OFFICE MARKET HIGHLIGHTS:
- Inventory – The Omaha Office Market has experienced exponential growth. The inventory has increased by 1.65M square feet from 42,764,759 SF in 2020 Q1 to 44,418,009 SF in Q1 2021 due primarily to deliveries of new construction.
- With the increased inventory has come increased vacancy as not all newly constructed buildings were 100% pre-leased. Due to vacancy in newly constructed buildings and tenants vacating or downsizing their footprint in existing buildings, the vacancy has increased by 1.38M square feet from 2,519,348 SF in Q1 2020 to 3,903,977 SF in Q1 2021.
- The vacancy percentage rate in Q1 2020 was 6.53% compared to 9.8% in Q1 2021. This is the highest vacancy rate since Q2 2007 when it was also 9.8%.
- Absorption – Although vacancy has increased, surprisingly there was positive absorption of 24,799 SF in Q1 2021 compared to a negative absorption of 57,703 SF in Q1 2020.
- Deal velocity is still below pre-pandemic levels. Tenants 5,000 SF and under are the most active in the market and tend to focus on buildings with existing improvements in place due to the increased cost of construction. Activity amongst 20,000+ SF tenants remains slow.
- Supply chain disruptions, construction material costs, and labor shortages are impacting new construction and tenant improvement costs and are further curtailing leasing velocity.
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