Office

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.

The CBD office market consists of approx. 3,400,000 SF. Entering 2023, the vacancy rate was 14.03% which increased slightly throughout the year, ending at 15.53%. The average asking rental rate is $10.62/SF NNN, increasing from $10.03/SF NNN at the beginning of 2023.

The term adaptive reuse summarizes the 2023 CBD office market. The former Guaranty Bank block will see the addition of approx. 100 market-rate apartments and a 10,000 SF fitness facility. The Economic Alliance office building repurposed its first floor as a magnet high school and the former Principal office building is slated for conversion to multifamily.

While the CBD lost electric transmission company, ITC Midwest, and the long-standing branch banking services of U.S. Bank, it gained the corporate headquarters of the Iowa Interstate Railroad, a considerable expansion of Cedar Rapids Bank & Trust and the relocation/additional investment by Shuttleworth & Ingersoll into their move to the former Gazette building.

Additional underutilized office space conversion is on the horizon. Developers and owners will continue to seek ways to fill or convert their vacant office space/buildings, specifically with multifamily, educational and medical users.

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.

The Cedar Rapids metro suburban office market consists of approx. 5,700,000 SF. Entering 2023, the vacancy rate was 17.57% which increased throughout the year, ultimately ending at 20.32%. The average asking rental rate is $10.76/SF NNN, decreasing slightly from $10.83/SF NNN at the beginning of 2023.

2023 was a year of suburban medical and dental office expansion. Despite the high cost of new construction, demand remains lofty in this subsector. Over the next year, the metro area will gain expanded emergency medical, dental and therapeutic services.

Several metro headquarters have listed space for lease while others began calling workers back to the office, at least part-time. Suburban office space continues to be in a period of transition following the pandemic which catapulted many companies into a fully remote-work environment.

Net absorption remained negative throughout 2023 indicating a decrease in occupied space fueled largely by large/corporate vacancies. The metro continued to see a trend of tenants downsizing or foregoing lease renewals. While the future of office space is still in flux, expect lackluster new construction starts in the near term. Leasing and sales of smaller suburban buildings are anticipated to remain strong.