Des Moines Warehouse Market Report 2025: Your Guide to Heartland Distribution Space
Last Updated: December 2025
If you’re looking for warehouse space in Des Moines, you’re entering one of America’s most underrated logistics markets – a Midwest hub that offers something increasingly rare: affordable space with genuine strategic value. Iowa’s capital sits at the crossroads of major interstate highways, offering next-day truck access to one-third of the U.S. population at rates that coastal markets can only dream about.
Let me walk you through what’s really happening in this market, from the Altoona distribution corridor to downtown’s urban industrial options. Whether you’re a small business owner looking for affordable warehouse space or a broker helping clients discover the Midwest’s hidden gem, here’s what you need to know.
Why Des Moines Deserves Your Attention
MARKET SNAPSHOT: DES MOINES WAREHOUSE FACTS
| Metric | Value |
|---|---|
| Average Lease Rate | $5.75/sq ft NNN (2025) |
| Total Industrial Inventory | 62 million sq ft |
| Current Vacancy | 5.8% (Q3 2025) |
| Historical Vacancy Average | 6.2% (10-year average) |
| Net Absorption (Trailing 12 Months) | 1.4 million sq ft |
| Metro Population | 725,000 |
| Unemployment Rate | 2.8% |
The numbers tell part of the story, but here’s what they mean for you: Des Moines offers the lowest warehouse costs of any major Midwest distribution hub while maintaining vacancy rates that indicate healthy demand. At $5.75/sq ft NNN, you’re paying roughly half what you’d spend in Chicago and a third of coastal market rates.
But here’s the real value proposition: Des Moines sits at the intersection of I-80 and I-35, providing direct interstate access to Chicago, Minneapolis, Kansas City, Omaha, and St. Louis. Within a one-day drive, you can reach 85 million consumers. That combination of low cost and logistics accessibility is why major e-commerce and retail players have made Des Moines a regional distribution anchor.
The Submarkets That Matter Most
Altoona / Eastern Polk County
This is Des Moines’ premier logistics address. The I-80 corridor through Altoona has attracted the market’s largest distribution centers and newest Class A product.
Key characteristics:
- Home to Facebook data center and major distribution facilities
- Average rates: $5.50-7.00/sq ft NNN
- Excellent I-80 access for east-west distribution
- Prairie Crossing development adding modern inventory
- Amazon fulfillment center validates submarket
Ankeny
Iowa’s fastest-growing city has become a distribution hotspot, combining residential growth with strategic industrial development along I-35.
Key characteristics:
- Average rates: $5.25-6.50/sq ft NNN
- I-35 access for north-south connectivity
- Strong workforce availability from growing residential base
- John Deere and agribusiness presence
- Mix of manufacturing and distribution users
West Des Moines / Jordan Creek
The western suburbs offer premium options with excellent highway access and proximity to corporate headquarters concentrated in West Des Moines.
Key characteristics:
- Average rates: $6.00-7.50/sq ft NNN
- I-80/I-35 interchange access
- Strong corporate tenant base
- Wells Fargo, Principal Financial presence drives demand
- Limited large-block availability
Downtown / Urban Core
Des Moines’ urban industrial inventory offers smaller spaces for last-mile delivery and local distribution, though options are limited.
Key characteristics:
- Average rates: $4.50-6.00/sq ft NNN
- Older building stock, often multi-story
- Ideal for local delivery operations
- Constrained availability
- Renovation opportunities in emerging areas
Grimes / Northwest Corridor
Emerging submarket along the Highway 141 corridor, attracting new development with competitive land costs.
Key characteristics:
- Average rates: $5.00-6.25/sq ft NNN
- Newer construction at competitive rates
- Growing inventory of modern specs
- Good access to I-80/35 interchange
- Watch for continued development
What Small Businesses Need to Know
Des Moines punches above its weight for small business logistics. The market’s combination of low costs, available labor, and central positioning creates genuine opportunities for companies that can leverage Midwest distribution.
Your advantages in this market:
- Exceptional affordability – Among lowest warehouse costs in the nation
- Logistics positioning – One-day ground to 85 million consumers
- Labor stability – 2.8% unemployment with strong work ethic reputation
- Pro-business environment – Iowa consistently ranks top-10 for business climate
- Low vacancy – 5.8% indicates healthy, balanced market
- Modern inventory available – New Class A product accessible to smaller users
- Quality of life – Affordable housing supports workforce retention
Watch out for:
- Limited large-block options – 200,000+ sq ft spaces are rare
- Seasonal challenges – Winter weather impacts operations December-March
- Workforce ceiling – 725,000 metro population limits labor pool
- Growth constraints – Market can’t absorb massive footprints
- Trucking availability – Driver shortages affect routing flexibility
- Limited air cargo – Des Moines International serves limited freight routes
The Value Proposition
How Des Moines Compares to Regional Alternatives
Des Moines has carved out a niche as the value play for Midwest distribution. Here’s how the economics compare:
| Market | Avg. Rent ($/sq ft) | Vacancy | One-Day Ground Reach |
|---|---|---|---|
| Des Moines | $5.75 | 5.8% | 85 million |
| Kansas City | $6.25 | 7.2% | 90 million |
| Minneapolis | $7.50 | 6.4% | 60 million |
| Chicago | $9.25 | 6.8% | 100 million |
| Omaha | $5.50 | 6.1% | 80 million |
The sweet spot for Des Moines: Companies that need central U.S. coverage without Chicago costs, or regional operators serving Iowa and adjacent states.
Major Corporate Validation
- Amazon – Multiple facilities including fulfillment and delivery stations
- Facebook/Meta – Massive data center in Altoona with ongoing expansion
- Microsoft – Data center presence
- Google – Data center investment
- Target – Distribution operations
- Hy-Vee – Headquarters and distribution (Iowa-based grocer)
The tech giants chose Des Moines for the same reasons it works for distribution: low costs, central location, reliable infrastructure, and stable workforce.
Real Numbers from Real Deals
Recent Notable Transactions:
Amazon – 640,000 sq ft fulfillment center, Bondurant
- Major e-commerce validation of eastern corridor
Facebook/Meta – Ongoing data center expansion, Altoona
- $1.5 billion+ total investment in market
Prairie Meadows – 175,000 sq ft speculative development, Altoona
- New Class A inventory available to market
Rate Ranges by Submarket:
| Submarket | Rate Range ($/sq ft NNN) |
|---|---|
| West Des Moines | $6.00-7.50 |
| Altoona | $5.50-7.00 |
| Ankeny | $5.25-6.50 |
| Grimes/NW Corridor | $5.00-6.25 |
| Downtown/Urban | $4.50-6.00 |
| Sublease Opportunities | 5-15% below direct rates |
Operating Cost Considerations:
- Property taxes: Moderate at approximately 1.8% of assessed value
- Triple net expenses: $2.25-3.00/sq ft annually
- Utilities: Competitive natural gas and electricity rates
- Heating costs: Budget for Iowa winters (November-March)
Looking Ahead: What’s Coming in 2025-2026
The Good:
- Steady demand – Net absorption positive for 8 consecutive quarters
- Balanced market – 5.8% vacancy supports healthy negotiations
- Infrastructure investment – Highway improvements ongoing
- Data center growth – Tech investment validates market infrastructure
- Workforce stability – Low unemployment with consistent labor availability
- Development pipeline – New Class A product coming without oversupply risk
- Cost advantage sustained – Land costs keep development economics favorable
The Challenges:
- Scale limitations – Market can’t support mega-distribution facilities
- Labor pool ceiling – Rapid expansion would stress workforce availability
- Weather disruption – Winter storms can interrupt operations
- Population growth modest – Metro growing ~1% annually
- Air freight limitations – Limited direct cargo routes
- E-commerce concentration – Heavy Amazon presence dominates large deals
Making Your Move: Practical Next Steps
If you’re a small business owner:
- Leverage cost advantage – Des Moines offers 40-60% savings vs. coastal markets
- Consider Altoona corridor – Best logistics access with modern inventory
- Plan for seasonality – Winter operations require contingency planning
- Explore Ankeny – Growing workforce and competitive rates
- Act on Class A options – Modern space now available at Midwest pricing
- Factor in fuel savings – Central location reduces transportation costs
- Understand NNN obligations – Iowa property taxes add to base rent
If you’re a broker:
- Lead with value story – Cost comparison vs. larger markets is compelling
- Emphasize logistics positioning – One-day ground reach visualization helps
- Highlight workforce stability – 2.8% unemployment resonates
- Position as “right-sized” market – Not competing for mega-deals
- Connect to corporate validation – Amazon, Meta presence legitimizes market
- Quantify total cost savings – Include labor, taxes, and quality of life
The Bottom Line
Des Moines represents something increasingly valuable in American logistics: a genuinely affordable market with strategic positioning and professional-grade infrastructure. You’re not sacrificing quality for cost here – you’re accessing modern facilities and reliable logistics at rates that add directly to your bottom line.
The 5.8% vacancy rate indicates a market in balance. There’s availability without oversupply, and demand without the frenzy that makes coastal markets impossible to navigate. For companies that need Midwest coverage, Des Moines delivers the fundamentals without the premium pricing.
This isn’t a market for everyone. If you need 500,000+ square feet, look to Kansas City or Chicago. If you need international air cargo, Des Moines isn’t your answer. But for regional distribution, e-commerce fulfillment serving the heartland, or companies seeking to escape coastal costs, Des Moines offers a compelling value proposition.
Iowa’s capital has quietly become a logistics hub that major corporations trust with their most important operations. The question is whether you’ll take advantage of the same fundamentals they did – before the rest of the market catches on.
