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September 19, 2020
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California Investor Acquires 270k sf Des Moines, IA Retail Center


Water Tower Place, a 270k sf retail center in Des Moines, Iowa, was acquired by a California-based family investment entity. The sale did not include a Home Depot within the center that is over 100k sf in size and is separately owned. The seller was a locally-based private partnership that had owned the property since it was built in 1994.

Other industry news sources report that the sale came in around $51 mil, which would give a price near $189/sf. From what we understand, this transaction ranks as one of the highest price retail property sales in the state’s history.

Water Tower Place is located at 4100 University Ave, east of I-35 and north of I-235. Anchored by the only Whole Foods Market in the state, Water Tower Place was 100% leased at the time of sale. Other national tenants in the center include Ross, Marshall’s, ULTA, Best Buy, Cost Plus World Market, Five Below, buybuy Baby, Office Depot and Guitar Center.

David Chasin, Kevin Shelburn and Bradley Kritzer with Pegasus Investments Real Estate Advisory Inc represented the seller in the transaction. The buyer, who has extensive experience acquiring and managing trophy-quality, grocery-anchored shopping centers throughout the United States, purchased the asset on an all-cash basis.

“There are a few markets we consider to be ‘sleeper’ markets. Basically, these are markets that should be on every national investor’s radar due to their phenomenal demographic, employment and real estate fundamentals, but for some reason or another have yet to make the mainstream lists. Without a doubt, Des Moines is near the top of that list,” explained David Chasin, Managing Director of Pegasus Investments. “For example, Des Moines is the fastest growing metro in the Midwest, it has the 2nd lowest unemployment rate in the U.S., has experienced 42% population growth since 2000, and boasts $100,000 average annual household incomes [West Des Moines].”

According to Brad Kritzer, Managing Director at Pegasus Investments, there were several key tenant bankruptcies in Water Tower’s history which show how resilient the property and market have been. “When Best Buy was shrinking many of its stores, the landlord was able to capitalize by bringing in the first Whole Foods in the state of Iowa. When Borders Bookstore shuttered all of its stores, buybuy Baby backfilled the entire vacancy which significantly improved the profile of the shopper. Finally, when Sports Authority failed, the landlord replaced them with Ross, ULTA and Five Below," Kritzer noted.

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