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Midwest Real Estate News
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SEPTEMBER 2021
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www.rejournals.com
whom he is working have requested no major changes to the layout or design of their office spaces. This might come as a surprise. Brokers in some markets have reported that companies are looking to rework office space to allow for more space for employees and to meet the demands brought on by hybrid working arrangements. Noddle, though, says that this doesn’t seem to be the case so far in Omaha.
Omaha is in the middle of a massive redevelopment of its riverfront, which should provide another boost to downtown.
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companies that don’t have to make long-term decisions are hitting the pause button. “We are seeing some short-term office lease renewals,” Mensinger said. “We are seeing one- to three-year lease
renewals. A lot of people talk about the sublease market. We do see sub leases here. But as far as our market goes, sub leases are only 1.3 percent of our total office inventory. There aren’t many companies leaving their leases early here. People are holding in place if they can.”
ha’s office market remained so low? Mensinger points to the more conservative nature of the Omaha commercial real estate market. The office market here hasn’t been overbuilt. While the vacancy rate in the office sector has risen during the pandemic, it’s only jumped from 7.4 percent to 10.6 percent.
“I really don’t think we’ll see any major changes in the way office spaces are designed in Omaha,” Noddle said. “I think most of the office buildings seeing big changes are the bigger, taller and denser properties. In the type of office space we have in Omaha, I don’t think we’ll see major changes.” The retail market is in flux here, too. Retailers in the Omaha market weren’t forced to remain closed for as long at the beginning of the pandemic as they were in other markets across the country. That helped retailers survive those earlier months.
So why has the vacancy rate in Oma-
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“We are a strong market, but we are conservative builders,” Mensinger said. “We don’t build a lot of office space on spec. Our office developments have a significant amount of square footage secured by the time they deliver.” The pandemic has provided an opportunity for some companies to improve their office space. As Mensinger says, some companies have moved from Class-B office space to Class-A, while others have made the jump from Class-C to Class-B space. At the same time, office rents in the Omaha market have remained steady. This, too, has helped companies that have wanted to move to a higher class of office space. “We have had a lot of companies with under 100 employees return to the office,” Mensinger said. “When you don’t have as much density, you have the luxury of coming back earlier. A lot of our national companies might require people to stay home or work fewer days in the office.” Noddle, whose company has been working on several office projects in Omaha throughout the pandemic, said that the office tenants with
And Mensinger said that people in Omaha are shopping and spending money again, which has provided another boost to retailers. The challenge? Retailers in Omaha, as they are across the country, are struggling to find enough workers. “We are hearing a lot now that restaurants are having trouble attracting people to work the hours,” Mensinger said. “Our unemployment rate here is at 2.7 percent. That gets challenging. It’s one thing to be open, but you have to be able to staff your restaurant or shop.” Another challenge in Omaha? Downtown remains quieter than outlying neighborhoods or suburbs, largely because so many bigger companies haven’t brought their workers back to the office. This has a ripple effect, hurting the retailers and restaurants located in the center of the city. “All of us are living in a world now where we don’t fully know what is going to happen next,” Mensinger said. “My hope is that people do start to return to the office. That helps with daytime traffic in the office and retail sector. With the Delta variant we are all a little unsure now. But I do think