Downtown Des Moines commercial property values up 11% in 2023

The total taxable value of downtown Des Moines' commercial properties jumped almost 11% in 2023 compared to the previous year, according to data provided to Axios by the Polk County Assessor.

Why it matters: Municipal budgets rely on the tax base.

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• Larger cities are facing massive cutbacks as commercial real estate prices tumble, the New York Times reports . Our colleagues at Axios D.C. reported on the same trend .

By the numbers: The value of downtown DSM's commercial and industrial properties as well as apartments with three or more residences was almost $2.8 billion last year.

• That's up from $2.5 billion the previous year and is nearly $486 million more than before the pandemic in 2019, per assessor data.

State of play: DSM is "kind of holding its own," Kevin Crowley, a manager with NAI Iowa Realty Commercial , tells Axios. That's partly attributable to office-to-residential conversion projects.

• Decisions like the repurposing of a 372,000-square-foot former Nationwide building for municipal offices helps reduce vacancies, he adds.
• Demand for downtown housing also remains strong, Brandon Brown, president of the Downtown DSM Neighborhood Association, tells Axios. Some buildings have waitlists, he says.

Reality check: Some downtown DSM commercial properties have high vacancy rates or have been on the market for months , Crowley says. A big factor is the high costs to remodel.

The big picture: Remote working trends have led to an "office real estate apocalypse," according to research updated in December from Arpit Gupta, a New York University business professor.

• Drops in lease values, occupancy and market rents in the U.S. commercial office sector resulted in a nearly $665 billion "value destruction" between 2019 and 2022, Gupta estimates.

Data: Polk County Assessor; Note: Values include properties classified as commercial, Industrial or apartments with three or more units.; Chart: Axios Visuals