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Office, Hotel planned for Gray’s Landing downtown




Joel Aschbrenner, jaschbrenn@dmreg.com 9 a.m. CDT September 16, 2014
 
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By this time next year a new office building and hotel could be rising in the still undeveloped southern end of downtown Des Moines known as Gray’s Landing.

Officials with Minneapolis-based development company Sherman Associates said Monday they plan to break ground before winter on a 102-room Holiday Inn Express and a three-story office building near Martin Luther King Jr. Parkway and Southwest 11th Street. Both projects are scheduled to open in late 2015.

The hotel and office would be Sherman’s first two developments in Gray’s Landing, the area south of MLK Parkway that the company has been trying to develop for years. Combine those buildings with the two apartment complexes Sherman hopes to start building next year, and the Gray’s Landing area appears primed for a long-awaited rush of construction.

This is the year when we finally get to see it take off,” Matt Anderson, Des Moines’ assistant city manager, said. “It’s about momentum. Once you get those first one or two buildings going, other users will start to notice and will steer business that way.”

Sherman laid out a plan in 2007 for redeveloping the empty former industrial sites south of MLK Parkway. It included 740,000 square feet of office and retail space and at least 500 apartments in a sprawling development that promised to help connect downtown to Gray’s Lake.

Then the recession hit.

Construction halted, demand for office and retail space sank and Sherman had to rethink its plans for Gray’s Landing, putting more emphasis on apartments.

Now the development is finally coming to fruition.

“It’s a large development, so it’s not going to happen at one time, but we are certainly seeing interest in the area picking up,” said Tony Kuechle, a vice president of development with Sherman.

The company’s office and hotel projects will appear before Des Moines’ Urban Design Review Board today.

The 72,000-square-foot office building would cost an estimated $15 million and would face MLK Parkway, between Southwest Ninth and Southwest 11th streets. The building, designed locally by OPN Architects, would include underground and surface parking and a fitness center.

The developers are asking the board to waive certain design and density requirements for the area.

The Holiday Inn Express, which is expected to cost about $12.5 million, would sit on the east side of Southwest 11th Street, south of MLK Parkway. The project was first approved by the Urban Design Review Board in 2010. A small change in its design since then requires approval once again from the board.

Other developments in the area

Sherman hopes to begin construction on two apartment complexes in Gray’s Landing in the spring, company officials said.

The Edge at Gray’s Landing would include 90 apartments on the southwest corner of Tuttle and Southwest Ninth streets. Construction of the $14.5 million project would begin in April if the project is awarded a community development block grant. If not awarded the grant, Sherman will have to look for different funding, city officials said.

Nexus at Gray’s Landing would include about 150 apartments at the southwest corner of Tuttle and Southeast 11th streets. Construction is scheduled to begin in May.

Nearby, several other developments are under construction or in the works.

• Just south, at 510 S.W. Ninth St., Hubbell Realty Co

is building Cityville on 9th, an apartment complex with street-level retailers. The first phase, with 111 units, is scheduled to open late this year. Second and third phases will bring the total to nearly 340 apartments.

Hubbell also plans to build a housing development with 40 to 50 townhomes a few blocks away at 555 S.W. Seventh St. Company officials have said construction could begin in spring 2015.

• At Southwest Third Street and MLK Parkway, developer Rich Eychaner is renovating a collection of brick buildings into a new retail center called the Green Limited/Des Moines Brewery block.

A rebound year for development

In 2014, the city saw more developers, site selectors and potential tenants express interest in the Gray’s Landing area than in any other year since the recession, Anderson said. In the coming year, some will likely announce plans to build there.

“The tire-kickers will be making decisions in ’15,” he said.

Gray’s Landing isn’t the only development to rebound after being stalled by the recession. Locally based Hansen Real Estate Services announced plans this year for a development covering an entire East Village block. That project will include a hotel, apartment complex and parking garage.

The city has been working with Hansen on that project since 2007, Anderson said.

While the Gray’s Landing area has sat largely empty for the last several years, lots of work has been done to prepare the site, said Rita Conner, an economic development coordinator with the city.

In recent years, the city constructed Southwest 11th Street, installed sewers and built a pump station to handle storm water. “If we can get one or two things in the ground, that will get some momentum going,” Conner said. “In a short time we probably won’t remember the four or five years when we didn’t see a lot of activity.”

Seeing demand for office space

A local company has agreed to leave its current office to be the primary tenant in Sherman’s new building, but officials with Sherman said they couldn’t reveal the company’s name. Several other tenants are in discussions, Kuechle said.

Sherman’s project is one of the first attempts to build speculative office space downtown since the recession. While still relatively high, downtown office vacancy rates have been falling in recent years and there is demand for low-rise offices with surface parking like Gray’s Landing is offering, said Glenn Lyons, president and CEO of the Downtown Community Alliance.

Lyons said Gray’s Landing, with its access to a major road and available land to develop, gives downtown another way to compete with the suburbs for office users.


 

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