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‘Prime’ piece of empty downtown Cedar Rapids land listed for $2.5 million near Paramount Theatre
Some hope to see project that combines private land with city-owned lot
Cedar Rapids — The fate of a site that could present an opportunity to attract people downtown — and ultimately change the face of Cedar Rapids’ urban core — remains in limbo until a buyer steps forward to redevelop a prime piece of vacant land.
GLD Commercial last week listed the 0.386-acre site — two empty lots at 320 and 330 First St. SE, owned by Iowa City developer Jesse Allen — for $2.5 million. The property is next to vacant city-owned land on First Street and Third Avenue SE where a proposed high rise has long been anticipated to shape the downtown landscape.
In July 2018, Steve Emerson, downtown Cedar Rapids' most prolific developer, was the only applicant to bid on the prominent city-owned land, which is used for parking near the Paramount Theatre.
The proposal envisioned a 25-story, $73 million high rise that would have been the tallest in the downtown area. According to the plans, the high rise would include a ground level, full-service Brothers Market grocery store, a 17th-floor restaurant with patio, 100 to 120 condominiums, 21 apartments, office space, about 700 parking spaces, rooftop gardens, electric vehicle charging stations, bike storage, solar panels and a mini dog park on the upper levels.
Emerson’s plans came after Allen initially proposed a 28-story, $103 million high rise encompassing the city-owned lots and the 320 and 330 First St. SE property. Allen’s proposal for the tower, dubbed One Park Place, was the winning proposal among three the city selected in May 2016, but fizzled and sent the city back to the drawing board when Allen couldn't secure financing after 18 months.
Adam Gibbs, GLD Commercial’s vice president, said his company has a database of individuals and companies that could be good prospective developers, but the listing still is new. He anticipates having a better gauge of interest in the coming weeks.
Cedar Rapids City Assessor’s Office records show the lots’ combined assessed value is $637,600, far below the selling price. The assessed value doesn’t account for the fact that the lots used to contain office buildings that sustained heavy damage in the August 2020 derecho and were torn down as a result of the storm.
It’s difficult to price the property because empty land downtown is sparse, Gibbs said, but the $2.5 million price is based on the opportunity it presents. It offers a clean slate compared with some older historical buildings with environmental issues or other challenges that present an obstacle to redevelopment, he said.
“Recognizing each property is unique, but being on First Street just down from the federal courthouse, and you look at the investment that has been made over the years along First Street, I think someone that wants to be in a more high-profile location downtown will see the value in that First Street location that they will not see being on, say, Second Avenue,” Gibbs said.
City Manager Jeff Pomeranz said this is a valuable downtown property, but its size could pose a challenge to redevelopment. He and Gibbs both said it would make sense to combine the city and private lots into one project.
“We’ll have to see if someone is interested in consolidating those two pieces for a larger project,” Pomeranz said.
Emerson continues to plan for a project at the city-owned site near the Paramount, though he said it would look different from what he initially planned years ago. For instance, the office and parking space likely need to be re-imagined in a post-pandemic world.
But for that price, Emerson said he isn’t interested in buying the property owned by Allen. He said Allen needed to take a “realistic approach” to selling the lots.
“He’s trying to win the lottery basically,” Emerson said. “ … Nobody’s going to buy it for that.”
Asked for comment, Allen directed The Gazette to Coralville real estate agent Tom Kaut. Kaut said time would tell whether a buyer steps forward at that price, but it’s in a prime location within a potential TIF district and Opportunity Zone, an economic development tool created by the 2017 GOP-backed Tax Cuts and Jobs Act that allows people to invest in economically distressed areas.
“Not many opportunities like that in downtown” Cedar Rapids, Kaut said. “ … A developer can purchase this property along with the city-owned parcel and have a great project.”
The economy has changed and interest rates have soared since Emerson first stepped forward to bid on the city-owned property, throwing a wrench in plans for the project that already would have been a massive undertaking before the COVID-19 pandemic.
His project also was initially included in Cedar Rapids’ pitch for state Reinvestment District funds. But after the IEDA awarded $9 million to split across multiple downtown projects — less than the city’s initial request of $39.5 million — city officials said the high rise near the Paramount and developer Mike Whalen’s Guaranty Bank project weren’t far enough along to receive a slice of the funds.
Asked if Cedar Rapids might issue another request for proposals to seek others interested in redeveloping the site, Pomeranz again said the city would take a wait-and-see approach if a buyer comes forward to take over the private lots.
“If there is an opportunity to move forward, we’ll have to make decisions at that time,” Pomeranz said. “Thus far, (Emerson has) been the only individual that has shown interest in the site now for a prolonged period of time.”
Gibbs said he thought the best use for the property would be some type of mixed-use development that incorporates the lots owned by the city.
Specifically, Gibbs said he would anticipate the development incorporating some parking and a residential component, such as a hotel, housing units or a mix. City officials have indicated a need for more housing in the urban core and for hotel rooms to attract larger events to the Alliant Energy PowerHouse convention complex.
The site is walkable to Theatre Cedar Rapids, the Paramount and other businesses that are likely to attract overnight guests downtown, Gibbs said, so it checks a lot of boxes for developers eyeing opportunities to build a hotel in the urban core.
As for office space, Gibbs said it couldn’t be ruled out, but companies’ need for office space appears to remain fluid as the world emerges from the COVID-19 pandemic.
“The last two projects were pretty ambitious, pretty grandiose projects and it would’ve been awesome for downtown,” Gibbs said. “I don’t know that we’re going to see something quite that grand go here just with post-COVID demand for downtown. I think that is just to be determined.”
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