Will the Des Moines Metro Be Hit Hard?

[spacebetween]

I think WF in DSM will be a good marriage for a long time as there are 4 WF business units that call DSM home. I could see one of the business units pulling up shop at some point and relocating, maybe. But, as Microsoft and Google have indicated, labor and property are so cheap here it would be hard for WF to leave anytime in the near future.

Here is an article in the DSM Register to support my opinion above:

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20081003/NEWS/81003014

[DMRyan]

This is one situation where I don't even think there could be educated speculation. There's no word that this purchase could be final with the latest judge-ordered ruling to pause the purchase by Wells Fargo. In as topsy turvy as the economy is these days, this could easily go the other way and mean bad news to Des Moines. The only track record we have is that Wells Fargo has been more than gracious in establishing a presence here and why would they want to jeopardize that with all of their investment made?

[Des Moineser]

It's only been slowed down. The judge ordered the slowdown because some of Citicorp's exec went to this judge's house and sat in his dining room and explained that they wanted a second chance to make a better deal for Wachovia.

[econboy]

As of this morning, word is that a higher court judge has overturned the lower court ruling and it appears things are looking in Wells Fargo's favor.

[Mastermind]

Wells Fargo-Wachovia plans succeed; Citi ends talks
ASSOCIATED PRESS • October 10, 2008

NEW YORK (AP) - Wells Fargo emerged as the apparent victor in the battle for control of Wachovia bank Thursday night, after rival suitor Citigroup broke off talks with Wells Fargo and federal regulators but vowed to have its day in court.

While Citigroup said it plans to seek $60 billion in damages for breach of contract, it has decided not to challenge the Wells Fargo-Wachovia deal in court.


Wells Fargo said late Thursday it had ended talks with Citigroup and was moving ahead to acquire all of Wachovia's banking and other operations. It said the deal would not require aid from the Federal Deposit Insurance Corp. or any other government agency.

"We're pleased Citigroup has abandoned its efforts to interfere with Wachovia's planned merger with Wells Fargo," said Wachovia spokeswoman Christy Phillips-Brown in an e-mail to The Associated Press. "We look forward to completing our merger with Wells Fargo, which we have always believed is in the best interest of shareholders, employees, creditors and retirees as well as the American taxpayers, and it imposes no risk to the FDIC fund."

Wells Fargo said it expects the deal to be completed by the end of the fourth quarter. In a statement issued by the company, Wells Fargo Chairman Dick Kovacevich called the deal "an incredible fit."

In a brief statement, the Federal Reserve said that it would "immediately" begin consideration of the request by Wells Fargo to acquire Wachovia.

Citigroup backed out of negotiations with Fed officials and Wells Fargo on Thursday, ending a nearly weeklong battle for Wachovia Corp. after the banks failed to come to a resolution over how to split up the Charlotte, N.C.-based bank.

While Citigroup decided not to ask that the Wells Fargo deal with Wachovia be prohibited, Citigroup said it remains willing to complete its original deal with Wachovia.

New York-based Citigroup said it believes it has strong legal claims against Wachovia, Wells Fargo, and their officers and directors for breach of contract and plans to pursue its claims "vigorously."

[DMRyan]

Might as well turn this into the general thread about the effects of the souring economy on Des Moines. An article by the Des Moines Business Record reports that speculative retail projects have nearly ground to a halt in the metro, a result of tightening financing by lendors and tepid response from businesses wishing to expand or relocate at this time.

Spec retail projects slow amid economic crisis
BY TODD RAZOR

As the economy tumbles and banks become more cautious in their lending practices, speculative retail projects are diminishing in the metro area.

"We're seeing exactly what the other developers are seeing," said John Knapp, a commercial agent with Iowa Realty Commercial, referring to the slowdown in construction of speculative projects.

Knapp said he doesn't know of any developer who is comfortable putting up speculative retail space right now, adding that vacancy rates are on the rise in many retail centers.

"It's largely been driven by the banks," said Jeff Saddoris, a broker with Knapp Properties Inc., noting that two years ago "money was flowing freely through the banking system" and a lot of retail centers were going up on a purely speculative basis, with little or no money down.

In the past six to eight months, however, financial institutions have been less active in lending, a trend that has been exacerbated by the collapse of developers such Regency Homes and Walters Cos., Saddoris said.

Around the time those companies folded, lending started to taper off, construction slowed and banks began requiring larger down payments on speculative projects. Concern with the amount of unleased space in the market is also prompting lenders to require more equity.

And today, Saddoris said, an increasing number of banks are not in the market for speculative projects at all.

"Clearly the environment has changed," said Tom Stanberry, CEO of West Bank, referring to the attitude of financial institutions when considering whether to extend credit for a retail center or small office building that has yet to secure commitments from tenants.

"In this economic environment, banks are requiring more equity in projects and a higher level of pre-leased space prior to" the start of construction, Stanberry said, adding that in some instances not only are banks asking for personal guarantees from people of significant net worth, but also requiring collateral to shore up those guarantees.

West Bank considers not only the financial strength of the development company and its owners, Stanberry said, but the size and scope of the project as well, adding that each loan is looked at on a case-by-case basis.

Though larger developers may have an easier time obtaining a loan without pre-leasing a percentage of the space, Knapp said, "mom-and-pop" operations have been affected more adversely by the credit crunch.

"The stronger the developer, the less the bank is looking at those leases and the more they are looking at the developer's bottom line," he said, concluding that "everybody is taking a more cautious approach at this point."

For Knapp Properties, being cautious translates into a less aggressive approach to retail development and being careful to pre-lease space in order to secure financing for new construction.

"We would not build purely on a speculative basis without a tenant," Saddoris said, adding that Knapp Properties, which owns approximately 375,000 square feet of retail space in Greater Des Moines, wants 30 to 40 percent of new space to be leased before beginning construction on any given project.

Rick Tollakson, president and CEO of Hubbell Realty Co., is more optimistic about speculative retail, saying his company currently has three speculative projects under way, including Greenway Crossing in West Des Moines, which is 100 percent leased.

But Tollakson admits that Hubbell has been, for the most part, "fairly conservative," and though the company has a moderate amount of speculative retail space in its portfolio, it will "see how that leasing goes before we really start looking to anything else."

Another aspect is the slowdown in demand for new retail stores. Though Des Moines may be faring better than larger coastal markets, "we are not completely isolated," Saddoris said.

Though the bigger developers are adopting a "wait-and-see" attitude, Knapp said, smaller retailers that deal in non-luxury, necessity products, such as food and fuel, are becoming more prevalent. And big-box stores, such as SuperTarget, are helping to keep smaller operations going.

Hubbell may also be seeing more activity in retail space that is contiguous to its housing developments. As homes are sold and more people move in, more demand is generated for retailers in those areas.

"Despite what the media says, people are still buying houses," Tollakson said.

[DMRyan]

Moody's Economy.com has this to say about the Des Moines metro, indicating that we are in a recession, but there is light at the end of the tunnel.

The Des Moines economy is slipping. The indirect effects of the June flood and
the contracting macro economy have spilled over into a broad range of industries.
Job growth is slow among Des Moines' high-wage non-agricultural industries,
particularly financial and real estate services and information. Slowing income
growth in these industries and low consumer confidence are weighing on
retail trade. In response, both trade and transportation are trimming payrolls. In
the context of the faltering national economy, the metro area's economy is keeping
its head above water thanks to relatively well-positioned financial firms and
robust government surpluses. Des Moines' economy will weaken well into 2009
but will outperform the U.S.

In the long run, the city's low cost of doing business and relatively young and
educated population will attract investment. In addition, high per capita income
driven by financial services and agriculture-related industries will draw immigrants
to fuel above average growth.

[speeder]

Des Moines grocers say business remains strong
http://www.desmoinesregister.com/articl ... 0301/1136/
DM Register
November 6, 2008
By JOANNE BOECKMAN
jboeckman@dmreg.com

Shoppers are adjusting their spending habits by buying less expensive cuts of meat and fewer national brands.

The economic downturn may have people looking for items to sacrifice in the family budget, but people still have to eat. That's good news for Des Moines grocery store operators.

Merlyn Linn, owner of Linn's Super Market at 3805 Sixth Ave. on the north side, has been in the grocery business more than 50 years. He has not noticed a change in people's shopping habits and said his grocery business has been good.

"In fact, we had record meat sales two weeks ago. It wasn't huge, but it was a record," he said.

Linn said he's heard other grocery stores say business has been down, but he's thankful his store has so far been unaffected by the economy.

"It's puzzling, but I'm thankful," he said. "Maybe we're doing well because people living in our area aren't living in $500,000 homes."

Across the city, the Sav-A-Lot at 3200 S.W. Ninth St. also has been doing good business, manager Greg Engel said.

"In general, I have noticed business picking up a little bit," he said.

New ownership last year resulted in improvements to the store, he said, but he was unsure whether that or the store's lower prices account for the steady business.

Engel said Sav-A-Lot customers - who pay for their grocery bags and sack their own items in exchange for food prices that claim to be 40 percent lower than others stores - are not changing buying habits.

Aldi, a store that operates similarly, reports faring well, too. Martha Swaney, a spokeswoman for the Chicago-based company, said since January nationwide sales of produce have increased by nearly 20 percent, fresh meat by 14 percent, coffee by 30 percent and eggs by about 47 percent.

Des Moines stores are located at 3940 E. 14th St., 2543 E. University Ave. and 500 E. Army Post Road. As a privately held company, Aldi does not disclose its revenue or numbers of customers, but business in Des Moines has been good enough that the company is considering improvements to those stores, Swaney said.

"Aldi's is working on plans to expand or remodel current stores to keep up with demand," she said.

Dahl's Foods vice president of marketing, Mark Brase, and Chris Friesleben, Hy-Vee's marketing director, said their store directors say customers are buying more private labels and fewer national brands.

Dahl's meat department has been selling more ground beef and chicken and it has been featuring less expensive cuts of meat such as steak for $3 or $4 per pound, instead of $7 or $8, said Mike Hoffman, Dahl's meat director.

"We're offering a Denver steak, cut from chuck, that is a new cut. We worked with the Iowa Beef (Industry) Council on it and it's an excellent cut," Hoffman said. "We also have flatiron steaks, the second most tender piece, also cut from chuck, featured at $3.99 per pound."

The most tender cut is tenderloin, which can sell for $14 or $15 per pound, he said.

"Our sense is that people are cooking more at home," said Hy-Vee's Friesleben. "The majority of our stores in Des Moines have a dietitian that will show people how to eat healthy foods when on a tight budget."

Customers can find information posted in the stores, or ask at customer service for contact information for the dietitian, and set up an appointment, Friesleben said.

"She will walk the aisles with you and show you the types of foods that are good for you and those you should avoid if you have dietary considerations. She can make suggestions for feeding families with a good, nutritious program," Friesleben said.

"She will walk the aisles with you and show you the types of foods that are good for you and those you should avoid if you have dietary considerations. She can make suggestions for feeding families with a good, nutritious program," Friesleben said.

Just wait until "big brother fight global warming no trans-fat drug kids to cure non-you-can't choose for yourself government" starts making this a rule of law. I am not a fan of Universal Healthcare or Socialized Medicine but I will demand the government control people's eating, drinking, and active habits if the American Tax Payer is footing the bill for healthcare...that just seems fair to me. If you want to eat unhealthy foods or drink unhealthy drinks or participate in sports or other non-essential movement activities, you'll have to purchase supplemental insurance to cover the potential costs of your bad habits.

[DMRyan]

Two job cut announcements for Urbandale (and the metro). Lennox Industries is closing their distribution center right off of I-35/80, laying off of moving 140 employees (some to Marshalltown at least).

From the DSM Register:

Lennox to cut or move 140 Urbandale jobs
By JEFF ECKHOFF • jeckhoff@dmreg.com • November 8, 2008

Lennox Industries plans to close a parts distribution center in Urbandale and move or eliminate 140 full-time jobs over the next few years.

The company said in a statement that 30 to 35 jobs probably will be moved to Marshalltown over the next few years, while another 20 to 25 will be added elsewhere because of the change. Reductions at the site at 4301 121st St. in Urbandale are expected to begin late in the first quarter of 2009.

No new construction is expected in Marshalltown as a result of the shift.

Dice, the reinvented technology company is cutting 10% of their workforce as well.

From the DSM Business Record:

Dice Holdings Inc. lays off 10 percent of workforce

BY JOE GARDYASZ
Dice Holdings Inc. has laid off 32 employees worldwide, including 23 who worked at its Urbandale headquarters, a spokeswoman said Thursday. Dice operates several online professional career site companies; it employed 190 people in Urbandale and 318 in total prior to the layoffs.

"The economic downturn has reduced recruitment activity, and that will impact usage of our services," said Jennifer Bewley, the company's director of investor relations. "Consequently, we believe that will impact our revenues in the future. So we had to align our resources for the environment we see ahead in the coming months."

[dogbo]

Someone reallly needs to look into how Wells Fargo seems to squash any news about job cuts. I always here about people getting laid off, yet they never announce anything. Probably helps with recruiting new employees....

I agree. They sure seem to be slippery when it comes to getting their layoffs in the news.

[Mastermind]

I'm not expressing outrage, just curious if someone inside could explain their communications policy.

[speeder]

I don't work for WF but I would have to say I think their policy is less '13 year old girl at a sleepover' and more lets minimize any pain and we will release only what is required of us or absolutely necessary. Doom and gloom and gossip doesn't seem to fit a company that has been around that long.

[Mastermind]

I don't work for WF but I would have to say I think their policy is less '13 year old girl at a sleepover' and more lets minimize any pain and we will release only what is required of us or absolutely necessary. Doom and gloom and gossip doesn't seem to fit a company that has been around that long.

What? Stating that x number of employees were laid off is gossip? I have no idea what your post implies...

[lunksmoo]

Luckily for Des Moines and the rest of Iowa, Best Buy is the only electronic store to serve the area instead of Circuit City. It looks like most of the Circuit City stores will be closing with their bankruptcy and liquidation.

[Better Life dude]

I think the next wave of closings nation wide will be retail chains either going completely under or closing a large percentage of poorer performing stores. Even Best Buy a well run retail chain - headquartered in Richfied, MN asked ALL of their home office employees to take a buyout. They got 500 employees to take the buy-out vs. risk being layed-off with no benefits. They are working on the inside and know how tough things are.

The great thing about the Des Moines metro and we learned this when my wife and I decided to move here in the mid-90's is that because of the large insurance company presence here, the local economy was pretty well recession proof. As a rule even when times are not great, people still continue to make their insurance premiums and keep their policies. And insurance companies tend to be risk-adverse conservative investors with their cash - (AIG being the exception to this rule) so they stay in business for many many many years. Bottom line: the economy and job situation in the Des Moines metro doesn't have the wild swings and this will bode well in the very rocky years we'll be having for the foreseeable future. You can already see that.

[speeder]

I don't work for WF but I would have to say I think their policy is less '13 year old girl at a sleepover' and more lets minimize any pain and we will release only what is required of us or absolutely necessary. Doom and gloom and gossip doesn't seem to fit a company that has been around that long.

What? Stating that x number of employees were laid off is gossip? I have no idea what your post implies...

It doesn't imply anything but let me be clearer on what it states... excessively worrying about how many people are laid off from what company is pointless and useless banter more appropriate to a 13 year old girl. In my opinion, the statistics are being used and manipulated to fuel our ever growing "I'm a victim' culture. I've been out of a job... worse things can happen, I mean there are other opportunities for people that will arise through new commerce, we aren't communists... people who've been laid off can move on, none of our occupations are guaranteed for life positions. Certainly speculating about the ethics of a corporation based upon how they release employees and news to the general public in an effort to continue to make money for their investors and retain the jobs they can isn't any more productive than gossiping. I'll applaud WF for dealing with the bumps of business their own way and keeping business to themselves, instead of fueling the insanity that is pushing forward a collectivist agenda. Individualism and innovation will redeem us, not worrying, handouts, and a complete disregard for the risks and rewards of private enterprise.

According to this article: http://www.bls.gov/news.release/empsit.nr0.htm; the last recorded unemployment rate was 7.2% Normal historical avg is around what 4-5%? - which likely includes a number of deadbeat degenerates that COULD work but somehow manage to live for years off the system and overwhelmingly vote for port-side politicians so they have someone "who cares about people" to continue enabling them by funneled tax money to them through our increasingly Robinhoodesque government. Anyway, I believe, considering all the turmoil we've made it through over the past 6-8months...from the 'lets make legislation pushing that everybody needs a home mortgage, who cares what they make and we'll go after your bank if you don't make bad loan to the disadvantaged' mortgage crisis to the "I really really want that, I'll use my credit card.... what do mean I am out of credit, I need more sh*t from Target & Costco to put in my next storage unit!" retail market bottoming out... 7.2% seems like a relief.

I hate to see anyone laid off, I know from experience that it sucks and having more people unemployed only means more competition for the existing jobs, but not having a job for some reason or another happens to everyone at some point... unless, you're chronically unemployed. I do honestly believe that with the disappointment of being laid-off comes the opportunity for something new; again innovation and individuals are a historically surprising combo. We the people just have to make sure our government doesn't make the mistakes of the past, in times like these, and prolong the madness by attempting to grow the economy by gorging itself, devaluing our assets, making false promises that government is the answer to all "our" problems (most notably that when wages fall so do income tax revenues... poor government, might have to shrink...nuts ), and enacting regulations that limit new & proven growth.

[GoVerticalDSM]

Does anyone know what is driving the huge job growth in the Texas cities (throw in OK City, too)??? It looks like they're not in a recession at all, there are many in the top 10.

[Mastermind]

I heard TX does not have state income taxes, also if you have ever watched and type of "flipping" show you will notice how inexpensive housing is in TX. I often think it is cheaper than Des Moines.

[DMRyan]

I have close family living in Houston and housing costs used to be on par with Des Moines, but I now think that it's cheaper to live there, especially when you consider the no state income tax thing.

I think the three large Texas cities benefit from the above, the higher oil prices and profiteering by energy companies (remember this survey was for October 2008), sunbelt climate and high foreign immigration rates. It may truly be the perfect combination to override this recession.

[Ingersoll1978]

This map is quite interesting (found it on a post on eomahaforums)... "The Geography of Jobs" graphic shows the expansion and contraction of major cities in the US.

Check it out: http://tipstrategies.com/archive/geography-of-jobs/

[Better Life dude]

This map is quite interesting (found it on a post on eomahaforums)... "The Geography of Jobs" graphic shows the expansion and contraction of major cities in the US.

Check it out: http://tipstrategies.com/archive/geography-of-jobs/

As you click quarter to quarter going forward in the time line, it looks like blood splattered everywhere - except Iowa curiously enough.

[Cmuse]

Interesting how in California the graphic dramatizes how closely related the job losses were to the real estate meltdown, with the lack of job growth beginning within six months of the real estate peak in Los Angeles, Orange County, and San Diego in early 2006, just as prices began to fall and the subprime and alt-A markets showed early signs of trouble. Of course, by now there is blood-letting everywhere. I myself am quite annoyed with many of the so-called economic experts of the '80s, '90s, and early 2000s who failed to realize the gravity of the situation (it's been a generation in the making), and how seriously it would affect many financial markets.

On another note, I worked in media for many years, and it was intriguing how industries that had little or nothing to do with the content of the websites and the magazines and books we sold were so important to the company -- because of big-bucks ad revenue. As airline companies (United, Delta) and car companies (the Detroit Big Three, Subaru, Volkswagen, Toyota, Mercedes) scaled back, or totally eliminated, their ad budgets with us, so the fortunes of the company itself went.