by Dan Rafter
There’s a winning formula common to the most successful commercial real estate markets in the Midwest today: Low unemployment rates and a major university near the CBD.
This formula is working today for Nebraska’s capital city of Lincoln, where all CRE sectors are showing continued improvement.
Activity is especially strong in the city’s Haymarket district near the still-new Pinnacle Bank Arena, said Richard Meginnis, executive vice president and business manager with Lincoln’s NAI FMA Realty.
But the Haymarket area, as strong as it is, is far from the only slice of Lincoln that is booming today.
“Commercial is really picking up all throughout Lincoln,” Meginnis said. “It’s catching up with the rest of the country right now. The improvement has been led by the apartment sector. That sector was the first to really heat up. Also, being the home of the University of Nebraska has helped. Like a lot of university towns, there has been a boom in student-housing construction around the university.”
Being the home of a major university — and one that sits right next to its CBD — is just one of the factors that makes Lincoln a good place for business owners and commercial real estate pros today. The city also boasts low unemployment, under 5 percent. There’s a strong labor force here, and the larger employers that call Lincoln home are all stable ones.
The city’s office market, in fact, is seeing solid gains largely because of the low unemployment rates and stable businesses here.
And Meginnis says that he expects this sector to only show more improvement as 2015 arrives.
“The companies coming out of the recession, the last thing they are adding now is personnel,” Meginnis said. “The last thing they are adding is employees. We are now starting to see that many of these companies have to add to their office spaces eventually.”
The numbers back up the optimism expressed by Meginnis. According to NAI FMA Realty’s first half 2014 report, the office, retail and industrial markets in the Lincoln market all posted positive net absorption in the first six months of 2014. The report cites the city’s rapidly expanding technology, manufacturing and restaurant/hospitality services industries as the forces behind this good news.
In fact, the city’s retail and industrial markets are approaching vacancy rate lows not seen since 2009, according to NAI FMA Realty. And in the first half of 2014, the total value of applications for commercial building permits — not counting multi-family and schools — soared past $94 million. Of this, $54 million is going toward new construction.
Tom Graf, a sales associate with NAI FMA Realty, said that he expects the good news for Lincoln to continue in 2015 and beyond. The city, he says, just has too many positives in its favor to think otherwise.
“We have a big university here. It’s where the state government is headquartered. We have a lot of good things going for us,” Graf said. “We have very stable and successful larger employers. Some are growing dramatically. Historically, our unemployment rate is low. That inspires confidence in our consumers, so they are willing to open their wallets.”
At the same time, the University of Nebraska continues to reach out to local entrepreneurs and start-ups. This brings a steady stream of new tech ventures to the city, Graf said.
“It’s impressive the results you do get when you have the university participating at the level it does,” Graf said. “There are so many new tech ventures in Lincoln today. The university is reaching out and directly engaging these young entrepreneurs. It all adds up to what looks like a good future here.”