Cities across the Midwest are waiting for workers to return to downtown offices. But one Midwest city, Omaha, is already seeing the signs of an office market recovery.
According to the first quarter Omaha office market report released today by Colliers, the Omaha office market saw more than 75,000 square feet of positive absorption in the first quarter of 2021. That is impressive in a COVID-19 world. Most office markets across the Midwest have seen negative absorption during the first quarter of the year as the pandemic continues to keep many office workers in work-from-home mode.
At the same time, more than 320,000 square feet of office space was delivered to the Omaha office market during the quarter. And more than 1 million square feet of office space is under construction here, with more than 76 percent of it either build-to-suit or pre-leased. A total of 52.3 percent of this space is in Omaha’s suburban West Dodge submarket, while 44.3 percent is in the Southwest submarket.
This doesn’t mean that the Omaha office market doesn’t face challenges. Colliers reports that the sector’s vacancy rate rose to 10.4 percent during the first quarter, a number that isn’t surprising given the impact COVID-19 is still having on cities across the Midwest. That vacancy rate is 110 basis points higher than the rate of 9.3 percent at the end of 2020 and 300 basis points above the rate of 7.4 percent in the first quarter of 2020.
Two large office properties were completed in the first quarter: Kiewit’s 194,850-square-foot headquarters building in the north downtown area and Centris Federal Credit Union’s 115,000-square-foot headquarters in Sterling Ridge at 132nd and Pacific streets.
The Kiewit move was an especially big move. The company moved out of its previous headquarters building at 33rd and Farnam streets in the Midtown submarket and into a seven-story $76 million worldwide headquarters building near 15th and Mike Fahey streets. This moved 600 workers downtown.
Before its move, Kiewit sold its 15-story property in 2019 to investors that plan to invest $10 million in renovations. These investors will rename the property Blackstone Plaza. The building is now 65 percent vacant. Kiewit also left behind more than 500,000 square feet in Aksarben Village.
The Omaha office market saw four additional deals of more than 10,000 square feet in the first quarter. Colliers moved from its space in Aksarben Village to 14,903 square feet in its new property at Two Miracle Hills. Wabtec Corporation occuped more than 14,000 square feet in the north tower of Central Park Plaza. Mighty Dog Roofing moved into 11,923 square feet in the Old Mill area, while Alfred Benesch & Co. occupied 11,301 square feet near 168th and Pacific streets.
There was also some downsizing in the Omaha office market. WPS Health Solutions downsized by 35,430 square feet in the North Park Business Park. Taylor Communications downsized by 25,125 square feet near 96th and F streets.