116 3rd St SE
Cedar Rapids, Iowa 52401
Data center projects drove Cedar Rapids commercial growth in 2025
Retail and service industry also performed well, while demand for office space lags, GLD reports
Feb. 26, 2026 4:00 pm
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CEDAR RAPIDS — A surge in industrial data center development drove commercial growth in Cedar Rapids last year while demand for traditional office space continued to lag below pre-pandemic levels, according to the annual report from real estate firm GLD Commercial.
The firm’s commercial real estate report states the 2025 market in and around Cedar Rapids was “characterized by strong industrial growth, … a transitioning office sector (and) resilient retail" operations.
“The big notable point from this report is what I’d say are spinoff or ripple effects from the data centers,” GLD cofounder David Drown said. “That’s everything from the sales of industrial space to land sales and the leasing of warehouse space and increased demand for apartments” for data center workers.
The report — the fifth of its kind — is separated by sector using data from the Cedar Rapids Area Association of Realtors, the Cedar Rapids and Linn County assessors’ offices, the Cedar Rapids Metro Economic Alliance and others.
It tracks occupancy and rental rates for the city’s central business office district, suburban offices, industrial market, retail and service properties, and multifamily/mixed-used facilities.
Data center projects drive industrial growth
Drown said the industrial commercial market remained “extremely tight” in 2025, in large part because of the two massive data centers under construction at the Big Cedar Industrial Center in southwest Cedar Rapids near The Eastern Iowa Airport.
That includes a $1.75 billion project from QTS and a nearly $600,000 campus from Google, both of which are under construction. The report credits those “megaprojects” with the broader market performance, given increased leasing activity from data center contractors/vendors.
That ripple effect “is typical based on what we’ve heard from other communities, but there’s never been anything prior to this of that scale in Cedar Rapids,” Drown said. “We’ve seen many, many leases and purchases to satisfy the demand of contractors and subcontractors” for those projects.
However, the vacancy rate for industrial space went up last year — ending the year at 8.83 percent compared to 3.97 percent at the beginning of 2025. In total, there are an estimated 14.9 million square feet of industrial space in the market area.
Drown said that increase can largely be attributed to the late-year listing of the 300,000- square-foot Smurfit Westrock packaging facility, 1601 Blairs Ferry Road NE, which served as an outlier to the overall trend.
“The vacancy rate did increase, but it’s mostly because of one big building,” he said. “Things are still really tight otherwise.”
Other notable industrial transactions in 2025 included the kickoff of a $68 million addition of a new food-grade warehouse at Danisco, a $48.5 million expansion at Ingredion’s Cedar Rapids plant and a $15 million warehouse project along Sixth Street SW.
Demand for downtown, suburban office still sagging
High vacancy rates and elevated interest rates have pushed many companies to pursue the use of existing office space rather than new development in both the downtown and suburban areas, although demand for both still lags from pre-pandemic levels.
The approximately 3.5 million square feet of office space in the Central Business District ended 2025 with a vacancy rate of 26.3 percent — up from 21.7 percent at the beginning of the year. Similarly, vacancy rates in the suburban office market ended the year slightly higher at 26.9 percent.
The trend is driven in part by changing work trends that have persisted since the COVID-19 pandemic disrupted typical operations, the report said.
“Hybrid work is now the norm, as opposed to the exception, driving demand for smaller, amenity-rich spaces that offer flexibility, convenience, wellness and accessibility,” the report reads. Focus has shifted “toward backfilling existing buildings … instead of ground-up office projects.”
The downtown vacancy rate also took a hit with the influx of 186,000 square feet with the spring listing of the former US Bank building at Third Street and Second Avenue SE, although the report notes the site is now under contract for redevelopment.
“We’re still seeing some of the effects of COVID, … but (we expect) some of the conversions from vacant office buildings into multifamily residential will continue to help diminish that office vacancy over time,” Drown said.
Some notable developments made headway in 2025, however, such as the city of Cedar Rapids’ pledging a $5.3 million upgrade of the former UFG building at 101 First Ave. SE and the opening of Cedar Rapids Bank & Trust’s new $19 million office building at 116 Sixth St. NE, across from the main bank at 500 First Ave. NE.
The report also notes developments in more suburban areas, such as the opening of UnityPoint Health’s new 22,000-square-foot senior care office in Hiawatha and ESCO Electric’s planned $8.5 million office project in Marion.
Download: 2025 Cedar Rapids Metro Commercial Real Estate Report_rfs.pdf
Retail ‘stable,’ despite closures
Demand for retail and service-oriented commercial space remained steady in 2025, ending the year with a nearly unchanged year-over-year vacancy rate of 7.84 percent. The average asking rental rate was $13.41 per square foot, down from $14.64 at the beginning of the year.
Of all commercial submarkets, the report stated that the retail/service areas “demonstrated the most stable performance” in 2025, with the city’s southwest quadrant showcasing a particularly strong performance near Westdale Town Center.
“While the metro saw multiple restaurants close, new concepts were quick to backfill their space, keeping well-located corridors active and minimizing vacancies,” the report stated. “Adaptive reuse projects reflect the retail submarket’s ability to attract new tenants even as traditional retail faces e-commerce pressures.”
Some notable projects included the start of construction on a new $25 million Dick’s House of Sport at Lindale Mall and 7-Brew’s $1.3 million purchase of the former Sugarfire BBQ site at 2350 Edgewood Rd. SW.
Multifamily development ‘moderating,’ but still busy
Demand for multifamily housing remained robust last year, driven in part by high interest rates and home prices that kept some would-be homebuyers in the rental pool. An influx of construction workers from the data center projects also has increased demand for rental units.
Around 650 rental units were planned or started in the Cedar Rapids area in 2025. Vacancy rates for multifamily units ranged between 3 percent and 5 percent for new construction and between 5 percent and 10 percent for older units.
Some of the proposed projects from 2025 include a 92-unit apartment complex in the 3400 block of Stone Creek Circle SW from Talon Development, the 58-unit Rose Cottage 2 development on Prairie View Lane SW and the sale of Mainstay Suites at 5145 Rockwell Dr. NE for apartment conversion.
“Following several years of heavy construction, the multifamily pipeline is moderating, as higher financing costs, stricter underwriting and construction inflation slow the start of new projects,” the report states. Still, “demand for quality rental housing remains robust, while affordable and workforce housing continue to be priorities.”
Comments: grace.nieland@thegazette.com
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