EMC Insurance Cos. plans to sell four of its downtown Des Moines properties, the company announced Thursday.
One of the biggest downtown property owners, the company says it’s realigning its real estate holdings to keep only the buildings it uses for its own business and employees. It will sell four properties it leases to other tenants or uses for storage:
- The 21-story HUB Tower, 699 Walnut St.
- The west side of the Kaleidoscope at the Hub, 555 Walnut St.
- The former Carpenter Paper building, 106 S.W. Seventh St.
- The Lortex building, 113 S.W. Eighth St.
An EMC news release said the company “has no plans to sell” the three buildings that comprise its headquarters: 717 Mulberry St., 219 Eighth St. and 700 Walnut St., the signature skyscraper commonly known as the “Vodka Building” because of its resemblance to an Absolut vodka bottle.
EMC also will keep its two parking ramps and a surface parking lot.
“EMC was founded here more than 110 years ago, and we’re committed to downtown Des Moines for the long term,” President and CEO Scott Jean said in a statement. “Des Moines will remain our headquarters location.”
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The property and casualty insurance company, which employs a total of 2,400 people, half of them in Des Moines, has determined it has “ample space at our three buildings to meet our needs for the foreseeable future,” he said.
In July, EMC announced it would put off planned construction of a headquarters expansion at the northwest corner of Seventh and Walnut streets, the former site of the downtown Younkers department store, and instead build a public park there for the city’s use.
Like businesses across the U.S., EMC had its employees work from home during the coronavirus pandemic until vaccines became widely available. There has been a voluntary return to the office since April, but the company plans to continue allowing employees flexibility in choosing their work site, Todd Strother, executive vice president, previously told the Des Moines Register.
“We anticipate that this flexibility will have some impact on our space needs,” he said in July.
There are currently no office buildings in downtown Des Moines listed for sale on LoopNet, an online marketplace for commercial property. However, the growth of remote work during the pandemic has led to an increase in companies turning space over for lease. Nationwide Insurance, for example, is seeking tenants for most of its five-story, 372,000-square-foot office building at 1200 Locust St.
Vacancy in downtown office space reached an elevated 19.6% in the third quarter of 2021, according to CBRE l Hubbell Commercial, which tracks the market. About 41,400 square feet downtown was listed as available for sublease in the second quarter alone, according to the company.
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Metrowide, sublease inventory reached 364,000 square feet in the third quarter, the highest level since 2011.
CBRE | Hubbell Commercial Vice President TJ Jacobs said he anticipates more corporate office space will be put up for sublease as the pandemic lingers. He said commercial real estate investment remains strong in the Des Moines metro, though office space is “one of the lesser desired asset classes.”
“However, in major markets throughout the country we are seeing a significant increase in office tower and office building investment sale activity. Eventually this will come to markets the size of Des Moines,” he said.
With its announcement Thursday, EMC also said it has a purchase agreement with a prospective buyer for the two brick storage buildings on the south side of downtown. The Lortex building at 113 S.W. Eighth St., built in 1970, is a 45,500-square-foot warehouse EMC purchased in 1997. EMC will retain ownership for up to two years while it transitions out of the space, according to its news release.
Also in 1997, it purchased the former Carpenter Paper building at 106 S.W. Seventh St., EMC said the four-story warehouse, built in 1918, is one of the last remaining downtown warehouses available for conversion to another use.
The buyer for both properties is in a due diligence phase.
As it considered an expansion, EMC purchased both the HUB Tower and the Kaleidoscope building in 2010 because of their close proximity to its other buildings. Since then, however, it has leased the majority of the space there.
The company had owned the entirety of the Kaleidoscope, an indoor mall built in the 1980s, but traded the eastern half in 2018 to Blackbird Investments in exchange for the former Younkers site. The park under construction there is set to open this summer.
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Blackbird had plans to tear down its portion of the Kaleidoscope, between Fifth and Sixth avenues, previously home to a food court, to make way for a 33-story apartment tower. The project is now on hold indefinitely and the property remains vacant.
The HUB Tower and the western half of the Kaleidoscope between Sixth Avenue and Seventh Street will be marketed as one package, and tenant leases will remain in effect. “A sale will not impact terms and conditions,” EMC’s news release says.
“We have been good stewards of these properties and made a lot of improvements to the Hub Tower and Kaleidoscope, in particular,” Jean said in his statement. “We intend to sell to a buyer who will maintain and take pride in the buildings just as we have.”
Kim Norvell covers growth and development for the Register. Reach her at [email protected] or 515-284-8259. Follow her on Twitter @KimNorvellDMR.
https://www.desmoinesregister.com/story/money/business/development/2022/01/06/emc-insurance-sell-hub-tower-kaleidoscope-warehouses-downtown-des-moines-walnut-street/9116381002/