Iconic downtown Des Moines skyscraper will house new hotel

One of Des Moines’ iconic skyline buildings will be partially converted into a hotel under a $59.3 million plan to remodel half of its 25 floors.

The top half of the Financial Center, 666 Walnut St., will remain office space that will also be upgraded as part of the project.

The building’s owners say they’re working to bring 190 upscale hotel rooms under a national brand, along with high-class amenities like a ground-floor restaurant, rooftop bar and meeting rooms open to hotel customers, office tenants and the public.

They are in negotiations with a hotel group, but not ready to announce who will operate it.

“It will be a unique-to-Des Moines, unique-to-Iowa project,” said Jake Christensen, a local developer who is working as a consultant to the project with Lawmark Capital, the building’s owner. “It will be a hotel flag and type that we don’t have yet.”

The Financial Center — known for its colorful lights that change with current events and as the landmark downtown that daredevils rappel annually to raise funds for the Special Olympics — has served as office space for various tenants since it opened in 1972.

Lawmark Capital, which also owns the ARAG Building and the DSM Partnership Building in downtown Des Moines, decided to take on a new project when Wells Fargo announced last year it was vacating 13 floors of the Financial Center.

Already facing a high vacancy rate, and knowing office tenants are seeking high-end amenities for employee retention and attraction, Lawmark Capital set out to re-imagine the space, said CEO Mark Buleziuk. With Wells Fargo gone, the Financial Center is about 70% vacant; a healthy office vacancy rate is about 6%.

“When Wells Fargo made the announcement they were going to vacate it put us in a pretty challenging position because our experience to date told us it would be very difficult to fill this building with office space when we still had floors available,” Buleziuk said. “So we had to come up with something very different to make this a viable asset.”

Under the plan, floors one through 13 will become the hotel, with 190 “large, extremely nice” hotel rooms, Christensen said. The first floor will have an upscale restaurant, coffee shop and food market.

“On the first floor, the ceiling heights are over 20-foot tall, so we have an opportunity to really create a dynamic experience for the hotel guests as they arrive, for the office tenants as they go to work and for the general public coming to check out the restaurant,” Christensen said.

The second and third floors will have a fitness room, meeting room, business center and access to the downtown skywalk. On the roof of the third floor, which has a large, flat surface at the base of the skyscraper’s tower, there will be a rooftop bar, pool and lounge. The rooftop is about 45 feet above Seventh Street and will be visible to passersby.

All of the amenities will be accessible by the building’s office tenants; some by the general public.

Office tenants also would see upgraded heating, ventilation and cooling systems, lighting and new elevators. Office tenants on floors 14-25 have a separate elevator from the bottom floors and will be able to go to work without disrupting hotel customers and vice versa.

Downtown Des Moines has seen an influx of new and remodeled hotels as hoteliers shift their focus away from the suburbs to the central business district. Previously, development had lagged in the core as hotels moved away from full-service to extended-stay offerings. Downtown did not add any new hotel rooms between the opening of Des Lux Hotel in 2000 and the Hyatt Place in 2010.

Reflecting the renewed appeal of the central business district, data from STR Inc., shows that for the past two years, downtown hotels have hovered between 60% and 65% occupancy — near the national average — with a room costing an average of $146 per night.

“When you look at that math it tells you that there’s still room in the market,” Christensen said. “It’s a testament to how far our city has come,” he added.

On Monday, the Des Moines City Council approved preliminary terms of a development agreement with Lawmark Capital, including a 15-year tax-increment finance package totaling $7.5 million. It’s estimated the hotel will provide $9.8 million in hotel/motel taxes over the life of the financial incentive, according to a memo to the council.

Buleziuk said the development team has been working hard behind the scenes to come up with schematic drawings and a design concept for the hotel, and it will be working with the national brand to align their visions.

It’s anticipated the hotel will open in 2022.

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