Omaha’s land sales market performed better in 2020 than in any year since we began tracking land sales in 2013. Investors Realty tracked 152 commercial land transactions in Greater Omaha in 2020 totaling 5,240 acres and $300 million in value. 2020 commercial transactions were up $195 million over 2019, and are substantially ahead of the eight-year average of $182 million.
Industrial, Commercial and Other categories each had their best year for total sales and total value since at least 2013.
Land sales are indicative of market confidence and future development. Since the market is up in every sector over last year and generally up over several years, it leads us to have a positive outlook for new development activity over the next 12 to 24 months. Below, we take a more detailed look at the various categories of sales.
COMMERCIAL LAND SALES
Commercial land sales include retail and service properties such as restaurants, car washes, gyms, daycares, banks and other similar uses. Omaha’s Commercial land market experienced 65 sales for $90 million in transaction value. There were dozens of sales in the one-acre size range. 56 of the sales traded for prices under $2 million each with only nine larger sales exceeding $2 million. Of note were the $3.1 million sale of the Lost Rail Golf Club west of Gretna and the $8.3 million sale of the former Best Buy site at 74th and Dodge St., which is being developed with the Crossroads project. Commercial land sales averaged $154,000 per acre ($3.54 psf), which is down from the past few years.
INDUSTRIAL LAND SALES
Industrial uses are fairly straightforward, but we do include datacenter land sales in industrial because data centers are typically located on land which would otherwise be used for industrial. There were 25 Industrial land sales in the Omaha area in 2020, totaling $73 million in value. Four sales really moved the needle in 2020:
- Raven Northbrook (Facebook) purchased 517 acres at Hwy 50 and Capehart Rd. for $36 million
- Springfield Business Park sold for $11.3 million to John Myers for a build-to-suit and future development
- Amazon bought two parcels: a 42.5-acre parcel at I-80 Logistic Hub (132nd & Cornhusker Rd.) for a last mile destination facility for $10.1 million and a 94-acre parcel on the northeast corner of Hwy 50 and Hwy 370 for $12.3 million for a distribution warehouse.
There were four sales in excess of 80 acres with the balance of the sales being mostly individual end-user lots. The average for all 2020 Industrial land sales was $96,100 per acre ($2.21 psf), the second highest year we have tracked.
OFFICE LAND SALES
Office land sales are also straightforward but do include all medical. Office land sales saw another lackluster year with only seven sales for 14 acres and $10.7 million. The average price per acre was $768,000 ($17.63 psf). The results were buoyed by the sale of 5.4 acres in Heartwood Preserve to Union Bank & Trust for their corporate headquarters. Without the UBT sale, the remaining six transactions averaged $584,000 per acre ($13.40 psf).
MULTIFAMILY LAND SALES
The number of Multifamily sales and the transaction value for 2020 is more than four times 2019. Multifamily land sales were robust in 2020 with 18 transactions for 313 acres and nearly $44 million. These numbers are misleading because they include a $21 million trailer park at 129th and West Maple Rd. Of the remaining 17 sales, 11 were suburban, totaling $16 million and 239 acres, which is a $67,000 per acre average ($1.54 psf). Six were urban totaling $5.2 million and 18.3 acres, which averages $282,000 per acre ($6.47 psf). These average prices fell off notably from 2019.
OTHER LAND SALES
The Other category includes single-family development properties, religious institutions, schools, long-term future development properties and one-off uses like mining. In a year with impressive sales across the market, the Other category had more sales and transaction value in 2020 than in any previous year. The 36 transactions in 2020 were three times 2019 results and the $82 million in sales value was five times what the market saw in 2019. The average price per acre was $22,715, which has been relatively flat over the years. The transactions in the Other category are typically large due to the inclusion of single-family development properties. 30 of the transactions were larger than 20 acres, 17 were larger than 75 acres and 10 were larger than 160 acres (a quarter section). One buyer, Big Red Ruby, acquired 500 acres in four transactions near Platteview Road, west of Springfield. Within the Other category we saw 12 single-family parcel sales for 760 acres at an average of nearly $42,000 per acre, which is the same average as the previous year.
The large bump in total sales and transaction volume for 2020 was surprising to see initially, especially considering the impact of the COVID-19 pandemic. However, with 2019 being a down year and strong demand coming from single-family, data centers and e-commerce real estate users, these results probably should not surprise us. Challenges in the retail sector are still prevalent, but as 2020 showed, there remains demand for quality commercial land.
The ongoing effects of COVID-19 make it hard to predict the future. If closed transactions in the first five months of 2021 are any indication, we will see a notable drop-off from 2020 as the market has only closed 31 land sales for $53 million. There have not been any Single-Family or Multifamily land sales and only one Office, four Industrial and three Other sales, with the balance being Commercial. However, our firm is tracking approximately 1,000 acres of Single-Family, 500 acres of Industrial and 100 acres of Multifamily land under contract as of May 2021. There are several buyers active in the market, so more parcels are expected to go under contract. We believe there will be some fall off in the number of sales and dollar volume from 2020’s historical numbers, but there are limited options for quality land parcels which suggests prices will remain stable or even increase.
Investors Realty has focused on land development and land sales since our inception and still leads the market with our activity in the land sales market. Investors directly handled 30 of the market’s 2020 transactions and our agents are familiar with the details of many of the others. We are available to answer any questions you may have about the market.
This article appeared in our company newsletter in June of 2021. Please click here to download the entire newsletter.