General Market Overview
Since January 1, 2005, overall office space availability has increased from 16% to 17%, representing a 6% increase over the past six-month period. The 17% space availability factor represents approximately 2.4M SF of available space throughout the approximate 14.4M SF non-owner occupied office market. The increase of available office space in the market is mainly attributed to the addition of major blocks of existing space vacated by major users and the addition of recently constructed office projects that still contain significant space availability.
Examples of significant vacated space include: the former ConAgra space located at the 7000 Building, 7000 West Center Road (47,200 SF) and former FDR space located at Farnam Tech Center “A,” 10842 Farnam Street (42,500 SF). Examples of new major space additions include: Westroads Office Park I, 1111 North 102nd Street (35,000 SF); One California, 136th & California Street (30,700 SF); 16929 Frances Street (23,500 SF) and Altech “A”, “B” and “C”, 146th & “F” Streets Vicinity (collectively 28,900 SF).
Although overall space availability has increased the past six months, it is important to note that several major absorptions of space have occurred through out the market. Alegent Health, for example, has leased 20,000 SF at 810 North 96th Street. In addition, AEG has leased 47,500 SF at Corporate Centre West III, 10805 Old Mill Road. And finally, two firms, Alegent Health and Bird Dog Solutions have collectively leased 32,500 SF at North Park II, 2301 North 117th Street.
In addition, it is important to note that sublease space has all but disappeared and is virtually non-existent in the marketplace.
The Downtown/Midtown market continues to have substantially more of a space availability factor than that of the Suburban market, albeit the difference is becoming less and less. Current space availability in the Downtown/Midtown market is 22%; in the Suburban market, 15%.
Sub-market Space Availability
Space availability increases have occurred in six or 50% of the sub-markets. The 72nd Street Corridor sub-market has undergone a 50% increase of space availability from 12% six months ago to 18% today. On January 1, 2005, the Central West Dodge Corridor sub-market had a 12% availability rate; today, it is 13%, representing an 8% increase. In the Old Mill sub-market, space availability was 20% on January 1, 2005; today, it is 23%, representing a 15% increase. The Suburban West Dodge Corridor sub-market has experienced an 8% increase in space availability from 12% six months ago to 13% today. On January 1, 2005, the Central Southwest sub-market had a 15% availability rate; today, it is 17%, representing a 13% increase. And finally, the Suburban Southwest sub-market has experienced a 55% increase. On January 1, 2005, the availability rate was 11%; today, it is 17%.
Space availability increases however, have occurred in four or 34% of the sub-markets. The Downtown/Midtown sub-market has experienced a 4% decrease from 23% to 22% the past six months. On January 1, 2005 space availability in the Regency sub-market reflected an availability rate of 12%; today, it approximates 9%, representing a 25% decrease. The Miracle Hills sub-market availability rate has decreased 34% from 15% six months ago to 10% as of July 1, 2005. And finally, on January 1, 2005, space availability in the Suburban Northwest sub-market was 10%; today, it is 9%, representing a 10% decrease.
Space availability has been maintained at 11% and 12%, respectively in the Belleuve/Sarpy County and Central Northwest sub-markets.
Rental Rates/Concessions
While the trend of rental rates in all classes of office buildings had been declining for the past couple of years, it now appears that they have stabilized. Concessions, those including rent abatement, additional tenant leasehold improvement allowances and/or moving allowances appear to have stabilized as well.
Existing Buildings – Known Forthcoming Space Availability
Major blocks of space totaling approximately 108,600 SF will becoming available in October, 2005 at Wall Street Plaza, 1410 Wall Street; Space Tech I, 1404 Fort Crook Road; Space Tech II, 1408 Fort Crook Road; and, Space Tech III, 1406 Fort Crook Road as a result of Northrop Grummans’ vacation. The firm will be relocating to a build to suit facility currently under construction at 36th Street at Highway 370. Ambassador Prudential Real Estate will be vacating approximately 20,000 SF at Park View Professional Center, 1055 North 115th Street in March, 2006. The firm will be relocating to its build to suit office building location at 135th & West Dodge Road. And finally, Commercial Federal will be vacating approximately 66,300 SF located at 450 Regency Parkway Drive on or about January 1, 2007. The firm will be relocating to its campus headquarters, 132nd & West Dodge Road. Total known forthcoming space availability approximates 194,400 SF. As a matter of perspective, this figure could have the effect of increasing overall space availability in the market by 1% if not absorbed.
Current Construction Activity
Presently there is active construction in progress reflecting 221,600 SF. 107,400 SF or 48% of space under construction is still available for lease. Construction activity has declined 21% as compared to six months ago when approximately 278,900 SF of space was under development.
All construction continues to occur in west Omaha.
Construction is nearing completion on the three-story Westfield Place II, 9900 Nicholas Street (44,600 SF) office building. Approximately 22,000 SF is still available for commitment. In the same sub-market, the Central West Dodge Road Corridor, the developer of Westroads Office Park II, 102nd & Nicholas Street; has begun construction of the three-story approximate 50,000 SF office building. Approximately 42,000 SF is still available for lease. This sub-market accounts for approximately 43% of the market’s total construction.
There are presently two office building projects, representing 28% of the market’s total construction activity, under development in the Suburban West Dodge Corridor sub-market. Construction is underway for a two-story office building to be principally occupied by Midwest Eyecare at 135th & California Streets. Approximately 4,200 SF is still available in the approximate 30,000 SF building. Ambassador Prudential Residential Real Estate is building a two-story approximate 32,000 SF building for its offices within the same vicinity. The firm will be occupying the Building in its entirety.
Nearing construction completion in the Suburban Southwest sub-market is the Legacy View office building located at 17330 Wright Street. The two-story approximate 23,000 SF office building is 38% pre-leased. Ground was recently broken on 14505 “F” Street, a two-story approximate 42,000 SF office building. Mutual Credit Union will be occupying approximately 17,000 SF in the building. 40% of the Building, therefore, is pre-committed. This sub-market accounts for approximately 29% of the market’s total construction.
Planned Construction
Active planned construction, representing projects that have not had groundbreaking as of July 1, 2005, but are highly likely to be built, constitutes approximately 737,300 SF of office space scheduled to come on line within the next 18-48 months.
In the Suburban West Dodge Rd. Corridor sub-market, 112,000 SF, representing 15% of what’s planned in the entire market, will be allocated between two buildings. A local developer is ultimately planning on building a four-story office building to contain approximately 64,000 SF in the Commercial Federal Office Park, 132nd & West Dodge Road vicinity. The second building planned in the sub-market is Seville Square IV (48,000 SF), 14750 West Dodge Road.
The Suburban Southwest sub-market accounts for 240,600 SF, or 33% of what’s planned. Eleven projects make up the planned square feet in this sub-market. They include five buildings all located within the Altech Office Park, southwest corner vicinity, 144th & “F” Streets. Altech “D” , “E” and “F” each, are to be 10,000 SF single-story office buildings. Altech V Building, to be located at 4005 S. 148th Street within the park, will be a two-story approximate 20,000 SF office building. And finally, Altech Plaza Building East will be a two-story approximate 70,500 SF office building. Additional planned office buildings within the sub-market include Walnut Grove Professional I (32,000 SF), 153rd & Weir Street; Legacy Condos (10,000 SF), 171st & Oak Drive; Hawthorne (10,100 SF), 17655 Welch Plaza; Southport Professional I and II, (each to contain 24,000 SF), Interstate 80 & Harrison Streets; and, a two-story office building (20,000 SF) to be constructed at 200th Street & Highway 370.
Two single-story, 10,000 SF office-building projects (Papillion Professional Park, 72nd & Halleck Streets) are being planned in the Bellevue/Sarpy County sub-market. Planned construction in this sub-market reflects 3% of what’s planned in the entire market.
In addition, three two-story office buildings, to be called, “Westpoint” (156th & West Maple Road), are being planned for the Suburban Northwest sub-market. Collectively, each 40,000 SF building accounts for approximately 16% of planned construction activity throughout the market.
North Park 4B and North Park 7B are respectively, two-story and three-story, approximate 52,000 SF buildings to be located in the 120th & Blondo Streets vicinity within the Central Northwest sub-market. The addition of these two buildings will account for 14% of what’s planned for the entire market.
Westroads Office Park III and IV are each three-story approximate 60,000 SF office buildings that will ultimately complement I and II at 102nd & Nicholas Streets. The addition of these two buildings will account for 16% of what’s planned for the entire market.
In the Downtown/Midtown sub-market, approximately 20,700 SF is planned for the former Omaha Club, 2002 Douglas Street. Planned construction in this sub-market reflects 3% of what’s planned in the entire market.
No projects are currently planned for the 72nd Street Corridor, Regency, Old Mill, Miracle Hills and Central Southwest sub-markets.
Passive planned construction, representing projects that may or may not get built, approximates 402,600 SF. It is not anticipated that any square feet of new office building space will be realized for several years.
Forthcoming Known Space Availability and New Construction: Its Implication on the Omaha Office Market
The effect of the addition of space created as a result of current construction will generate approximately 107,400 SF of additional space throughout the market over the next eighteen months. As a matter of perspective, this figure, coupled with known approximate 194,400 SF of existing space becoming available among several office buildings, would represent approximately 301,800 SF of surplus space in the market and thus could have the effect of raising overall market space availability by 2% if not absorbed. Consequently, current construction activity and known forthcoming space availability in existing buildings could have a significant effect on the market.
The implications to the office market of actively and passively planned projects will not be known until confirmation of construction activity.
Sub-market Overview Bellevue/Sarpy County
Space availability in this sub-market has been maintained at 11% since January 1, 2005.
It is important to note that there is significant office development underway and planned for Defense Contractors that will have the effect of creating additional space availability in the sub-market in current leased facilities. Major blocks of space, totaling approximately 108,600 SF, for example, will becoming available in October, 2005 at Wall Street Plaza, 1410 Wall Street; Space Tech I, 1404 Fort Crook Road; Space Tech II, 1408 Fort Crook Road; and, Space Tech III, 1406 Fort Crook Road as a result of Northrop Grummans’ vacation. The firm will be relocating to a build to suit facility currently under construction at 36th Street & Highway 370.
Two additional 10,000 SF single-story office buildings are being planned at Papillion Professional Park, 72nd & Halleck Streets in Papillion. Downtown/Midtown
Space availability in this sub-market has decreased from 23% six months ago to 22% today, representing a 4% decrease. The Downtown/Midtown sub-market continues to have substantially more of a space availability factor than that of the Suburban market, albeit the difference is becoming less and less. Current space availability in the Downtown/Midtown market is now 22%; in the Suburban Market, 15%.
The 4% decline in space availability is mainly attributed to the absorption of approximately 21,000 SF by FirstComp at Central Park Plaza, 222 South 15th Street.
There is no known significant foreseen space availability within current leased facilities forecasted in the sub-market in the near future.
The owners of the Omaha Club, 2002 Douglas Street, are planning a 20,700 SF addition. 72nd Street Corridor
Space availability in this sub-market has increased 50% from 12% to 18% since January 1, 2005.
The 50% increase in space availability is mainly attributed to the addition of approximately 47,500 SF at the “7000” Building, 7000 West Center Road. The space was formerly occupied by ConAgra. In addition, FirstComp’s decision to relocate its offices downtown has created significant additional space availability in the sub-market in two buildings: Bonanza Plaza (8,700 SF), 212 South 74th Street and 7444 Farnam Building (10,900 SF), 7444 Farnam Street.
There is no other known significant foreseen vacancy forthcoming either in the way of existing buildings or new construction. Central West Dodge Corridor
Space availability in this major sub-market overall has increased 8% from 12% six months ago to 13% today. The increase of space availability has been brought about by the addition of one new building in inventory, Westroads Office Park I (35,000 SF), 1111 North 102nd Street and additional space that has been vacated by tenants. Solomon Smith Barney, for example, has vacated approximately 17,300 SF at 94 Dodge Place, 9394 W. Dodge Road. The firm has relocated its offices to One California, 136th & California Street. In addition, Mutual of Omaha has consolidated its 14,500 SF operation at Executive Center I, 1000 North 90th Street into its corporate Headquarters, 33rd & Dodge Streets.
One significant space absorption however, is worth noting. Alegent Health has leased approximately 20,000 SF at 810 North 96th Street.
Construction is nearing completion on the three-story Westfield Place II, 9900 Nicholas Street (44,600 SF) office building. Approximately 22,000 SF is still available for commitment. The developer of Westroads Office Park II, 102nd & Nicholas Street, has begun construction of the three-story approximate 50,000 SF office building. Approximately 42,000 SF is still available for lease. This sub-market accounts for approximately 43% of the market’s total construction.
Westroads Office Park III and IV are each three-story approximate 60,000 SF office buildings that will ultimately complement I and II at 102nd & Nicholas Streets. The addition of these two buildings will account for 16% of what’s planned for the entire market.
Regency
Space availability within the Regency sub-market has declined 25% from 12% to 9% since January 1, 2005.
Several small space absorptions at 10801 Pacific Street, Corporate Square, 310 & 366 Regency Parkway Drive, Four Regency, 10040 Regency Circle and Regency One, 10050 Regency Circle, collectively have reduced space availability in the sub-market.
Commercial Federal Bank will be vacating approximately 66,300 SF at 450 Regency Parkway Drive on or about January 1, 2007. The firm will be consolidating its space needs at its corporate campus, 132nd & West Dodge Road.
There is no other known significant foreseen space availability forthcoming either in the way of existing buildings or new construction.
Old Mill
Space availability has increased 15% from 20% to 23% in this sub-market since January 1, 2005. The increase is mainly attributed to the effects of significant space additions in the sub-market. Gallup, for example, has vacated 17,100 SF at Executive Centre Tower, 10909 Mill Valley Road. Former FDR space (42,500 SF) has now become available at Farnam Tech Center “A,” 10842 Farnam Drive. In addition, Commercial Federal Bank has vacated 21,400 SF at Harney West II, 10845 Harney Street.
One major space absorption in the sub-market, however, is worth mentioning. AEG has leased 47,500 SF at Corporate Centre West III, 10805 Old Mill Road.
No known space availability is expected to come about nor is there any planned construction of office building space for the future in Old Mill.
Miracle Hills
Space availability in this area has decreased 34%. Six months ago the availability rate was 15%; today, it is 10%. The space decline is mainly attributed to space absorption among one large transaction and several smaller transactions. PPIC leased approximately 14,000 SF at Miracle Hills VII, 11605 Miracle Hills Drive.
Ambassador Prudential Real Estate will be vacating approximately 20,000 SF at Park View Professional Center, 1055 North 115th Street in March, 2006. The firm will be relocating to its build to suit office building location at 135th & West Dodge Road.
There is no other known availability of space expected in Miracle Hills. Moreover, future development is not planned as the office park is fully built.
Suburban West Dodge Rd. Corridor
Space availability in this sub-market has increased 8% from 12% six months ago to 13% today.
The additional space availability is primarily attributed to the addition of newly developed First Westroads Bank Building, 15750 West Dodge Road, and One California, 137th & West Dodge Road to inventory. Approximately 11,000 SF remains available at the former; approximately 30,700 SF is still available at the latter. |
