DES MOINES, Iowa -- There is no question that downtown Des Moines is growing, you can see apartment complexes popping up all over the city. Many people see how much building is going on downtown, they see the cranes, and they hear about vacancies. It leads many to ask if downtown is overbuilt, a question developers hear constantly.
“We get asked every day and the answer is challenging, the answer is really no,” Senior Vice President CBRE, Hubbell Commercial Ryan Jensen said.
“The reason people are asking the question is for the last couple of years it just seems like there’s been building and building and building and I guess at some point I guess it needs to and should slow down a little bit and I think we are seeing that,” Premier Companies Partner Troy Strawhecker said.
According to a yearly market survey from CBRE and Hubbell Commercial only 4.3 percent of the apartments were vacant in 2017. The number of apartment units downtown has doubled since last year and still the vacancy rate in 2018 is only around 9.7 percent.
Many apartments downtown are offering incentives to fill their vacancies quickly.
“You want to fill it quickly without reducing your rents because once you reduce your rents, especially with the supply we have to drive those rents back up, so the concessions are an easy way to fill the physical occupancy and then after the concessions wear off maintain where the rents need to be,” Jensen said.
When the market survey says nearly 3,000 units were built downtown last year and almost 3,000 units are under construction in 2018, another question many people are asking is should we slow down development?
“I do believe you’ll start to see a slowing down of development, we won’t keep that same pace up,” Strawhecker said.
Strawhecker said that development slow down should happen as early as next year, he said there may only be 800 apartment units built in 2019.