MIDDLE MARKET HIGHLIGHT, APRIL 2006

GRAND ISLAND
Karen Stone, CCIM

Grand Island, Nebraska, is a well-located city with close proximity to numerous intermodal transportation options, including Interstate 80, state highways 281, 30, 34 and 2, and the Burlington Northern and Union Pacific railroads. “We are right in the middle of the country, within a 2-day truck drive of both coasts,” says Marlan Ferguson, president of the Grand Island Area Economic Development Corporation. As a result, the traditionally agricultural-based economy of Grand Island is adding distribution, logistics and transportation companies to its list of growing businesses. “In 2005, we hit a new record for the capital investment in the area — $80 million,” Ferguson explains. “We anticipate that our population, currently around 44,000 within the city limits, will grow between 4 and 5 percent annually through the next 4 to 5 years to 50,000 in 2010, fueling continued growth, which will spur additional investment.”

In late 2005, Wal-Mart completed two Supercenter stores in Grand Island, one on the north side of the city (pictured above) and one in the southern quadrant.

“The area along Highway 281 has exploded since The Home Depot opened there in 2001,” notes Ferguson. Retailers such as Applebee’s, Ruby Tuesday and Old Chicago, and small, service-oriented strip centers quickly followed. Oakbrook, Illinois-based Edgemark Development has just completed construction of Grand Corners, a big box retail center, on the site of a former drive-in theatre. Located south of the Wal-Mart on Highway 281 at the intersection of Old Potash Highway and Webb Road, Grand Corners is home to a 90,000-square-foot Kohl’s, a 30,000 square foot T.J. Maxx department store and Best Buy. In February, Hy-Vee, an Iowa-based regional grocery store chain, announced that it would build a 60,000- to 70,000-square-foot store adjacent to T.J. Maxx. Although details have not yet been announced, Hy-Vee has already purchased the land and construction is expected to begin later this year.

Several new retail projects are in the works. A Lincoln-based group of investors has received preliminary site plan approval to build a 500,000-square-foot lifestyle center, to be called Ponderosa Pointe, at the corner of highways 281and 34 in the northwest sector of the market. Final approval should be received this spring.

Raymond O’Connor, owner of Grand Island-based O’Connor Enterprises, feels the retail trend for the near future will be more big boxes that will house more specialized tenants, such as pet supply and electronics retailers, rather than discount department stores or home improvement centers. “We have also seen an increase in market rents in the past 2 years from a range of $6 to $9 per square foot to $14 to $18 per square foot,” O’Connor notes.

In 2004, the city passed a 5-cent sales tax increase, the proceeds of which have been bringing new life to Grand Island’s downtown. “We are currently expanding the central public library located on the west side of downtown,” Ferguson says. The $7 million, 25,000-square-foot expansion will bring the total square footage of the library to 50,269. A new parking facility will be built on the block west of the library. The sales tax funds are also being used for a new $8 million public safety center that will house the offices of both the local police department and the county sheriff. Other government related developments include a new $29 million jail that will be built in downtown near the new public safety building, and a new middle school, which will be built in the suburbs with $19 million in bond money.

Downtown is also getting a new entertainment venue — a $35 million, 7,500-seat civic center, located in the southern part of downtown on South Locus. Known as Heartland Event Center, the facility is designed to host conventions and concerts. The developer, Fonner Park, expects the center to open in August.

The medical services sector is also becoming a growth industry for Grand Island. St. Francis Hospital, located in north-central Grand Island three blocks east of Highway 281, is building a $63 million wing that will add 80 new beds, bringing the hospital’s capacity to 350. The nine-story facility is scheduled to open fall 2007. The existing single-story building will be retooled to serve as medical offices. The hospital’s expansion is spurring growth along Highway 281, where dental, eye care and specialized medical service offices are popping up.

In 2003, Grand Island was successful in attracting the Nebraska Air National Guard to a location close to its Central Nebraska Regional Airport. Construction of the facility, which will be a base for Chinook Helicopters, will start in the fall. It is expected the facility will bring 200 employees and their families to the area during the next 3 years.

According to Ferguson, “This is the best economy we have seen in years. In general, the commercial and service sectors are stabilized at the moment, and housing is trying to catch up.”

“When our community population hit the 50,000 mark, that put us on the radar screen for many national retailers and things changed for us significantly,” O’Connor adds. “Because we are a crossroads, we have a wide regional draw and we have become a major shopping hub for central Nebraska.”

As the population continues to grow, demand for housing will increase as well. O’Connor Enterprises has partnered with Katherine and Cliff Mesner of Central City, Nebraska, to create new residential options for Grand Island’s citizens. “We are in the final approval stage for a 202-unit condo development that will be called Village Pointe,” O’Connor says. The 57-acre site will also include 116 single-family sites that will be sold to builders, and 86 units for residents 55 and older. The site is located in northwest Grand Island, south of 13th Street and west of Highway 281. It is estimated the developers will spend $4 million for infrastructure construction that will take 6 months to complete.

Grand Island offers residents a great quality of life and is primed for continued growth, primarily to the northwest. According to O’Connor, the city annexed this area several years ago and brought in utilities and other infrastructure. That, coupled with ample farmland available for redevelopment, makes this section of the market very attractive to developers. “We are very excited about current growth in our city and region,” Ferguson says. “We are confident that public and private commitment is in place, creating the potential for this growth to continue.”

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