Report: Cedar Rapids has 1.5 million square feet of open office space
Decline in retail space on the market expected to be filled with upcoming project completions
Cedar Rapids has a glut of office space available, with more than 1.5 million square feet on the active market.
This is the result of several new projects coming online, including City Hall, Intermec's new site and the U.S. District Courthouse, which have shifted employees from one location to another.
The report, released Thursday in the quarterly Commercial Market Overview by Scott Olson, a registered architect and commercial real estate consultant for Skogman Commercial Group and a Cedar Rapids city councilman, looks at available retail, industrial and office space as well as market trends.
"It's just something we need to watch," Olson said, adding that the excess empty space could cause long-term challenges by pushing down property valuations.
"I support all of these new projects, but right now we're shifting people around. We need new faces."
The amount of open office space has nearly doubled since January 2012 as six new properties have entered the market and several new projects are in the planning stage.
Olson said aside from getting companies to relocate or expand in Cedar Rapids, developers should consider converting some of the excess space into housing.
Des Moines had similar problems several years ago, when large companies abandoned old office buildings in favor for new ones, Olson noted. The city since has turned many of those large buildings into downtown housing and has several others opening soon.
The city of Cedar Rapids also needs to be mindful of how it awards tax increment financing (TIF) and tax abatement, he added
"Moving forward we should only be considering unique and difficult projects that benefit the entire city and wouldn't otherwise be financially feasible. Too much abatement will have a negative long- term impact on existing housing, commercial and industrial properties, thus negating the benefit of the new projects," he wrote in the market overview.
The industrial market showed improvement over the last several months with active space on the market dropping by 11 percent, to 824,000 available square feet, according to the overview.
Land sales remained slow with only one industrial land sale occurring over three acres in the last 18 months.
Retail space on the market has also declined, but Olson said several new projects — including the renovation of Westdale Mall and Lindale Mall — will increase available space dramatically.Rates are also increasing as newer space enters the market, according to the report.