NYT | Des Moines Landmark Poised to Rise From Its Ashes

A Des Moines Landmark May Rise From Its Ashes - The New York Times

6/14/16, 12:32 PM

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COMMERCIAL REAL ESTATE

A Des Moines Landmark May Rise From Its Ashes Square Feet

By JOE GOSE

MAY 24, 2016

DES MOINES — The Younkers department store was an anchor in this city’s downtown for over 100 years. And after it closed in 2005, the prime location was central to a plan to revitalize a long-neglected commercial corridor.

A fire in 2014, however, derailed momentum for the project, under which the store, on the north side of Walnut Street, between Seventh and Eighth Streets, was to be converted to 120 apartments and commercial space.

The blaze resulted in the demolition of one of the two turn-of-the century buildings that had housed the store and halted a plan to spruce up several blocks of Walnut Street. And it caused millions of dollars in damage to surrounding properties and the closing of several nearby small businesses.

But now Blackbird Investments, a Des Moines-based developer, has embarked on a $60 million project to bring some 280 apartments, retailers, restaurants and potentially hotel rooms to the former Younkers site.

“There aren’t a heck of a lot of opportunities remaining in the core of downtown, and this is the center of the universe for Des Moines,” said Justin Doyle, a Blackbird partner. http://www.nytimes.com/2016/05/25/realestate/commercial/a-fire-ravaged-des-moines-landmark-may-rise-from-its-ashes.html?ref=commercial&_r=0

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A Des Moines Landmark May Rise From Its Ashes - The New York Times

6/14/16, 12:32 PM

Blackbird paid $2.75 million last summer to buy the property from the Alexander Company, a developer based in Madison, Wis. After several years of planning, Alexander began its rehabilitation just months before the fire, the cause of which was never determined. Lawsuits and insurance claims followed, bogging down the project.

Younkers has its roots in the late 19th century here in Iowa, when three Younker brothers founded a dry goods store. In 1899, the Walnut Street store opened as the flagship location, and in 1924, it expanded into the adjacent Wilkins Building, which dates to 1909. Dozens of other department stores later operated under the Younkers name, and today, the Younkers brand is owned by Bon-Ton Stores. Five years after the flagship store closed, it was listed in the National Register of Historic Places.

Since acquiring the Younkers property, Blackbird has been in a sprint to convert the surviving six-story Wilkins Building into a mix of commercial spaces and 60 apartments. Blackbird has also undertaken a painstaking renovation of what was once the popular Younkers Tea Room restaurant on the sixth floor to its 1920s grandeur. Mr. Doyle said he hoped to open the Wilkins Building by next spring.

Next door, on the vacant parcel where the older building stood, Blackbird wants to develop a tower that could accommodate as many as 220 apartments, or a mix of hotel rooms and apartments, as well as additional commercial space, Mr. Doyle said.

Municipal and business leaders in Des Moines have said they consider redevelopment of the Younkers site a critical component of a broad rejuvenation that has added hundreds of residential units, hotel rooms, entertainment venues and commercial space to downtown, already an insurance and financial hub that employs an estimated 75,000 people.

Private and public investment in the downtown area has totaled $3 billion in the last decade, according to the Downtown Community Alliance, a division of the Greater Des Moines Partnership. The nonprofit group, which is funded by private companies, government and institutions, promotes economic and community development in central Iowa.

Several other residential and commercial projects are in the works downtown, including the conversion of offices in the 92-year-old Equitable Building into http://www.nytimes.com/2016/05/25/realestate/commercial/a-fire-ravaged-des-moines-landmark-may-rise-from-its-ashes.html?ref=commercial&_r=0

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A Des Moines Landmark May Rise From Its Ashes - The New York Times

6/14/16, 12:32 PM

including the conversion of offices in the 92-year-old Equitable Building into apartments and commercial space, the construction of a Hy-Vee supermarket with apartments above it, and the development of a 330-room Hilton-operated hotel connected to the Iowa Events Center, which has convention space.

But downtown business leaders are especially bullish on the prospect that the Younkers redevelopment can help return Walnut Street to its 20th-century glory days by becoming a lively pedestrian mall.

In the 1970s, the city converted several blocks of Walnut Street into a transit hub for buses — building shelters and generally closing the street to cars during business hours. As in other cities, suburban growth was already hurting downtown retailers in Des Moines, and that move, along with an extensive public skyway system, further diminished the number of shoppers strolling along the corridor and led to the eventual closing of Younkers and other stores.

But in 2012, the transit hub moved a few blocks to the south, opening new opportunities for Walnut Street, said Jay Byers, chief executive of the Greater Des Moines Partnership. “There hasn’t been a lot of development along the block for years,” he added.

In 2013, the city and Walnut Street property owners agreed to split an estimated $5.4 million bill to create a pedestrian-friendly environment that would help attract stores and restaurants, work that was delayed by the Younkers fire.

Recently, workers began ripping out the remaining bus shelters and sidewalks to prepare for upgrades from Fifth Avenue to Eighth Street along Walnut Street, said Jason Van Essen, a senior city planner for Des Moines. He expects the work to be complete this year.

Wells Fargo, one of the largest employers in central Iowa, improved the corridor’s outlook last year when it pegged storefront space at 666 Walnut Street for its 12th history museum in the United States. The museums showcase the bank’s role in the country’s development, and the Des Moines location is expected to open this year.

“Hopefully, with the momentum between the development projects along Walnut Street and the improvements to the streetscape, it will spur new interest in retail, restaurants and services that will fill in spaces along the street,” Mr. Van Essen said. http://www.nytimes.com/2016/05/25/realestate/commercial/a-fire-ravaged-des-moines-landmark-may-rise-from-its-ashes.html?ref=commercial&_r=0

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A Des Moines Landmark May Rise From Its Ashes - The New York Times

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Essen said.

Still, challenges remain in attracting retailers downtown.

Across from the Younkers site, EMC Insurance operates in a campus that fills a square block, and it is now building a $22.7 million office building there. It also owns retail space to the east on Walnut Street, and traditional retailers occupy only roughly 25 percent of the space set aside for those uses, said Robert L. Link, senior vice president and corporate secretary for EMC. Fast-food restaurants and other small businesses that serve daytime workers occupy about 85 percent of space tailored specifically to those operations.

“We’re trying to get big-box stores or businesses that do small-box concepts in urban settings,” Mr. Link said. “But they all have certain minimums in population, and we always seem to fall just a little bit short.”

That is changing, downtown leaders contend. About 10,000 residents occupy 6,500 units in and around downtown, and 3,200 additional units are either under construction or in various planning stages, said Eugene Meyer, president of the Greater Des Moines Partnership.

Thomas Jacobs, a partner at Blackbird and a vice president with the real estate brokerage CBRE/Hubbell Commercial in West Des Moines, added that pent-up demand was driving the preleasing of downtown units under construction.

Downtown apartment vacancy has hovered just above an average of 2 percent since 2012, according to a CBRE Hubbell apartment survey released this year.

Average rental rates downtown have generally risen over the same period and now range from $748 a month for an efficiency unit to $1,752 for a three-bedroom apartment, the survey said.

Blackbird said it planned to seek rents of around $2 per square foot for its market-rate units, which will vary from 650 square feet to 1,200 square feet, Mr. Doyle, the Blackbird partner, said.

He acknowledged that taking on the prominent Younkers project had put Blackbird under the spotlight in the community, which wants to see Walnut Street’s biggest eyesore transformed into a project it can brag about. The community’s opinion of Blackbird rides on it, he added.

“The average guy on the street doesn’t understand, and frankly doesn’t care, http://www.nytimes.com/2016/05/25/realestate/commercial/a-fire-ravaged-des-moines-landmark-may-rise-from-its-ashes.html?ref=commercial&_r=0

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A Des Moines Landmark May Rise From Its Ashes - The New York Times

6/14/16, 12:32 PM

“The average guy on the street doesn’t understand, and frankly doesn’t care, how long it took to figure out litigation and insurance claims,” Mr. Doyle said, referring to the fire’s aftermath. “They just know they’ve been walking by the site on their way to work for months and months and nothing has been happening.”

A version of this article appears in print on May 25, 2016, on page B5 of the New York edition with the headline: Saving a Des Moines Landmark From the Ashes.

© 2016 The New York Times Company

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