Timothy Kerrigan describes the sales, leasing and new-construction activity in the Omaha market with one word: robust.
It’s an unusual word for Omaha’s CRE market. Kerrigan, a vice president specializing in office, land and investment for Omaha’s Investors Realty, said that brokers here have typically used “stable” and “steady” to describe the commercial activity in the Omaha market.
But that changed last year.
In 2015, the Omaha commercial real estate market saw about 1 million square feet of lease deals of more than 1,000 square feet. The market also absorbed 340,000 square feet last year.
“In a market that is 22 million square feet, that is a pretty good year,” Kerrigan said.
Kerrigan said that Investors Realty tracked 147 transactions of 1,000 square feet or more last year in the greater Omaha market. That is the highest this figure has been since the recession hit the country in 2007 and 2008, Kerrigan said.
“Omaha’s secret is a diverse economy,” Kerrigan said. “For many years, we have had a strong agri-business economy here. But at the same time, we are home to five companies that are in the Fortune 500, which for a community our size is a pretty incredible figure. There is good, steady growth and employment that comes from those big players as well as a handful of Fortune 1000 companies that are growing in Omaha.”
A thriving office market
Kerrigan pointed to two submarkets as performing especially well these days when it comes to office leases and sales, the West Dodge corridor market and the Miracle Hills market.
The Miracle Hills submarket had an office vacancy rate of just 3.3 percent, Kerrigan said. The West Dodge corridor was even better, with an office vacancy rate of 3.2 percent. Kerrigan said that the overall Omaha office vacancy rate was a far higher 12 percent.
“Dodge is the primary east-west connector in Omaha. You can travel great distances on Dodge quickly,” Kerrigan said. “Both of these markets have a great location, a great connectivity to Omaha’s main traffic arteries.”
The two submarkets benefit, too, from intelligent, well-planned development strategies, Kerrigan said. Both submarkets feature a broad range of product type, from Class-A to Class-B and even affordable Class-B-minus or Class-C office space.
“There is something for everyone in that market,” Kerrigan said.
Looking for the right amenities
Office tenants today want modern buildings with high-end amenities. But what’s even more important are the amenities of the communities in which these offices sit, Kerrigan said.
Companies, for instance, want to offer their employees the chance to work in walkable communities. Their workers can then walk to restaurants during their lunch breaks, enjoy a short walk to public transportation at the end of the work day and maybe even gather at a nearby pub after work hours for a morale-boosting employee get-together.
Offices in walkable communities might also be located near convenience stores, grocery stores and fitness centers that appeal to employees.
“That is the most talked-about amenity that people want today,” Kerrigan said. “They want to work in an area with a high walkability score. That has become more important than the amenities inside an office building.”
Covered parking makes an office building more desirable, too, Kerrigan said.
“Once you have some kind of covered parking element, you don’t want to go without it if you are a tenant,” Kerrigan said. “It’s not rare to find covered parking in the Omaha market, but it is rare enough that it still counts as a unique feature, one that building owners can really promote. As a result, covered parking always gives a building great value.”
It’s not surprising that much of the new office development in the Omaha market is taking place in the city’s downtown, especially in the busy Capital District.
Engineering and architecture firm HDR has announced its plans for a new headquarters building in this downtown section, a building that will stand 18 to 20 stories tall. Next to it will rise the Capital District multi-use redevelopment project that is now under construction.
This mixed-use project will include about 1.3 million square feet of offices, retail shops, residential and a full-service hotel, in addition to a sizable amount of indoor parking.
Aksarben Village is another hotspot for office development. Kerrigan said that this development, a mixed-use project in the Midtown section of Omaha, is in the middle of a development boom. Last year, Pacific Life opened a new headquarters office building here, and this year will see the opening of a new building for Green Plains Energy.
The Lumberyard District, a mixed-use development under construction now in the southwest Omaha community of Millard, will include new apartments, offices and retail uses when it is complete in 2018. Kerrigan said that this development, too, is attracting plenty of commercial real estate activity.
Why are so many companies locating in Omaha? Kerrigan said that the city is an affordable place to set up shop and boasts a quality, educated workforce.
“Business owners love the quality of the employment force here,” Kerrigan said. “They love their employees. They are hard-working, accountable and reliable. Those employees can afford to work for less than they can on the coasts or in Chicago or other big cities because our cost of living is in check here in Omaha. And those employees have to suffer a rush hour that, at worst, is 30 minutes. That’s not too bad.”
Kerrigan said that the Omaha market boasts a pro-business attitude that companies like. The area’s public schools are also a boon. Kerrigan says that the quality of the schools in Omaha is an important draw for companies.