Many times in regional reports, there is usually at least one submarket that slumps and at least one that thrives. But Des Moines is seeing consistent demand across the board for retail, as noted in CBRE's latest market report analyzing the market and asset class.
Overall, net absorption was positive at 70,000 square feet in the fourth quarter and 241,292 square feet for the full year. In Des Moines, CBRE tracked six submarkets — Ankeny, Northwest, Northeast, South, CBD, and Western Suburbs — all of which saw positive demand. Most of the activity happened in the western suburbs, where 59,214 square feet was absorbed in the final three months and 132,287 for the entire year.
Vacancies saw a small decrease in the fourth quarter to 3.5 percent, down from 3.6 percent in the previous three months.
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Investment sales soared 23 percent in 2024 to exceed $74 million. The top deal involved Westwood Plaza, which went for $10.4 million. Second and third place involved Kum & Go and Prairie Cove properties, which changed hands for $6.79 million and $5.5 million, respectively.
Average asking lease rates improved by 52 cents NNN to $16.85 per square foot NNN in 2024. In the fourth quarter, the category saw a small increase of eight cents.
"Retail is increasingly becoming a more favorable investment product sought by investors, spurred by little new product coming to the marketplace and consistent rent appreciation," CBRE wrote in the report.
"What was once an unattractive segment for investors a few years ago, there has been a growing interest in retail opportunities in recent years. Although the shine on retail centers remains strong, we anticipate stagnant investment volume as many shopping center owners are not selling assets as market fundamentals are strong and interest rates are at levels in which leveraged buyers are unable to offer additional compression in cap rates."
In the short term, CBRE expects absorption to remain positive in suburban regions in Des Moines. Also, the CRE firm forecasts that a scarce amount of supply will lead to "strong retail centers" seeing lease rate growth ranging between two and three percent year-over-year. Additionally, it added that vacancy will remain at record low levels.
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