Office market thriving in the heart of Omaha

west dodge pointby Dan Rafter

The office sector is lagging in several markets across the country. But in Omaha? It’s a different story.

Jeffrey Wyatt, senior advisor with the Omaha office of Colliers International, said that the overall strength of the market is boosting the city’s office market, too.

He said that effective rents on Class-A office space in the heart of Omaha continue to trend upward, and that vacancies in this sector continue to fall. And this, he said, might inspire some developers to take on spec office building in the near future.

“Tenants are more comfortable today paying these higher rents for modern Class-A office spaces,” Wyatt said. “I think we’ll see more builders coming out of the ground with spec office. Banks are more comfortable lending for office projects today.”

Class-B office space in the heart of Omaha is faring well today, too, Wyatt said, as long as it’s the right size. Larger spaces, covering 100,000 square feet or so, are renting well. Smaller spaces, too – 2,000-square-foot to 5,000-square-foot office suites – are attracting a steady stream of tenants, Wyatt said.

But not all office spaces are thriving even in the heart of Omaha’s CBD. Wyatt said that Class-C office space is struggling. Not many renters want to invest in such outmoded and dated office space, he said.

“Class-C space now is a complete zero,” Wyatt said. “It is really struggling.”

Wyatt expects a bright future for Omaha’s office sector, too. There are plenty of new developments that are causing excitement in the city.

Wyatt points to Aksarben Village, an entertainment and shopping community that 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 serving the three faiths associated with the Tri-Faith Initiative.

Retail is doing well in Omaha, too. The opening of the Nebraska Crossing Outlet Center in suburban Gretna has played a big role in the market’s recent retail success. The outlet center — as outlet centers often do — has 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, two big retailers that have provided a boost to the city.

So, what is it about Omaha? Why has this city’s commercial real estate market continued to thrive?
Wyatt points to several factors.

“We are conservative market,” Wyatt said. “We have hard-working people here. We are one of the wealthier communities in the country per capita, but we are not flashy or showy. We don’t have those big swings in the market that other cities face. There is not a lot of institutional money coming into Omaha. Most of the development is spurred by local companies. There is pride on the part of these companies in creating projects in the community in which their officials live. You see these people at the pool or at church. They want to do a good job.”

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