A MESSAGE FROM ADAM
It's our pleasure to present the second annual Cedar Rapids Metro Commercial Real Estate Report.
2022 was another exceptional year for the commercial real estate industry. Development in the industrial and multifamily submarkets soared to new heights while the office market continued to show significant repercussions from the COVID-19 pandemic.
I encourage you to reach out to any of the GLD Commercial real estate experts to further discuss the information contained in this report.
Adam Gibbs, SIOR Principal & Co-Founder
KEY TAKEAWAYS
Industrial submarket:
2022 was another unprecedented year for new construction and leasing
Demand, values and rental rates should begin to stabilize in 2023
Office submarket:
Multiple corporate headquarters listed space for sale or lease
Rental rates will decline as more space becomes available
Landlords will need to be flexible with lease terms and clauses
Retail submarket:
Second-generation vacancy and rental rates remain stable; first-generation rental rates will be subject to construction costs
Several new construction starts
Consumers continue to expect both e-commerce and in-store options
Multifamily/Mixed-use submarkets:
Higher interest rates and home prices continue to fuel multifamily rentals
Over 2,500 units completed, under construction or announced in 2022
Mixed-use projects with a function of retail/office and residential continue
2022 Cedar Rapids Metro /05
Y/E'21 Q1 Q2 Q3 Q4 2 15 1 05 0 01 2022 QUARTERLY METRO INDUSTRIAL VACANCY RATES 02 2022 QUARTERLY METRO INDUSTRIAL NET ABSORPTION 03 2022 QUARTERLY METRO INDUSTRIAL AVERAGE PSF ASKING RENTAL RATES 0 . 7 1 % 1 . 8 0 % 0 . 4 0 % 1 . 6 1 % Q1 Q2 Q3 Q4 200,000 150,000 100,000 50,000 0 -50,000 -100,000 -150,000 -200,000 Y/E'21 Q1 Q2 Q3 Q4 8 6 4 2 0 1 7 0 , 9 8 0 ( 1 4 9 , 3 5 8 ) ( 1 5 5 , 7 9 4 ) $ 6 . 2 1 $ 6 . 1 8 $ 6 . 2 3 $ 6 . 5 3 2022 Cedar Rapids Metro /06 Anegativenumberreflects squarefootageadded tothemarket INDUSTRIAL 1 . 1 7 % 35,594 $ 6 . 5 1
ANALYSIS The figures contained herein focus on existing, or currently under construction, industrial buildings including warehouse, flex, commercial and small shop properties. Non-competitive, owner-occupied, special-purpose manufacturing buildings do not accurately affect local vacancy or rental rates and are therefore excluded from this analysis.
MARKET OVERVIEW The Cedar Rapids industrial market consists of approx 12,700,000 square feet (SF). Entering 2022, the vacancy rate was 0.71%, it fluctuated significantly throughout the year as new construction came online and large existing spaces (Gazette facility) were sold or leased. The 2022 industrial vacancy rate ultimately ended at 1.17%.
The average asking rental rate is $6 51/SF NNN which has steadily increased since the beginning of 2022 at $6.21/SF NNN. This increase is due to the cost of new construction, continued supply chain issues and lack of available second-generation space.
LOOKING AHEAD
Following several robust years, industrial market demand, values and rental rates should begin to level off and stabilize in 2023 Rising interest rates coupled with the potential for an economic recession will also slow the rate at which speculative new construction is being built.
655 Capital Dr SW, Cedar Rapids HYVEE BAKERY/WAREHOUSE constructing an $8,000,000 bakery and distribution facility of approx. 50,000 SF
prise Dr., Marion SPECULATIVE WAREHOUSE constructing a $3,600,000 ing for light industrial, distribution and warehousing of approx 52,300 SF
10015 6th St. SW, Cedar Rapids SUB-ZERO MANUFACTURING constructing a
$90,000,000 light manufacturing facility of approx. 400,000 SF expansion of its manufacturing facility by approx. 9,200 SF
725 41st Ave. Dr. SW, Cedar Rapids JRS PHARMA constructing an $18,000,000
3545 3rd Ave., Marion MARION PROCESS SOLUTIONS 48,327 SF among 3 buildings on 3.49 acres sold as an investment for $4,625,000
wling St. SW, Cedar Rapids former GAZETTE COLORWEB PRINTING sold to Raining Rose 198,884 SF on 34.59 acres sold vacant for $6,000,000
h Ave. SW, Cedar Rapids EDGEWOOD LOGISTICS PARK 101,920 SF new ion warehouse leased to Midwest Refrigerated Services
1201 Continental Pl. NE, Cedar Rapids GLOBAL FILTER 100,000 SF lease signed at an existing facility
h St. SW, Cedar Rapids LOWE'S HOME IMPROVEMENT 81,000 SF lease
SW, Cedar Rapids EDGEWOOD LOGISTICS PARK 50,000 SF new ion leased to Zurcher Tire
01 INDUSTRIAL
SIGNIFICANT TRANSACTIONS ANNOUNCED, IN PROGRESS, COMPLETED OR TRADED
2022 Cedar Rapids Metro /07
Y/E'21 Q1 Q2 Q3 Q4 15 10 5 0 01 2022 QUARTERLY CBD OFFICE VACANCY RATES 02 2022 QUARTERLY CBD OFFICE NET ABSORPTION PSF 03 2022 QUARTERLY CBD OFFICE AVERAGE PSF ASKING RENTAL RATES 1 2 . 6 5 % 1 2 . 8 1 % 1 4 . 3 0 % 1 4 . 1 1 % Q1 Q2 Q3 Q4 20,000 0 -20,000 -40,000 -60,000 Y/E'21 Q1 Q2 Q3 Q4 15 10 5 0 ( 5 4 , 5 6 4 ) ( 5 1 , 0 1 7 ) ( 2 9 , 0 9 7 ) $ 8 . 4 7 $ 7 . 0 5 $ 1 0 . 2 9 $ 1 0 . 5 5 2022 Cedar Rapids Metro /08 Anegativenumberreflects squarefootageadded tothemarket CBD OFFICE 1 4 . 0 3 % 2,487 $ 1 0 . 0 3
ANALYSIS The figures contained herein focus on all CBD office buildings. Non-competitive hospital-owned properties, radio/television-occupied properties and existing buildings being converted to multifamily housing do not accurately affect local vacancy or rental rates and are therefore excluded from this analysis.
MARKET OVERVIEW The CBD office market consists of approximately 3,400,000 SF. Entering 2022, the vacancy rate was 12.65% which increased throughout 2022, ending at 14 03%
The average asking rental rate is $10.03/SF NNN, increasing from $8.47 at the beginning of the year.
The CBD office market saw substantial activity in 2022 downtown staple, Principal, exited for a suburban location, the former Guaranty Bank adaptive reuse opportunity went sale pending, the Witwer Building sold to Foundation 2 and the Higley Building was listed for sale.
LOOKING AHEAD Expect a continued increase in vacancy especially as large corporate tenants finalize remote/work-from-home policies Employers and landlords, especially in the CBD, should begin to focus on the human element and transition space to serve a more collaborative purpose in order to attract and retain employees.
SIGNIFICANT TRANSACTIONS ANNOUNCED, IN PROGRESS, COMPLETED OR TRADED
ve. SE, Cedar Rapids UFG-OWNED RUSH NICHOLSON BUILDING
27,186 SF on 0.325 acres sold to the City of Cedar Rapids for $2,500,000
305 2nd Ave. SE, Cedar Rapids WITWER BUILDING
40,000 SF on 0.41 acres, one-half leased and one-half vacant sold for $1,484,000
t. SE, Cedar Rapids former GUARANTY BANK BUILDING, WORLD THEATER, DRAGON RESTAURANT & PARKING LOT a 101,302 SF adaptive reuse opportunity listed for $3,100,000 currently SALE PENDING
116/118 3rd Ave. SE, Cedar Rapids HIGLEY BUILDING
53,706 SF on 0.19 acres partially-leased investment property listed for sale at $2,150,000
200 2nd Ave. SE, Cedar Rapids former PRINCIPAL FINANCIAL
67,000 SF on 0.39 acres vacant building listed for lease or sale for $3,600,000
ve SE, Cedar Rapids former GAZETTE OFFICE
16,800 SF on 0.96 acres vacant g isted for sale for $2,860,000 currently LEASE PENDING
02
CENTRAL BUSINESS DISTRICT (CBD) OFFICE
2022 Cedar Rapids Metro /09
Y/E'21 Q1 Q2 Q3 Q4 20 15 10 5 0 01 2022 QUARTERLY METRO OFFICE VACANCY RATES 02 2022 QUARTERLY METRO OFFICE NET ABSORPTION PSF 03 2022 QUARTERLY METRO OFFICE AVERAGE PSF ASKING RENTAL RATES 8 . 0 6 % 9 . 0 1 % 1 1 . 3 4 % 1 6 . 6 3 % Q1 Q2 Q3 Q4 0 -100,000 -200,000 -300,000 -400,000 Y/E'21 Q1 Q2 Q3 Q4 15 10 5 0 ( 1 5 2 , 7 9 0 ) (52,153) ( 3 1 6 , 0 4 5 ) $ 1 1 . 8 1 $ 1 1 . 5 3 $ 1 0 . 6 5 $ 1 0 . 9 6 2022 Cedar Rapids Metro /10 Anegativenumberreflects squarefootageadded tothemarket SUBURBAN OFFICE 1 7 . 5 7 % (62,036) $ 1 0 . 8 3
ANALYSIS The figures contained herein focus on metro area office properties. CBD office and non-competitive owner-occupied medical buildings do not accurately affect local vacancy or rental rates and are therefore excluded from this analysis.
MARKET OVERVIEW
The Cedar Rapids metro suburban office market consists of approximately 5,900,000 SF. Entering 2022, the vacancy rate was 8.06% which increased each quarter, ultimately doubling and ending the year at 17 57%
The average asking rental rate is $10.83/SF NNN, decreasing slightly from $11.81 at the beginning of 2022.
The former Aegon/Transamerica Edgewood Road campus fell out of contract for the second time and was listed for sale via an online auction site, selling to an out-of-state owner during the third quarter for $7,020,000. The existing 201,165 SF office building was subsequently listed for sale and/or lease.
LOOKING AHEAD Corporations will continue to reduce overall square footage as they look for more flexible lease terms including expansion, contraction and pandemic clauses. Lease rates will gradually decline as additional space becomes available.
11,240 SF on 0.51 acres sold r $1,725,000
ve. SW, Cedar Rapids former LUECK LABEL
15,876 SF on s sold vacant for $1,710,000
r Center Ct. NE, Cedar Rapids former US CELLULAR OFFICE
15,334 SF on 2.26 acres sold vacant to Dunkin' Donuts for $1,300,000
1900 1st Ave. NE, Cedar Rapids former WESTERN FRATERNAL LIFE
4050 River Center Ct. NE, Cedar Rapids former TATA CONSULTANCY SERVICES
21,036 SF on 6.64 acres sold vacant for $2,645,000
ewood Pkwy. SW, Cedar Rapids former PURDUE GLOBAL
26,505 SF on 3.97 d vacant for $2,800,000
20,295 SF on 1.12 acres sold as an investment for $2,365,000
929 Martha's Way, Hiawatha TATA CONSULTANCY SERVICES
r Ridge Dr NE, Cedar Rapids UNITYPOINT CHILDREN'S SPECIALTY SERVICES on 1.9 acres sold as an investment for $1,862,500
1025 Kirkwood Pkwy SW, Cedar Rapids RUFFALO NOEL LEVITZ 91,892 SF building on 13.97 acres listed for sale, partially occupied at $12,000,000
1 Parsons Dr., Hiawatha former GODADDY HEADQUARTERS
73,674 SF vacant building on 5.74 acres listed for sale at $8,430,720
SUBURBAN OFFICE 03
ANNOUNCED, IN PROGRESS, COMPLETED OR TRADED 2022 Cedar Rapids Metro /11
SIGNIFICANT TRANSACTIONS
Y/E'21 Q1 Q2 Q3 Q4 8 6 4 2 0 01 2022 QUARTERLY METRO RETAIL/SERVICE VACANCY RATES 02 2022 QUARTERLY METRO RETAIL/SERVICE NET ABSORPTION PSF 03 2022 QUARTERLY METRO RETAIL/SERVICE AVERAGE PSF ASKING RENTAL RATES 4 . 7 2 % 4 . 7 7 % 5 . 2 5 % 5 . 6 5 % Q1 Q2 Q3 Q4 0 -20,000 -40,000 -60,000 Y/E'21 Q1 Q2 Q3 Q4 15 10 5 0 ( 5 9 , 0 8 8 ) ( 3 8 , 3 7 5 ) ( 3 7 , 6 5 9 ) $ 1 3 . 9 0 $ 1 2 . 5 7 $ 1 2 . 9 7 $ 1 2 . 8 8 2022 Cedar Rapids Metro /12 Anegativenumberreflects squarefootageadded tothemarket RETAIL/SERVICE 6 . 0 3 % ( 3 9 , 4 3 2 ) $ 1 4 . 9 6
ANALYSIS The figures contained herein focus on metro area retail buildings and service establishments
MARKET OVERVIEW The Cedar Rapids retail/service market consists of approx. 9,300,000. Entering 2022, the vacancy was 4.72%, increasing slightly and ending the year at 6.03%.
The average asking rental rate is $14 96/SF NNN, a slight increase from $13 90 at the beginning of 2022. This increase is attributed to new construction costs and Class A space availability.
Net-leased retail investments dominated the first half of 2022 while business sales including restaurants, banquet hall/event centers and auto dealerships commanded the second half. New retail development came online in the vicinity of anchor tenants at Westdale and Blairs Ferry Super Target.
LOOKING AHEAD While most shoppers turned online during the pandemic, boosting e-commerce and the need for increased warehouse space, many of those shoppers are returning to the store looking for an experiential retail experience Customers prefer to try products before buying, which is difficult to accomplish online. Expect the retail market and rental rates to stay stable throughout 2023.
4000 Westdale Pkwy. SW, Cedar Rapids HOME2SUITES HOTEL constructing an 84room hotel at Westdale
ey Blvd SW, Cedar Rapids WILEY CROSSING demolition of an existing p to make way for a new 17,020 SF retail strip, a $5,400,000 investment
1202 3rd St. SE, Cedar Rapids BREWHEMIA/OLYMPIC THEATER 20,700 SF multitenant retail/special purpose building sold as an investment for $3,307,189
167 Jacolyn Dr. NW, Cedar Rapids CEDAR HILLS RETAIL CENTER 37,336 SF multitenant retail center sold as an investment for $1,655,000
r Terrace Rd., Marion BARREL HOUSE RESTAURANT-ANCHORED CENTER multi-tenant retail/office center sold as an investment for $2,500,000
2120 Edgewood Rd. SW, Cedar Rapids TOP SHAPE GYM 35,346 SF single-tenant investment sold for $2,775,000
5225 Buffalo Ridge Dr NE, Cedar Rapids DOLLAR TREE 9,500 SF single-tenant investment sold for $1,943,500
3120 Edgewood Rd. SW, Cedar Rapids former FAZOLI'S freestanding restaurant 3,601 SF on 0.92 acres sold vacant for $1,200,000
RETAIL/SERVICE 04
2022 Cedar Rapids Metro /13
SIGNIFICANT TRANSACTIONS ANNOUNCED, IN PROGRESS, COMPLETED OR TRADED
ANALYSIS The figures contained herein focus on metro area multifamily buildings and/or complexes with a minimum of 12 units Small-scale multifamily properties consisting of duplexes, townhomes or condos do not accurately affect local capitalization rates (cap rates), vacancy or rental rates and are therefore excluded from this analysis.
MARKET OVERVIEW Housing continues to be in short supply, ultimately contributing to record-low multifamily vacancy rates The majority of class B and C properties are hovering at or slightly above 5% vacancy while most newly constructed apartments were leased to 95% occupancy within the first three months of completion.
Changing market conditions and higher interest rates have led to less inventory and turnover. Very few apartment complexes were sold within the Cedar Rapids metro area The properties that did trade hands were smaller, most between 12-24 units, with an average cap rate of 7.28%.
LOOKING AHEAD The rental market will continue to be robust as higher interest rates allow fewer consumers to qualify for single-family home ownership While rents have increased over the past few years, it appears they are at or near their peak and will begin to stabilize.
While the cost of building materials has decreased, the cost to construct new properties is not supported by current market rents. Developers will continue to seek incentives, primarily in the form of tax credits, to assist in bridging the gap between the cost of construction and achievable market rents.
h Ave., Marion GREEN PARK APARTMENTS
147 multifamily units in two with a dog park, pickleball courts and firepit area $25,000,000
627 6th St SE, Cedar Rapids CEDAR RAPIDS BRICKSTONE 44-unit four-story affordable housing complex with a nonprofit partner component $12,200,000
1220 Jacolyn Dr. SW, Cedar Rapids THE JACOLYN announced 50-unit affordable housing complex on Rd., Hiawatha ANTHONY PROPERTIES announced 200-unit mily complex
1218-1310 3rd St. SE, Cedar Rapids REDBALL LOFTS announcement for a 4-story, mixed-use building $9,800,000
NW intersection of Tower Terrace Rd. & Robins Rd., Robins ROBINS LANDING announcement for a 400-acre mixed-use development $85,000,000 initial investment
t. SE, Cedar Rapids DOMOV (Loftus) announcement for a 5-story mixed-use with 186 multifamily units and 11,000 SF of commercial space $36,000,000
MULTIFAMILY / MIXED-USE 05
2022 Cedar
Metro /14
SIGNIFICANT TRANSACTIONS ANNOUNCED, IN PROGRESS, COMPLETED OR TRADED LARGE-SCALE MIXED-USE PROJECTS ANNOUNCED
OR IN PROGRESS
Rapids
2.37
2022 Cedar Rapids Metro /15 BUSINESSES
TOTAL POPULATION
LINN COUNTY EMPLOYEES
TOTAL POPULATION 243,725 DAYTIME LINN COUNTY STATISTICAL DATA 06 EMPLOYEES 64.1% WHITE COLLAR EMPLOYEES
BLUE COLLAR PER HOUSEHOLD $66,607 MEDIAN INCOME AGE 38.5 MEDIAN INCOME
PER CAPITA
HOUSING OF HOUSEHOLD
8,378
233,301
151,679
22.8%
$37,119
UNITS 101,230
AVERAGE SIZE COLLINS AEROSPACE
LARGEST EMPLOYER 9,000 EMPLOYEES
427 First Street SE, Suite 200 Cedar Rapids, IA 52401 gldcommercial.com 319.731.3400
Principal
SIOR
319.731.3417
For additional information, contact:
Adam Gibbs, SIOR
& Co-Founder 319.731.3415 agibbs@gldcommercial.com Dave Drown, SIOR, CCIM Principal & Co-Founder 319.731.3411 ddrown@gldcommercial.com Erica Seelman Principal 319.731.3412 erica@gldcommercial.com Angie Glick-Martin,
Principal 319.731.3409 angie@gldcommercial.com Michael Gibbs Agent Associate
mgibbs@gldcommercial.com
