With vacancy rates hovering at 17 percent, landlords are striving to keep good tenants from leaving their buildings. “Tenants, conversely, are using this leverage to either upgrade their space or reduce their leasehold costs when renewing,” says Greg Hornish, president of Omaha-based The Hornish Company.

Additional incentives such as free rent, liberal tenant finish allowances, and the rights to terminate leases prior to lease expiration dates are but a few of the perks that landlords are using to attract tenants to their properties. Some landlords are now offering increased fees to brokers as enticement to show their property over others.

Developers are not rushing to build speculative office buildings, even though there seems to be reasonable activity in the marketplace. Applied Underwriters recently leased a 50,000-square-foot office building, adjacent to its existing 50,000-square-foot building, at 10815 Old Mill Road. Omni Hotel Reservation Systems moved from a 12,500-square-foot facility to its new, 21,000-square-foot office at 11819 Miami Street.

“The city of Omaha, with the help of the Chamber of Commerce, has done a good job of selling Omaha’s virtues to businesses,” Hornish says. Last year, The Hornish Company assisted the Staubach Company in bringing AFLAC to its new 20,000-square-foot Midwest Customer Service Center at 9500 West Dodge Road.

Additionally, The Hornish Company was successful in representing and procuring space for Booz Allen Hamilton’s new offices, totaling 6,000 square feet, at 1200 Landmark Centre. “I feel this is significant because STRATCOM, located at Offut Air Force Base in Bellevue, has emerged as an important and growing factor for our nation’s air defense,” Hornish says. “This will continue to attract companies like Booz Allen Hamilton to the area and encourage defense contractors already present to grow.”

Omaha continues to be the home of many telemarketing, reservation systems and customer service centers.

New construction and business consolidations have dropped a lot of space on the market, adding to the concerns of developers and landlords. First Data Resources recently completed construction of two buildings, 285,000 square feet and 215,000 square feet, at its new office campus at the former Aksarben racetrack, located at 72nd and Pacific streets. Additionally, TSA Software vacated 50,000 square feet at its headquarters, located in the Old Mill Office Park.

Consolidations are having a major impact on the central business district (CBD), which continues to show a higher percentage of vacancy than west Omaha. First National Bank recently moved into its new 40-story, 650,000-square-foot office tower. Union Pacific’s new $260 million, 1.1 million-square-foot headquarters will be ready for occupancy during the 3rd quarter of 2004. Both developments will leave more than 500,000 square feet vacant in downtown. Current vacant space for the CBD totals 1.15 million square feet and, with minimal absorption expected, will increase to 1.5 million square feet by the third quarter 2004, equal to a 32 percent vacancy rate for downtown Omaha.

In contrast, there is a lot of positive news to mention. The city is completing construction of its $290 million, 240,000-square-foot convention center and arena. Also, the Gallup Organization is completing construction of its new headquarters, consisting of 305,000 square feet of offices and training rooms, on the riverfront. “The synergy created by these two projects has contributed to an increase in residential development by condominium and apartment developers to satisfy office workers who desire to live close to their workplace,” Hornish says.

The population within 50 miles surrounding downtown Omaha totals 1.1 million. “Employers have been pleasantly surprised and impressed to find the quantity and quality of the work force when considering a move to the Omaha area,” Hornish says.

Construction on a major street and overpass project will begin this year, and continuing through 2008, from Interstate 680 and Dodge Street westward to 130th Street and West Dodge Road. This construction will have a major impact on two office parks, Old Mill and Miracle Hills. There are 2.2 million square feet of developed office space between the two parks with more than 400,000 square feet of vacant space, representing about 18 percent of the total space. “This number will grow in the near future as leases expire and tenants, seeking less disruption and delays traveling to and from work, relocate their offices to better serve their employees,” Hornish says. “Landlords are lowering rents and becoming more aggressive to stem this outward migration of office users.”

No major new office parks have been announced for development this year. There are five office buildings already under construction, representing 200,000 square feet, that will be added to the current 3.19 million square feet of available space. The five buildings are: Executive Centre II, a three-story, 54,000-square-foot office building located at 93rd Street and Western Avenue; 11600 Centre Place, a three-story, 59,800-square-foot office building located 11602 W. Center Rd.; Harris Feldman Law Offices & Hauptman O’Brien, a 22,000-square-foot building (18,000 square feet is pre-leased) located at 1005 107th St.; Millennium Plaza, a 45,000-square-foot office building located at 15858 W. Dodge Rd.; and Lakeside Hills Court, a 27,000-square-foot office building located at 2110 South 169th Plaza.

Class A rental rates in Omaha range from $19 to $27 per square foot.


©2003 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.