Occupancy, Sales Per Square Foot Support Omaha Retail Scene
Over the past few decades, Omaha has grown in both size and reputation as a Midwest gem that offers affordable housing, a solid job market, excellent schools and a central location that makes both business and leisure travel a relative breeze. As our city has grown, our lifestyle has adapted, which has had an interesting impact on commercial real estate. While some developments are flourishing, others have been struggling.
Overall, retail growth in Omaha is slow, but occupancy is robust in Class A-located centers. The main corridors in west Omaha (Center, Dodge and Maple streets) have strong occupancy and rents now pushing $40 per square foot NNN for new construction.
Restaurants, medical/retail (or “medtail”) and fitness have become the main drivers of recent retail space use. “Treasure hunt” discount concepts such as Ross, Marshalls, TJ Maxx, Burlington and Five Below have all opened multiple locations in the past 24 months in a wide range of demographic areas of Omaha.
Nationally, the traditional shopping mall concept has been plagued by big-name store closures as consumers continue to turn to online shopping. Locally, some traditional malls are faring better than others. Westroads, which opened in 1968, remains strong in both occupancy and sales per square foot. With national golf attraction Topgolf opening within walking distance of Westroads in 2020 and additional redevelopment planned for the surrounding area, this centrally located space should continue to be desirable for retailers — and highly trafficked by consumers.
Two other Omaha malls, Crossroads and Oakview, continue to struggle and will need major investment and vision to be redeveloped into their next chapters. Rumors have long surrounded the plans to develop the Crossroads area and its corridor at 72nd and Dodge streets, one of the busiest intersections in Omaha. However, the mall is privately owned, and the owner has not yet committed to its future.
These malls have been part of Omaha since 1960 and 1991, respectively, and the city’s growth, changes in consumer habits and the evolution of the surrounding land has failed to sustain the crowds and attraction they had 20 to 30 years ago.
One of Omaha’s first lifestyle developments, Village Pointe, which opened in 2004, continues to do well in both occupancy and sales per square foot. Recently added tenants with strong national name recognition such as Bentley, CycleBar and Kendra Scott, have attracted additional consumer traffic.
Another mixed-use center, Shadow Lake, has been open in Papillion (part of the Omaha metropolitan area) since 2009. Shadow Lake has seen its troubles in the past, but with new ownership and leasing strategy, has experienced a substantial boost in occupancy over the past 12 months. Papillion, which is in Sarpy County, is a hotbed of growth for professionals and young families with corporations such as PayPal and Werner Enterprises, as well a new multi-sport complex called Papillion Landing.
The future is mixed-use
As for the future of mixed-use in Omaha, Heartwood Preserve is a high-profile mixed-use development that will include dense urban districts, retail space, restaurants, office space, senior living, single- and multifamily residential areas, and an abundance of parks and open space. Heartwood Preserve is located off Dodge Street, the city’s main corridor that divides north and south Omaha, and is scheduled to be completed in 2022.
Further west, plans are underway to create a western “gateway to the city” near 192nd and Dodge streets. The yet-to-be-named development is slated to include residential, restaurants, hotels, businesses and trails. Within that same tract would be two upscale office parks, tentatively known as Fountain Ridge East and West. The area is already well-developed with Lawrence Youngman Lake, houses with a median value of approximately $400,000, and Methodist Women’s Hospital, which opened in 2010.
One huge trend in the Omaha market is the boom in infill developments. Areas such as the Blackstone District and Benson, which are in midtown Omaha, have become sought-after districts for restaurants and bars, apartments and local shops.
Additional retail development is on the horizon for the Saddle Creek area of midtown Omaha, including a freestanding Chipotle and a two-tenant retail building anchored by Bank of the West that we at Access are developing. And in northern downtown, Millwork Commons will blend newly urban Omaha with its north downtown neighborhood’s industrial history. The district will include apartments, offices, retail, townhouses, a hotel, park, entertainment area with restaurants and a musical performance space.
Here at Access, one of our most exciting and notable projects of the past several months is Regency Landing, a 12-acre multi-use project located at I-1680 and Pacific. Retail, office, hotel and restaurant space will create a dense urban destination in the Regency area, with easy access to all of Omaha.
To keep pace with the market growth and changes, our property management division has been growing at a rapid pace to keep up with our own development pipeline but also third-party growth both in commercial and multifamily projects. Having a robust asset plan to actualize an owner’s goals has been key to adding value to all of our deals.
— By Kirk Hanson and Darren Hicks, Principals and Co-Founders, Access Commercial LLC. This article originally appeared in the April 2020 issue of Heartland Real Estate Business magazine.