Omaha's Razor Thin Industrial Market

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iamjacobm
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Omaha's Razor Thin Industrial Market

Post by iamjacobm »

It has been like this for a while now, but we are at a new record low vacancy of 3%. We have three submarkets under 2% and the worst one is only at 6%. It really is too bad that the project on Ames fell through not just for North O, but for the city at large. With so little space available I hope we aren't missing out on some potential business. I am surprised we haven't seen some spec industrial space announced or proposed with these kind of numbers.
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Re: Omaha's Razor Thin Industrial Market

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I went to a seminar a couple weeks ago at the Chamber on Industrial Site Selection. One of the biggest issue companies see with Industrial development around Omaha is the lack of skilled workers to work in new manufacturing facilities.

People also think Omaha would be a "Prime" location for industrial between Chicago and Denver on Interstate 80 and right up the road on 29 from KC. However most companies would rather be in Des Moines, still between Chicago and Denver, but also on 35 Between KC and the Twin Cities. That said, the majority would still rather be closer to Chicago or Denver.

There is some planning for a large industrial park south of town, but right now, there are a few pieces to the puzzle still missing.

Personally I see most of the industrial/manufacturing going east of the river over by Google and Mid American Energy on the south side of the bluffs. Right next to I29 and also a rail line that is not considered a major mainline and the railroad would be way more open using for industrial access.
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Re: Omaha's Razor Thin Industrial Market

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http://www.omaha.com/money/r-r-commerce ... 496ec.html
The site stands out as well for its span of nearly 80 acres along Highway 50 south of Highway 370. The first 250,000-square-foot warehouse is to be ready for occupancy next summer. When done, three more structures, for a total of about 1 million square feet, are to occupy what once was raw land.
» Since the start of the year, about 305,000 square feet of new industrial and warehouse space has been added to the local inventory. Of that, 91 percent reportedly was occupied at completion.

» Roughly 1 million square feet of new development is underway, almost all of which is to be done before the year’s end and has been claimed by tenants.

» On the rental side, the vacancy rate is a low 3.3 percent. In the first six months of this year, a net 342,000 square feet of industrial and warehouse space was leased.
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Re: Omaha's Razor Thin Industrial Market

Post by Omaha_corn_burner »

What's the difference between commercial and industrial?
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Re: Omaha's Razor Thin Industrial Market

Post by Brad »

Omaha_corn_burner wrote:What's the difference between commercial and industrial?
Commercial is more retail, shopping, office. Industrial is more manufacturing, warehouse, transloading.

Its not a fine line, there is a little grey area where the two meet, a lot of the breweries that have tasting rooms like Luckey Bucket, its in an industrial space, but they have a retail portion.
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Re: Omaha's Razor Thin Industrial Market

Post by Omaha_corn_burner »

Brad wrote:a lot of the breweries that have tasting rooms like Luckey Bucket, its in an industrial space, but they have a retail portion.
This is actually exactly what I was thinking of.
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Re: Omaha's Razor Thin Industrial Market

Post by Omaha_corn_burner »

So how about Oriental Trading down the street? They don't manufacture anything, just ship out goods.
How about the Yahoo/Google/Facebook datacenters? They don't really "do" anything at all.
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Re: Omaha's Razor Thin Industrial Market

Post by Brad »

Omaha_corn_burner wrote:So how about Oriental Trading down the street? They don't manufacture anything, just ship out goods.
How about the Yahoo/Google/Facebook datacenters? They don't really "do" anything at all.
Oriental Trading is a warehouse and zone industrial. The data Centers are zoned "Light Industrial", they are basically a warehouse full of computers.

Check out the Sarpy County GIS Map, there is a zoning layer under basemaps.
https://maps.sarpy.com/html5viewer/inde ... iewer=SIMS
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Re: Omaha's Razor Thin Industrial Market

Post by iamjacobm »

Its not a hard and fast rule. Generally "industrial" will be more open spaces, higher ceilings in less visible locations than "retail."

As was mentioned though many of these have showrooms or office portions in the same building.
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Re: Omaha's Razor Thin Industrial Market

Post by Omaha_corn_burner »

Alright, thanks. I have no idea about this stuff, so here's a question.

Typically do industrial operations build their own buildings or move into existing units? OP is sad about a low vacancy rate, but growth can continue if companies are just building their own buildings. Wouldn't the square footage or revenue be more important than vacancy rate? Not knowing anything, it seems that a 3% vacancy rate is fantastic. Can you imagine if developers just built 100,000+ square foot warehouses and then tried to find tenants?

Again, I have no idea about this topic, I was just confused by the negative replies about the vacancy rate.
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Re: Omaha's Razor Thin Industrial Market

Post by iamjacobm »

In theory you want all available space filled right? Low vacancy mean owners are making money and demand is strong.

Where it can be trouble is if someone wants to expand their operation or someone new wants to move into the market there may not be space available that they need, and not every company wants to wait a year to build a new facility and many companies simply want to lease from other owners as they are not interested in being involved in owning the land/building.

The fact that a number of the new projects going up are spec and not build to suit is very good news to me. Means investors are confident that they can fill the space without having a tenant lined up before they break ground, signs of a strong market.
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Re: Omaha's Razor Thin Industrial Market

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https://www.rejournals.com/r-r-realty-g ... a-20181010
R&R Realty Group cut the ribbon yesterday on its first building in the Omaha area. Warehouse 1, located at the intersections of Gold Coast Road and Highway 50, is the first warehouse to be completed within R&R Commerce Park in Sarpy County, Nebraska.

At 250,000 square feet, this speculative warehouse is the largest of its kind in the area. Three more buildings are planned within R&R Commerce Park for a total of more than 1 million square feet. Each of the park’s buildings will be designed to meet the needs of modern warehouse users with features like 32-foot ceiling heights and an ESFR fire suppression system.
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Re: Omaha's Razor Thin Industrial Market

Post by ita »

iamjacobm wrote: Wed Oct 10, 2018 10:36 am https://www.rejournals.com/r-r-realty-g ... a-20181010
R&R Realty Group cut the ribbon yesterday on its first building in the Omaha area. Warehouse 1, located at the intersections of Gold Coast Road and Highway 50, is the first warehouse to be completed within R&R Commerce Park in Sarpy County, Nebraska.

At 250,000 square feet, this speculative warehouse is the largest of its kind in the area. Three more buildings are planned within R&R Commerce Park for a total of more than 1 million square feet. Each of the park’s buildings will be designed to meet the needs of modern warehouse users with features like 32-foot ceiling heights and an ESFR fire suppression system.
You beat me to this update. Here is another article on this new industrial building with some additional photos and comments from those involved in the development.

https://morningsky.com/omaha/posts/r-an ... ith-ribbon
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Re: Omaha's Razor Thin Industrial Market

Post by ita »

ita wrote: Wed Oct 10, 2018 11:41 am
iamjacobm wrote: Wed Oct 10, 2018 10:36 am https://www.rejournals.com/r-r-realty-g ... a-20181010
R&R Realty Group cut the ribbon yesterday on its first building in the Omaha area. Warehouse 1, located at the intersections of Gold Coast Road and Highway 50, is the first warehouse to be completed within R&R Commerce Park in Sarpy County, Nebraska.

At 250,000 square feet, this speculative warehouse is the largest of its kind in the area. Three more buildings are planned within R&R Commerce Park for a total of more than 1 million square feet. Each of the park’s buildings will be designed to meet the needs of modern warehouse users with features like 32-foot ceiling heights and an ESFR fire suppression system.
You beat me to this update. Here is another article on this new industrial building with some additional photos and comments from those involved in the development.

https://morningsky.com/omaha/posts/r-an ... ith-ribbon
We recently drove by this development. When was it completed? I noticed they have two warehouses. Warehouse 1, I assume is the one with frontage off 144th, only have one sign up so far. I think it was an auto collision center. I would like to see these fill up as this project was a speculative build for a type of real estate that Omaha supposedly lacked. Does anyone else have information on this project?
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Re: Omaha's Razor Thin Industrial Market

Post by ita »

R&R Realty plans to build 1.3 million square feet of warehouse space in Sarpy County
Dan Crisler
Four years ago, farmland occupied much of the area south of Nebraska Highway 370 between Interstate 80 and State Highway 50.

Today the area is home to four warehouses totaling 1.1 million square feet of in-demand industrial space. Known as Commerce Park, it represents the start of what might be the largest speculative industrial development in the Omaha region’s recent history.

R&R Realty Group, the West Des Moines-based real estate firm that owns Commerce Park, recently announced plans to build six new warehouses, totaling over 1.3 million square feet spread across 100 acres. Due to its location on the southeast corner of the 156th Street and Schram Road intersection, the planned development has been dubbed Commerce Park South.

With north and south combined, Commerce Park will measure about 2.4 million square feet of industrial space, which nationally has been in short supply and seen rising rent rates.

Much like the north development, which sits on 80 acres, the warehouses to the south will be built in a speculative manner — ready to serve the needs of nearly any company that requires mainly storage and distribution space.
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Re: Omaha's Razor Thin Industrial Market

Post by ita »

Here's an excerpt from Nebraska Examiner's article about the Gretna Industrial Park. The industrial real estate market is as hot as ever and here are some of the projects that have been built in response.
Dennis Sciscoe, an industrial broker with the Cushman & Wakefield/Lund Co., is the listing agent and said the 400,000-square-foot planned structure stands out as the area’s largest industrial-use property to be built on a speculative basis.

When all park phases are complete, Sciscoe said, the Gretna project would be the Omaha metro area’s largest contiguous industrial park.

“The boundaries of industrial development are pushing outward, which is a good sign that our market is expanding,” he said.

Other industrial parks are under construction in the metro area as well. R&R Realty of West Des Moines, for example, has been building a huge development in Sarpy County near Highways 370 and 50 that rivals the overall size envisioned at Gretna, though the R&R property splits and is not contiguous.

Omaha developer White Lotus hopes to build about 1 million square feet of warehouse industrial space on 71 acres near Lincoln, and also is developing the 138-acre I-80 Logistics Hub in Sarpy County at 132nd Street and Cornhusker Road.

A sample of tenants occupying I-80 Logistics: Amazon, United Parcel Service, Home Depot, GXO Logistics, Scooters.

The Opus Group plans to develop about 550,000 square feet in Council Bluffs and, said Sciscoe, has leased a sizable chunk to Packaging Corp. of America.
While the industrial market grows further south, I do not foresee employers overcoming the ever present issue of employee transportation without additional investments in transit.
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Re: Omaha's Razor Thin Industrial Market

Post by ita »

http://www.nainpdodge.com/wp-content/up ... _FINAL.pdf

Industrial market is still very tight, 2.2% vacancy tight. Retail and office vacancies are still pretty low, at 5% and 7.6% respectively. Anyway, the industrial and warehouse construction boom will not be slowing down anytime soon.
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