Developers know when to hold onto property, when to make a move

Commercial property developers and investors tend to think in terms of years - and sometimes decades - when considering how long it will take to fully develop a parcel of land.

In fact, AEGON Real Estate Investment Advisors, a successor to Life Investors Development Co.,  continues to own portions of a 600-acre tract that it acquired in the late 1960s in northeast Cedar Rapids.

The original development plan, announced in April 1970, called for construction of a regional shopping center on the southwest corner of Edgewood Road and 42nd Street NE that would be "comparable in size to the Lindale Plaza shopping center (now Lindale Mall) on First Avenue East."

Life Investors Insurance Company of America, predecessor to AEGON USA in Cedar Rapids (now Transamerica) would have its corporate headquarters in the shopping center. Large sections of land north of Blairs Ferry Road NE were designated for residential development, including a mobile home park.

Four years after Life Investors unveiled its original Twin Pines Community commercial, residential and recreational development, the insurance company announced plans for a $2.9 million, 100,000-square-foot corporate headquarters on the northeast corner of Edgewood Road and 42nd Street NE. By the time it was completed in the spring of 1975, the project had grown to a five-story, $3.6 million building that would house Life Investors and two of its subsidiaries.

Needless to say, the regional shopping center never came to fruition. Office buildings occupy that space today, a testament to the changing needs of the community after Westdale Mall opened in 1979 in southwest Cedar Rapids and interest rates in the high teens took their toll on consumer spending.

The first retail development did not occur until January 1990 when a restaurant, the Sandtrap, opened at 4100 River Ridge Dr. NE. By that time, AEGON USA had constructed an addition to its corporate headquarters and two additional office buildings, known as North Pointe Plaza, on North River Boulevard NE.

In June 1996, Perpetual Savings Bank (now Bank of the West) opened a branch office in what would become the North River Village office and retail park. In more recent years, AEGON USA has sold off parcels to developers of two strip centers, a Chinese restaurant and Hy-Vee, the West Des Moines-based supermarket and drugstore chain.

Jon Dusek, president and chief executive officer of Armstrong Development Co. in Cedar Rapids, said it's not unusual for insurance companies, pension funds and other institutional investors to take the "long view" when they purchase land for development.

"Almost any land deal involves multiple years," said Dusek, whose company developed Longfellow Square in Hiawatha, a mix of retail, services and offices.

"We bought the property in 2000 and we've got about 80 percent done. Originally we hoped to be done in 10 years, but with the way the economy has been the last several years, it's going to take us a little longer."

Longfellow Square is located along North Center Point Road north of Boyson Road in Hiawatha. Dusek said Armstrong Development had specific plans that included retail and service tenants facing North Center Point Road and office buildings to the east.

"We sell and build to suit," Dusek said. "We ended up with restaurants and services, like Culver's and St. Luke's, along North Center Point and office buildings behind them. We pretty much precluded warehousing because we wanted a certain feel to it.

"We put restrictive covenants in place because we were trying to sell people on the idea that they would know what they would get as neighbors in the future. All the buildings would be similar in quality."

Gerry Ambrose, a Coralville developer who has enjoyed success at both ends of the Corridor, recently signed a lease with Kohl's, the Milwaukee-based department store chain, to anchor Wiley Center at 32nd Avenue and Wiley Boulevard SW in Cedar Rapids. Ambrose, developer of Coral Valley Market in Coralville and a former co-owner of Sycamore Mall in Iowa City, is accustomed to buying land and holding it until the right time for development.

"I bought that 19 acres land about 11 years ago," Ambrose said. "It became apparent to me that I couldn't market the western portion of the land that far off Wiley Boulevard commercially. In order to justify keeping the balance of the property for commercial development, I needed to down zone it and sell it for multifamily housing.

"We feel that the 11 acres we have is the prime commercial land that is left for development."

Ambrose, who with Hunter Parks developed Edgewood Market in 2005 and most recently Edgewood Station on the perimeter of Westdale Mall, said there aren't many prime corners for retail development remaining at either end of the Corridor.

"Typically retailers want corners, high visibility and high traffic counts," he said. "They want to be located around other retailers and restaurants.

"I think Kohl's on Wiley Boulevard SW will create a new market area. Life really came to Wiley Boulevard when Target opened and I think the addition of Kohl's to Menards and Walmart will really create a lively area."

While AEGON and Armstrong Development have enacted restrictive covenants to assure that the level of building quality and landscaping is maintained, Dusek was quick to add that such covenants need to take into account the potential cost of compliance.

"There's a little bit of a fine line when you're putting covenants in place," he said. "You don't want to create such severe covenants that you make it more costly for somebody. Frankly, when you're selling land for offices, it's going to weed out those who want to do warehousing because they won't pay that much for the land."

Dusek said developers try to stay abreast of growth patterns and anticipate where people want to work and live. His company recently began marketing Tower Commerce Park, a 58-acre, 26-lot business park between Stamy Road and Hawkeye Drive in Hiawatha.

"There's a lot of growth up there and we need to get some road networks installed," Dusek said. "When Tower Terrace Road is completed and an interchange with Interstate 380 is developed, I think you will see some real explosive growth in the northern part of the county."