CENTRAL BUSINESS DISTRICT (CBD) OFFICE

Analysis

The figures contained herein focus on the office real estate outlook for all CBD office buildings.

Hospital-owned properties, radio/television not predominately office and those buildings being converted to multifamily housing which do not accurately affect local vacancy or rental rates and are therefore excluded from this analysis.

Market Overview

The  CBD  office market consists of approximately 3,000,000 square feet.

Entering  2021, the vacancy rate was 12.08% and has remained relatively consistent throughout the year. The average asking rental rate is $8.47/SF  NNN.  Note – approx. 44,000 SF was re-listed in the APAC building (425 2nd St. SE) at  $3.00/SF NNN which significantly affected the fourth quarter average asking rental rate.

Looking Ahead

Work-from-home and hybrid work schedules will continue to affect the daytime population in downtown  Cedar  Rapids.

The ripple effect will be felt throughout downtown restaurants and retailers,  although Theatre Cedar Rapids and the Paramount Theatre will boost evening restaurant traffic.

Two significant shifts are anticipated to evolve in the CBD office market:

  •  Continued conversion of mostly vacant Class B and Class C office space  into multifamily residential
  • The likely addition of vacant office square footage as companies continue  to evaluate their future workplace needs

Significant transactions announced or completed

SUBURBAN OFFICE

Analysis

The figures contained herein focus on the office real estate outlook for all metro area office properties.

CBD office and owner-occupied medical buildings do not accurately affect local vacancy or rental rates and are therefore excluded from this analysis.

Market Overview

The Cedar Rapids suburban office market consists of approximately 6,000,000 SF. Entering 2021, the vacancy rate was 4.71% and remained stable for the first and second quarters. Additional vacant office space was added to the market during the third and fourth quarters pushing the vacancy rate to  6.24%  during the third quarter and ultimately ending the year at 8.06%. Note — a combined  135,000 SF were added to the market (or brought back to the market) between availability in The Fountains, Ruffalo Noel Levitz and Western Fraternal Life buildings.

The average asking rental rate is  $11.81 SF NNN.

Looking Ahead

Suburban office buildings are less apt to be converted to multifamily residential so while we anticipate a slight continued increase in vacancy, the market is expected to stabilize in 2022 and begin to recover.

Most suburban office buildings in the Cedar Rapids metro market cater to companies occupying under 10,000 SF. Overall, it appears COVID  has had less of an impact on companies of this size. There will, however, be a transition in this submarket as tenants seek cost savings and as their needs continue to evolve.

The 107,332 SF Toyota Financial building is expected to become available
by the end of 2022 joining other large-scale office vacancies including the former Aegon buildings on N. River Blvd.

Significant transactions announced or completed

  • 955 Kacena Road, HiawathaUnityPoint  IT  relocation — leased a 24,000 SF  building, downsized from a 40,000 SF building