Iowa is one of the Midwestern states experiencing rural flight. It has a declining economy and population, even as the state offers incentives for residential and commercial investment. Commercial property is quite cheap in Iowa, particularly as more agricultural plots are being put up for commercial development, but there aren't many takers in this area. Usually commercial development follows residential development and there just isn't any residential development in a state that most people are fleeing.

Sioux City's downtown is experiencing a rough retail market as one of its last three retail anchor tenants recently moved to different area of town. The tenant cited sluggish sales. A lack of foot traffic is causing retail tenancies in Sioux City's downtown to rise and rents to plummet. Some retailers are looking elsewhere in the city, but many are just closing their doors. The office submarket is in a slump, too, as the state government, one of the largest tenants in the state, increasingly moves towards purchasing and converting older, less expensive properties and drops of tenancy in downtown areas.

Despite the overall gloomy forecast, there is some positive news in the Des Moines industrial market. About four years ago, the city experienced a glut of vacant industrial space as businesses packed up and followed the labor market out of state, but in recent years, those businesses that remained in the Des Moines have been expanding, creating jobs and eating up vacant industrial space. Commercial agents and property managers have been aggressively marketing the industrial space, even resorting to cold calling and direct mailing. Their marketing campaigns have been so successful that there is a shortage of mid-size industrial space in the city. Lower vacancies have prompted talk of speculative building, particularly in the warehousing subsector, but developers are leery of jumping back into what they see as an overall declining economy.

There's also a bright spot in the Iowa City housing market. Iowa City attracts residents because of the nearby University of Iowa. These residents have the money to spend on housing, but they also have high rates of transiency. Across the country, people tend to move once every seven years. In Iowa City, residents move once every five years. It is this transiency and internal movement that is driving the housing market rather than any market growth. Across the rest of the state, the housing market is down.