by Dan Rafter
Trenton Magid, principal and founder of Omaha’s World Group Commercial Real Estate, describes the Omaha commercial real estate market as a stable one.
And he’s far from alone. The brokers doing business in Nebraska’s largest city say that Omaha weathered the Great Recession so well mostly because developers never overbuilt here. A diverse economy and growing downtown have helped, too.
Today, Omaha is enjoying a solid recovery. The city’s commercial real estate business might not be booming. But it is growing at a steady clip.
In other words, Omaha is, still, a stable place.
“Developers never go crazy in this market,” Magid said. “Omaha is always on a lot of the best-to-recover from the recession lists. We had a period where deals came at a slower rate. But we never really had as severe a downturn as many other markets had.”
Tim Kerrigan, vice president for office, land and investment with Investors Realty, says that there are many reasons why Omaha has recovered so well from the recession.
There’s that busy downtown, for instance. TD Ameritrade Park, a baseball park that serves as the home of the College World Series, is the anchor for the downtown, drawing crowds every time it holds an event. Creighton University is nearby, too. The school brings students, of course, but it’s also brought plenty of new multi-family units to the downtown area.
Mixed-use developments have helped Omaha’s economy, and its commercial real estate market, too. Aksarben Village, an entertainment and shopping community is home to plenty of shops, restaurants, bars and green space. It remains a popular destination spot for Omaha residents.
Sterling Ridge, too, has generated excitement here. This 150-acre mixed-use development on the site of the former Ironwood Golf Course will provide multi-family housing, single-family homes, retail spaces and churches with the three faiths associated with the Tri-Faith Initiative.
“We have a steady economy in Omaha. And we have a good diversity of businesses,” Kerrigan said. “Of course, we still have a strong agribusiness base here, and agriculture has been very strong these last few years. Also, we are fortunate to have low unemployment here. That, combined with the fact that we didn’t overbuild here in the years leading up to the recession, has helped. We didn’t have a soft market going into the slow years. We had a stable market going in.”
The numbers shows that Omaha is indeed firmly in recovery mode.
World Group’s fourth quarter 2013 industrial report, for instance, says that in 2013 the Omaha market saw more than 265,000 square feet of positive absorption. This lowered the vacancy rate in this sector from 5.2 percent at the beginning of the year to 4.8 percent by its end.
The Sarpy West market was the most active in industrial, with 175,000 square feet of absorption activity. This market had an impressively low vacancy rate of 1.4 percent. Omaha’s South Central industrial market was an interesting one: It actually showed 170,000 square feet of negative absorption during 2013. But it ended the year with a low vacancy rate just below 4 percent.
The city’s retail market is a strong one, too, with almost 850,000 square feet of positive absorption in 2013, according to World Group’s fourth quarter 2013 retail report.
The retail vacancy rate here fell to 7.4 percent at the end of 2013, a solid drop from 8.4 percent one year earlier.
The opening of the Nebraska Crossing Outlet Center in suburban Gretna played a big role in the market’s retail success last year. The outlet center — as outlet centes often do — attracted a steady stream of shoppers looking for bargains.
The Omaha market also saw the opening of a new Menards and WalMart Neighborhood Market in the fourth quarter of 2013.
The vacancy rate for the market’s office sector fell, too, to 13 percent by the end of 2013. According to World Group, this sector saw 150,000 square feet of positive absorption for the year. A highlight was the completion of the 13,000-square-foot Gavilon world headquarters building in downtown Omaha.
Investors Realty reported good news, too, about commercial real estate activity in Omaha. According to Investors Realty, the vacancy rate at the end of 2013 for Class-A office buildings was just 5.4 percent, compared to 13 percent overall in this sector. That demonstrates a “flight to quality,” with tenants moving from Class-B and Class-C space to more modern, amenity-filled office properties.
Investors Realty reports, too, that office construction is on the uptick in the Omaha market. The market last year even saw the completion of the first speculative office building here since 2008, WestPlex IV. This building is seeing strong leasing activity today, according to Investors Realty.
Meanwhile, Lockwood Development is building a 50,000-square-foot speculative office building at Sterling Ridge, while R&R Realty of Des Moines, Iowa, is in the planning stages of Fountain West Office Park to be located at the southwest corner of 192nd Street and West Dodge Road. The first phase of Fountain West, to rise from the ground soon, is a speculative 75,000-square-foot office building.