Nebraska

Omaha Industrial Market Experiences Increased Construction

by Kristin Harlow October 27, 2022

By Denny Sciscoe, The Lund Co. The Omaha industrial market is experiencing increased leasing velocity, positive rent growth and record-breaking development. The market consists of 18 submarkets, totaling 103 million square feet of inventory. Omaha has traditionally been a risk-averse market with steady, slow-paced growth. Since 2016, Omaha has seen increased speculative development, which is absorbed as fast as it is built. In 2020, we began to see hyper-development, fueled by increased demand and developer confidence. The increased demand was a result of COVID-19, where we experienced five years of growth in a 12-month period as occupiers scrambled to find space for inventories and e-commerce, which was exasperated by the demand to store “just in case” inventories. The supply and demand dynamics of our market have been almost perfectly balanced. The average deliveries are around 1.3 million square feet annually, and our average absorption has been around 1.4 million square feet. Since the beginning of 2022, we are tracking about 5 million square feet of demand and another 2.2 million square feet of space that is currently in the construction pipeline. Overall vacancy currently sits at 2.6 percent, which is 100 basis points below our average of 3.6 percent. …

October 27, 2022

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Analyzing the Potential of Lincoln’s Commercial Real Estate Market

by Kristin Harlow April 28, 2022

What does the Lincoln, Nebraska commercial real estate market have to offer? Quite simply it has land, room to grow, affordability and a centralized location. Pair these attractive and unique features with an educated workforce in a culturally diverse community and the answer becomes clear. Lincoln’s commercial real estate market has a lot of potential. Despite Lincoln’s small size of approximately 300,000 people, it is experiencing the same challenges and triumphs as the bigger metropolitan areas. Warehouse space One of the biggest challenges in the Lincoln market is the low supply of industrial space in a high-demand environment. The industrial vacancy rate as of year-end 2021 was 1.6 percent. Any new product that comes on market is leased quickly and the per-square-foot selling price is trending up with a 31 percent increase in just three years. Unfortunately, in the Lincoln market, the value of new industrial construction building permits has been trending down over the last five years. The rising cost of construction makes this trend even more significant; many developers are unwilling to invest in speculative product without the certainty that tenants will pay the rental rate necessary to provide an adequate rate of return. One local developer, Las …

April 28, 2022

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Omaha’s Healthy Multifamily Market Drives Increase in Agency Lending

by Kristin Harlow November 24, 2021

Despite some disruption from COVID-19, Omaha’s multifamily market is resilient. It remains a healthy, stable market boasting sound fundamentals and continues to experience increasing demand for apartments. Multifamily, in general, has outperformed many other real estate sectors during the pandemic. Omaha’s multifamily occupancy remains strong and rent growth over the past 12 months has shown a positive overall trend. In construction, the market takes a measured approach with roughly 1,500 units per year on average. According to Reis, there are 384 units scheduled to be delivered throughout the remainder of 2021, while absorption is forecast to be more than 400 units, resulting in a 0.1 percent uptick in occupancy. Solid market fundamentals Both Omaha and nearby Lincoln, Nebraska, are seeing strong investment sales activity although limited assets are available. The market is predominantly controlled by local players, many of which build for their portfolios and operate the properties. However, some smaller players and out-of-town investors have found the timing was right to exit out of the market and sell. Out-of-state groups are aggressively entering these markets and paying significant premiums for available assets. Driving investment sales activity are low interest rates and better returns than these groups can find in …

November 24, 2021

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Lincoln Office Market Assesses Amount of ‘Shadow Space’

by Kristin Harlow November 18, 2021

Historically, Lincoln, Nebraska, has been a resilient Midwestern city. Home to state and county governments and the University of Nebraska-Lincoln, it has weathered past economic ups and downs and provided steady growth close to 2 percent each year. As COVID-19 restrictions ease, people are gradually returning to shop and find entertainment downtown, and new construction continues to rise above Lincoln’s skyline. Interestingly, the last time this many cranes were visible downtown was during the last economic downturn. It has been remarked that during that time, Lincoln “built its way out of the recession.” Now, many building projects are helping to maintain the resiliency of our economy during these challenging times. Prominent projects, proposed or initiated prior to the pandemic, continue to move forward. Examples include a proposed 15-story, 300,000-square-foot mixed-use building by Chicago-based Argent Group housing 200 residential units. Omaha-based White Lotus Development plans a $54 million redevelopment of the Pershing Auditorium block, a vacant city-owned venue. White Lotus would bring 100 affordable housing units with a wellness center, childcare center, retail, community green space and potentially a new city library. Other notable projects include a $21 million renovation of a 100-year-old, seven-story Atrium Building by new local owners. Pushing …

November 18, 2021

Industrial Market Reports Midwest Midwest Market Reports Nebraska Office Retail

Solid Fundamentals Uphold Lincoln Real Estate Market

by Kristin Harlow May 20, 2021

By Tom Graf, NAI FMA Realty Over the past decade, Lincoln has experienced sustained growth and earned a reputation as a place to be in the Midwest. Its low unemployment, stable economy, low cost of living, prospering tech scene as well as lifestyle and entertainment fitting of a big city with the feel of a small community has insulated Lincoln better than many cities of its size. Perhaps this is most compelling with the number of cranes spotted in the skies back in 2008 and again in 2020. Just as many cities were struggling, Lincoln built its way out of the Great Recession in 2008 and 2020 was no exception. Retail Throughout the economic uncertainty brought on by the COVID-19 pandemic, Lincoln’s retail landscape fared well with vacancy holding at 7.1 percent for the year in 2020. New construction was active throughout the market despite store closures and bankruptcies making the national headlines. For some opportunistic retailers, vacant spaces opened the door to take advantage of the market and negotiate better terms for new locations. Retailers thriving in today’s market are the “daily needs” retailers — grocery, home improvement and discount concepts. Some niche online businesses, which have grown through …

May 20, 2021

Industrial Market Reports Midwest Midwest Market Reports Nebraska

Omaha Industrial Activity Remains Strong, Particularly in Western Sarpy County

by Kristin Harlow May 13, 2021

By John Dickerson, OMNE Partners Our Omaha-area industrial sector has come through the pandemic very well, compared with other commercial sectors. We have not had to work out many rent payment plans with tenants, and industrial users going out of business have been minimal. Omaha has survived and come out of 2020 well economically. Our unemployment rate is the second lowest in the country. Our cost of living has also been lower than most other major cities in the Midwest. This low cost of living carries over to real estate rental rates and operating costs. Leasing activity Industrial leasing has been quite good in Omaha for years. Our vacancy rates have been below 5 percent for a number of years and currently have been about 3.5 percent. By reviewing spaces for lease on Crexi, an internet marketing service, there are about 120 properties that I identified with space available with a total of over 3 million square feet for lease. Rental rates for industrial vary, of course, for typical reasons — age and condition of the property, location and how much a space/building might be finished in office or other special improvements. In Omaha, many flex buildings have users that …

May 13, 2021

Market Reports Midwest Midwest Market Reports Nebraska Retail

Drive-Thrus, Pickup Services Will Shape Future of Retail Landscape

by Kristin Harlow May 6, 2021

By Jared Sullivan, The Lerner Co. The retail commercial real estate industry has been an interesting world to observe over the last several years, to say the least. From the repurposing of massive retail boxes and malls following the fall of Gordmans, Sports Authority, Sears and others, to the unpredictable global environment we have been experiencing over the last 12 months due to COVID-19. One thing that’s certain is the ability to quickly adapt within the retail world is a critical element to remain relevant as the mold of consumers’ needs continues to evolve. Fortunately for the Omaha and Lincoln retail markets, the downturn for businesses and consumers alike has been significantly less than the more densely populated cities and suburbs of New York and California. Nevertheless, the impact of government shutdowns and restrictions throughout 2020 has handicapped more businesses and landlords than we ever expected. As we emerge from this storm, we must ask ourselves “What will the retail landscape look like moving forward?” Here to stay One outcome of 2020 we anticipate seeing as a gold standard moving forward has been the implementation of curbside carryout and mobile order pickup services. While the concept of these services is …

May 6, 2021

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Omaha Industrial Market Dips Toe into Modern Speculative Development

by Kristin Harlow November 19, 2020

By Kevin Stratman, CCIM, SIOR, Investors Realty Like many metropolitan areas, new construction has been the recent theme in Omaha’s industrial market. Since 2015, the Omaha market has delivered almost 5 million square feet of new flex, industrial and warehouse properties. This is significant, considering the market as a whole is only about 90 million square feet. Equally impressive, the market has kept the vacancy rate below 4 percent despite all this growth. A bulk of this development has taken place in the popular Sarpy West submarket on the southwest side of the metro area along the I-80 corridor. Notwithstanding all of this construction, the market continues to have a lack of opportunities for users of all sizes. At the time of this writing, there are only 10 vacancies in existing properties for lease that are greater than 50,000 square feet. Only one of those vacancies is in a modern warehouse building. Both national and local tenants alike are shocked to find the limited number of spaces available to them. Which begs the question, why is there so little speculative construction in Omaha? Omaha has always been a more conservative economy. The market might not see the high of highs …

November 19, 2020

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Omaha’s Strong Multifamily Market Fundamentals Drive Investment Sales Activity

by Kristin Harlow November 12, 2020

By Jason Kinnison, NorthMarq The Omaha multifamily market’s occupancy, rents and new construction activity remain stable despite the economic uncertainty surrounding the COVID-19 pandemic. As a solid Midwestern market, Omaha’s apartment sector remains strong due to its healthy market fundamentals, including a strong employment base and a highly educated workforce. Omaha boasts an approximate 94.9 percent occupancy rate and consistently has a steady supply of roughly 1,500 new units delivered annually. New construction activity has historically been at an absorbable pace, however, there has been a slight lag in absorption recently, which has the potential to compress occupancy levels as well as asking rents. Multifamily rent collections remained strong in the second quarter, supported in part by the increased unemployment benefits offered to renters who lost jobs and the government-sponsored stimulus initiatives. Additionally, federal eviction bans were enacted. Omaha’s multifamily real estate property values continue rising and capitalization rates remain low. Over the last five to seven years, Omaha has experienced an increase in multifamily investment sales activity. Historically, the market has been controlled by local investors with a buy-and-hold mentality. However, as valuations have risen and activity has increased in investment sales, there has been a shift to more …

November 12, 2020

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Key Leasing Considerations for Commercial Landlords in the Age of Coronavirus

by Kristin Harlow November 5, 2020

By Addison Fairchild, Baird Holm At its onset nearly nine months ago, the novel coronavirus forced federal, state and local leaders to consider measures necessary to prevent the virus’s inevitable spread. Those leaders imposed measures they calculated to balance minimizing the spread and harm of coronavirus to the national and local economies. Whether those measures were effective in achieving those goals is a question for another day. However, now that coronavirus is currently a part of daily life, businesses have been considering what measures they must take. Like political leaders, they must also consider balancing the potential liability they may face for the spread of the coronavirus or other illness, the harm to their patrons and clients, and the harm to their bottom lines. Commercial landlords are not exempt from considering the coronavirus or other pandemics in future leasing. It is unlikely a court would find a commercial landlord liable for the spread of a pandemic in their leased properties, except in rare circumstances. However, tenants may require landlords to provide upgrades to properties to ensure the safety of the leased premises. This article considers whether landlords may be liable for the spread of a pandemic in their leased premises. …

November 5, 2020

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