. A development agreement approved in 2016 between the city and Coralville-based Janssen Lodging LLC, the hotel’s owner, called for the project to receive up to $4.1 million in tax increment over 20 years.

The Hotel Fort Des Moines, which will retain its name but be part of Hilton Hotel's Curio Collection, received $16.2 million in state historic preservation tax credits awarded in mid-2019.

The renovation project had been expected to be completed by this fall.

"As the building restoration nears completion, it would not be beneficial to either the developer nor the city for the developer to immediately open the hotel due to the impact of the COVID-19 virus on the hotel industry," according to a document provided to the council this week.

Also this week, the council approved:

Preliminary terms of an urban renewal development agreement with 217 E Second LC, which is managed by developer Jake Christensen, who is proposing a $6.3 million renovation of the building at 217 E. Second St. Christensen bought the property in 2018 for $1.85 million, Polk County real estate records show.

Terms of the proposed development agreement between the city and Christensen call for the project to receive financial assistance in the form of project-generated tax increment of about $1.2 million.

• Designating the Financial Center at 606-666 Walnut St. and 207 Seventh St. a local landmark. LawMark LP, which owns the structure that includes a 25-story tower, plans a nearly $60 million renovation of the property. The designation makes the property eligible for State Historic Tax Credits that can be used to help defray renovation costs.

• Final terms for a development agreement with Aust Real Estate LLC, managed by Matt and Mindy Aust of West Des Moines. Aust Real Estate plans a $6.1 million restoration of property at 1201 Keosauqua Way in Des Moines. For years, the brick structure was home to Reliable Rug and Carpet Cleaning Co.

The development agreement approved by the council provides the project with up to $990,119 of project-generated tax increment over 20 years. The property in early 2020 was valued at $180,700. When the renovations are completed, the property’s value is expected to climb to $1.4 million, according to city documents.

The developers, who bought the property in April, plan a historically compatible renovation of the 18,912-square-foot building, which is vacant. The renovated structure will include speculative commercial and retail space and one second-story living unit.

Construction is expected to begin by spring 2021 and be completed by early 2022, according to city documents.
Aust Real Estate LLC has purchased a long-abandoned building at 1201 Keosauqua Way. The structure will undergo a $4.8 million renovation. Architectural rendering special to the Business Record
Area commercial building permits

Commercial building permits totaling more than $53 million were issued for projects in 13 Des Moines-area communities in July, data from the permits shows. The permits were for new commercial construction, additions and remodels or renovations. Click on the map to find out what commercial building permits were issued in the Des Moines area between Jan. 1 and July 31, 2020. To view a spreadsheet that includes the commercial building permit information, click here.

Downtown walking tour to take place Friday
The Iowa Architectural Foundation’s live Architecture on the Move downtown Des Moines walking tour had to be postponed last week due to inclement weather. You can still sign up for the rescheduled date this Friday, Sept. 18. Guides will have microphones, enabling social distancing. The tours provide an opportunity for local residents and visitors to appreciate the architectural treasures of Iowa's capital city. Sign-in starts at 5 p.m., inside the atrium at Capital Square. Tours take off at 5:30 p.m. and are led by IAF’s volunteer architects. Masks and comfortable shoes and clothing are recommended. Tickets are $20 and can be purchased here.

Bankers Trust files foreclosure petition on parking garage under construction in downtown Des Moines: A foreclosure petition filed this week in Polk County District Court on a downtown Des Moines parking garage under construction at Fifth Avenue and Walnut Street puts the future of the $200 million multipiece development called the Fifth in jeopardy. The petition, filed by Bankers Trust Co., claims that 5th and Walnut Parking LLC and developers Justin Mandelbaum and Sean Mandelbaum are in default on a $48 million note on which payments were to begin being made on Aug. 31.

Des Moines University unveils renderings of new campus: Des Moines University officials last week unveiled renderings of its a new campus planned in West Des Moines at 8025 Grand Ave.

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Submitted photos
Construction complete of Calvin Square

What: Calvin Square
Where: 44th Street and Hickman Avenue in Des Moines
Developer: Calvin Community
Architect: Wells Plus Architects of Des Moines

Background and update: The metro’s first townhomes with private elevators (the second photo shows the elevator on the left) are now available to lease.

The Calvin Community campus expansion brings a range retirement living options to one location. Calvin Square’s six two-story townhomes each include two bedrooms, a garage and a private elevator and lease for $2,950 per month.

The 36 apartments sit above the relocated MercyOne Beaverdale Family Medicine in a second building facing Hickman Avenue. Apartments range from 724 to 977 square feet and include underground parking. The MercyOne clinic opened earlier this year. Construction just finished on the townhomes and apartments; they are ready for immediate occupancy.

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:
The following real estate transactions were recorded in Polk and Dallas counties between Sept. 4-11, 2020.
Burton Properties LLC paid West Des Moines-based Mid-Coast Properties LLC $1.62 million for properties at 2037 and 2041 Grand Ave. in West Des Moines, Polk County real estate records show. Burton Properties is located in Polk City. The properties each include one-story office buildings. The building at 2041 Grand Ave., constructed in 1993, is 8,400 square feet; the property is valued at $1 million, records show. The building at 2037 Grand Ave., construct in 1995, is 6,250 square feet; the property is valued at $519,000. The transaction was recorded on Sept. 9, records show.

Pleasant Hill Properties LLC of Ames paid AFM Arbor Chase LLC, also of Ames, $2 million for 18 lots with townhouses built on them, real estate records show. The two-story, two-bedroom townhouses with tuck-under garages are located at 6333-6358 Scarlet Leaf Lane and 6332-6356 Autumn Leaf Lane in Pleasant Hill. The townhouses were constructed in 2008, records show. The transaction was recorded on Sept. 10, records show.

Heather and Josh Saboe paid Bret and Rebecca Bussanmas $1.2 million for property at 16106 Maple Drive in Urbandale, Dallas County real estate records show. The 2.2-acre tract includes a two-story, 3,086-square-foot house constructed in 2012. The transaction was recorded on Sept. 8, records show.

Kyle and Bridget Kroner paid Ironwood Homes Inc. $1 million for property at 36460 Shadow Trail in Van Meter, records show. The 2.1 acres include a two-story house on which construction was completed in July. The house includes a great room with stone fireplace and office with built-in desk and cabinets, records show. The transaction was recorded on Sept. 10, records show.

KLBB Real Estate 2 LLC of Waukee paid TD200 LLC based in Parker, Colo., $990,000 for property at 660 Second St. in Waukee, records show. The property includes two-story apartment buildings constructed in 1978. The transaction was recorded on Sept. 4, records show.

National study calls for industry action on gender parity,
diversity in commercial real estate

By Business Record Staff

A national study indicates there is much work to do on gender and diversity parity – with little progress over the last five years – within the commercial real estate industry.

The 2020 CREW Network Benchmark Study: Gender and Diversity in Commercial Real Estate, conducted in partnership with the MIT Center for Real Estate, measures progress for women over the past 15 years, capturing industrywide data and benchmarking diversity in commercial real estate.

"We are calling on executives who can affect change to take this study seriously and take action in their company and in the industry," said CREW Network CEO Wendy Mann in a release. "CREW Network remains committed to creating a more diverse, equal and inclusive industry — but we can’t do it alone. Industry leaders must address these issues as a business imperative — and take action now to make this important investment in our companies, our employees, and the future of our industry to remain a competitive and attractive employer."

Key findings from the study:

  • Women occupy 36.7% of the commercial real estate industry. The percentage has remained between 35% and 37% over the past 15 years.
  • The study saw a 5.4% increase in female respondents 39 years old and younger, indicating a growing generation of young and emerging women professionals in the industry.
  • More women occupy brokerage than ever before (29%), a 6% increase from 2015.
  • Women’s career satisfaction level is the lowest since the study began in 2005. Fifty-five percent of women are very satisfied with their career.
  • Only 16% of respondents reported that 25% or more of the professionals in their workplace are Black, indigenous and people of color (BIPOC). However, more than half of respondents have noticed a culture shift regarding diversity, equity and inclusion.
  • Overall, the difference in total average compensation (salaries, bonuses and commission combined) across genders is 34% — a nearly 11% increase from 2015.

The fixed salary gap between genders is 10.2% and the commission and bonus gap is a staggering 55.9%:
  • Women earn 10% less than men in base salaries. The gap is wider for Asian women (14%), Black women (15%) and Hispanic/Latina women (20%).
  • Women earn 56% less than men from commissions and bonuses. The gap is wider for Black women (71%), Asian women (73%) and Hispanic/Latina women (74%).

See the full release.

Ikea developing mixed-use centers: Ikea, the Swedish retailer known for its inexpensive yet hard-to-assemble furniture, is starting to develop its own mixed-use centers in the United States, reports John Egan for National Real Estate Investor. The company’s shopping center arm, called Ingka Centres, recently bought a San Francisco shopping center and plans to transform it into a $260 million mixed-use development that will include the smaller-format Ikea store, writes Egan. The company is looking in other U.S. cities for property to buy. "Our urban projects are all about getting closer to our customers," Gerard Groener, general manager of Ingka Centres, said in a prepared statement. "We believe Ingka Centres can transform the performance of well-located assets … by aligning their [offerings] to how people want to spend their time."

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