Vacancies were up. Transactions were down. And net absorption was negative. Last year was far from a highlight for the Omaha office market. And, to no one’s surprise, the culprit was COVID-19.
That’s the takeaway from the 2020 Year-End Omaha Office Market Report released recently by Investors Realty.
According to the report, the Omaha office market saw 180 new lease transactions for 718,246 square feet in 2020. That is down from a typical year in which Omaha usually sees a little more than 200 office lease transactions for 1 million square feet.
That might be only 10 percent fewer transactions than a typical year, but the amount of leased office space did fall nearly 30 percent, according to Investors Realty. That’s an indication that most office leases in Omaha last year were of the smaller variety. Why? Most companies didn’t want to make major leasing decisions last year as the pandemic continued its hold on the country.
The numbers tell the story of a sector that struggled in 2020. The office vacancy rate in Omaha jumped from 5.4 percent in 2019 to 8.89 percent last year. The only submarket to see a decrease in the office vacancy rate was Old Mill, which went from a vacancy rate of 8.4 percent in 2019 to one of 7.2 percent last year.
Absorption was down, too. In 2020, Omaha’s office market saw negative 140,674 square feet of absorption. That’s a big difference from a typical year. Investros Realty says that the Omaha market has historically seen 250,000 square feet of absorption in its office market each year.
Last year’s negative absorption was an anomoly, then, and nearly wiped out the 577,000 square feet absorbed in 2019.
These weak numbers aren’t a surprise. COVID-19 forced companies to send their employees to work-from-home mode, and most workers haven’t yet returned to their offices. That, of course, greatly lessened demand for office space and forced companies to place give office-space moves on hold.
Construction was down last year, too. At the end of 2020, about 1.1 million square feet of new office construction was underway. But more than 800,000 square feet of that came from projects started before 2020, according to Investors Realty.
Last year, two significant office projects broke ground: R&R Realty Group started construction on Waterford, a 180,000-square-foot Class-A building at 192nd Street and West Dodge Road. UBT broke ground on its 93,000-square-foot headquarters building at the Heartwood Preserve at 144th Street and West Dodge Road.