Richard Meginnis, executive vice president of NAI FMA Realty, doesn’t hesitate when asked if commercial deals are happening more quickly in Lincoln, Neb: “We are improving fast,” he says. Midwest Real Estate News recently spoke with Meginnis about the rise in CRE deals in this capital city and the reasons behind it.
Midwest Real Estate News: Lincoln seems to have survived the Great Recession in solid shape. Is that an accurate view?
Richard Meginnis: It is. We’ve seen a definite acceleration in commercial activity in town. We had an ew arena in the downtown area open up, Pinnacle Bank Arena. That has opened up a new area of downtown for development. The activity there has accelerated faster than we had planned. We expected a three- to five-year build-out around the area. But the area is now already 60 percent filled with restaurants, condos and apartments all completed and open. There is also a large office building under construction.
MWREN: Why do you think commercial deals have been happening at this faster pace?
Meginnis: There’s a pent-up demand in Lincoln. People here are looking for something new and exciting. They’re looking for something different than just a mall for new retail and restaurants. A lot of companies are starting to realize the power of the university town. That’s especially true in student housing. That’s one of the hot areas for development today, of course. A lot of companies want to start new student housing. That’s a hot item in all markets of the Midwest.
MWREN: What commercial sectors are performing especially well in Lincoln?
Meginnis: Retail is the one that is doing really well in Lincoln. Our retail vacancy rate has dropped to 5.6 percent. As of July of 2011 it was over 8 percent. It has dropped more than 200 basis points for retail. It’s also helped with the rents, which are going up. And we’ve done this without any large new shopping areas opening up. A lot of the large shopping areas, of course, are driven by anchor tenants. Those are what are hard to find now, a tenant to anchor a center. But retail is doing well everywhere in our area, not just in the downtown.
MWREN: Downtown Lincoln is doing especially well. What’s behind that?
Meginnis: The rejuvenation for downtown is driven by government tenants. There are more TIF dollars available for the older parts of town, more incentives for development. The city has been aggressive in allowing that lately. The city has put more money into parking garages, too, so that the private companies don’t have to build their own garages for a new tenant.
MWREN: How is the office market doing?
Meginnis: Our office market is fairly flat. I don’t see a lot of people adding a lot of new employees. That’s the last thing I think a lot of companies will add coming out of this recession. We are seeing some of the smaller companies in the area start adding new workers, at least a bit. But we are not seeing it with the larger companies. Lincoln is a strong government town, of course, but it’s also a strong insurance-servicing area. We have a lot of large insurance employers. These companies have been flat in hiring or dropping employees. Five or so years ago, they were adding people at a fairly good rate. They have now leveled off.
MWREN: Is there anything about Lincoln that helps it during economically tough times?
Meginnis: Our workforce is very skilled. People after they graduate want to stay in Lincoln. They like the feel of a smaller town that’s easy to get around. We have neighborhoods here, but everybody feels as if they are part of one town. It doesn’t feel like people are segmented into their own areas. We also have a low crime rate. This makes Lincoln a place that people want to live in.