Waiting for a boom that’s not coming?

Commercial real estate activity is strong in Omaha. There’s no boom here, though. And that’s the depressing part.

Will we ever see the return of the boom days in commercial real estate?

That’s a question that came up as I was working on the latest issue of Midwest Real Estate News, our August edition. In it, we ran an update on the state of the commercial real estate sector in Omaha.

Omaha is one of the strongest markets in the Midwest. It’s blessed with low unemployment and a diversity of employers. The city has pumped serious dollars into its downtown, and its new downtown baseball field, home to the College World Series, is a jewel.

But not even strong Omaha has escaped the impact of the nation’s economic downturn.

David Levy, partner and real estate section chairman with the Omaha law firm of Baird Holm, told me that he sees a market in transition when he looks at Omaha. There is more commercial real estate activity today in the city than there was a year ago. But there is an equal amount of caution on the part of developers and financing sources, he said.

This is most clearly seen in the actions of the smaller to mid-size companies dotting the city. They aren’t moving. They aren’t leasing new space. And they’re certainly not building new facilities.

That kind of activity has been reserved for the bigger companies. It’s these larger companies that today are fueling the commercial real estate activity that is happening in Omaha.

“The activity that we have in Omaha today is somewhat inconsistent,” said Levy, partner and real estate section chairman with the Baird Holm law firm in Omaha. “The activity comes and goes a little bit. Sometimes we see good activity in the city, sometimes we don’t. We are seeing more projects that start but don’t finish. But at least projects are starting. That’s a positive sign.”

That’s the reality when it comes to commercial real estate today. Even the strongest markets have seen slower activity.

Of course, in markets such as Omaha there are positive signs.

“We have had three straight positive quarters of absorption in the office sector here,” said Steve Sheppard, vice president and office specialist with Omaha’s CBRE|MEGA. “For our market that is a great sign. It’s a testament to the overall health of Omaha’s commercial real estate market.”

But this growth isn’t happening quickly enough. The recovery from the recession has been a long slog. And few expect things to change much before the November presidential election. And after it? What happens then is anyone’s guess. There’s little indication that a second Obama administration will bring about a stronger economy. And no one knows what a Romney administation will do; the candidate has been elusive at best about sharing any specific plans for the country should he win in November.

So that leaves us at a familar place, even in the healthiest of markets across the United States. We’re waiting for a boom that doesn’t appear to be coming.

— Dan Rafter

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