The strong performance of the Omaha apartment market is expected to continue in 2014 and beyond. According to MPF Research, Omaha’s apartment occupancy stood at 95.8 percent in the third quarter of 2013, up from 95.5 percent at the end of 2012 and in line with Omaha’s average occupancy rate of slightly under 96 percent since 2000. On the new construction front, developers continue to bring new projects to the market. During the first 10 months of 2013, multifamily building permits totaled 1,454 units in metro Omaha, which was 47 percent above the 986 multifamily housing units permitted during the same period in 2012 and 19 percent above the 1,225 units permitted during all of 2012. The figure was also slightly above the upper end of my range of expectations of 1,300 to 1,400 units for all of 2013. On a percentage basis, the addition of 1,454 units would increase the apartment housing stock by 1.6 percent based on an overall inventory of approximately 88,000 units. More Shovels in the Ground During 2014, I expect construction activity to continue to be strong. Indeed, we could see multifamily building permit issuance reach 1,300 to 1,400 units. Included in these new development …
Nebraska
The Omaha apartment market remains a strong performer. According to MPF Research, Omaha’s apartment occupancy stood at 95.5 percent at the end of 2012, up a modest 80 basis points from the end of 2011 and in line with Omaha’s average occupancy rate of 95.9 percent since 2000. Coupling the strong occupancy rate with a continued favorable financing environment, it is no surprise that developers are eager to bring new units on line and move quickly to lock in permanent financing. As a result, 2012 saw 1,225 multifamily housing building permits issued, which was very much in line with my predicted total of 1,300 permits for the year, and up 25 percent when compared to 2011. The addition of 1,225 units will increase the apartment housing stock in Omaha by 1.4 percent on an overall inventory of approximately 88,000 units. My expectation is that permit activity will again be around 1,200 units for all of 2013, with a small chance that it could possibly increase to as many as 1,400 units. There are a number of local and regional developers who are actively seeking multifamily land, and the lack of top sites is likely to be the biggest development constraint …
The Omaha industrial market, which contains a total inventory of roughly 67.5 million square feet, posted a tight vacancy rate of 5.1 percent at the end of 2012, according to commercial real estate research firm Xceligent Inc. For the year, about 652,000 square feet of space was absorbed, or about 1 percent of the market. Overall, 2012 was a strong year with an estimated 142 new leasing transactions completed. Unlike 2011, however, in which eight major deals in excess of 100,000 square feet dominated the industrial market reports, none of the deals in 2012 were blockbuster. In fact, only three transactions were in excess of 50,000 square feet. What does this mean? A lot of mid-sized deals occurred. For the first time in a while, those vacant spaces ranging from 2,000 to 10,000 square feet have accounted for a glut of excess space in recent years are getting leased. More significantly, the mid-sized deals indicate growth of both new and local businesses expanding their presence in the Omaha industrial market. Meanwhile, speculative or new construction is at a standstill. Almost all of the new construction in the market has either taken the form of build-to-suit or owner-occupied space, or is …
The office segment of Omaha’s commercial real estate market is currently in a transitional phase. Companies that have been in the market for office space during the past two to three years have realized that discounted rent and/or the ability to relocate into higher-quality properties are feasible options. In order to retain and attract tenants, landlords are now required to lower rents and renovate properties to the extent they can. This pressure on property owners has been the leading force behind this current state of transition, and the ripple effects are felt through all classes of buildings. Tenants in Class C properties are now able to climb the property ladder and obtain favorable lease rates in a Class B property. Owners of Class C properties are forced to renovate, or redevelop, to avoid obsolescence. The Lund Co. refers to this evolution as “Real Estate Darwinism.” FACELIFT PAYS OFF A perfect example of the evolution of a property is the 450 Regency building. Originally constructed as a single-tenant, build-to-suit for IBM in 1983, the property became stale and was a non-factor in the overall office inventory in Omaha. The building sat vacant for many years after its second tenant, Commercial Federal/Bank …
Although retail developments and construction cooled during 2009, the Omaha retail sector is now experiencing an influx of completed projects, with most planned projects being set on the back burner. Retail projects in the final phases of construction include the 600,000-square-foot L Street Marketplace, located at the corner of 120th and L streets in Omaha; Midtown Crossing, a mixed-use project offering 200,000 square feet of retail space at 33rd and Dodge streets; and the forthcoming retail and entertainment component of Aksarben Village, which is located at 72nd and Center streets. The new projects are bringing Target, Best Buy, Sports Authority, Prairie Life Fitness Center, Marcus Theaters and Wohlner’s Grocery to the market. Neighboring retail developments in Council Bluffs, Iowa, include the JC Penney- and Shopko-anchored 24th Street Marketplace and Target-, Hobby Lobby- and Kohl’s-anchored Metro Crossing. A handful of new retailers and restaurants have entered the Omaha market, including Garden Ridge, Books A Million, Jump & Shout Play Center, Brix, Five Guys and Smashburger. Active developers include Cormac Company, Seldin Company, Noddle Company, Lerner Company and Magnum. Many developers are looking to infill sites for untapped development opportunities. Both the Midtown Crossing and Aksarben Village projects are helping to revitalize …
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