The Changing Landscape of Flex Space
The Omaha Industrial vacancy rate has been hovering around 3 percent since 2014. This quarter is no different. For the third quarter in a row, the vacancy rate stands at 3.3 percent in Omaha. New construction was occupied as quickly as it was completed with 215,500 square feet added to inventory and 211,393 square feet of absorption for the quarter. All of the square footage in newly constructed buildings were spoken for before they even hit the inventory. The Blue Buffalo Company expanded their warehouse in Bellevue by 160,000 square feet, Hayes Mechanical moved in to 27,500 square feet in Sarpy County and Highway Signing Inc. moved in to a 20,000-square-foot facility in Council Bluffs. Currently, in the Omaha metro area, there are 13 properties totaling almost one million square feet under construction. Most of the square footage under construction is located in Western Sarpy County and is build-to-suit; Oxbow Animal Health, Thrasher Foundation System, Freightliner Truck Center and others. There are five speculative properties, comprising 80,000 square feet, currently under construction. For years now the question has been posed, “When will asking rates reach the point that speculative construction makes sense financially?” The Omaha industrial market is not there yet, but moving in that direction. Overall average asking rents in the market are $5.59 per square foot on a triple net basis. For the speculative projects now under construction, asking rates are running between $6.40 and $7.25 per square foot. Colliers International believes that in order to purchase land, construct a new building and still make a profit, rents will need to go even higher.