Q1 2021 Omaha Industrial Market Report
Omaha is a natural distribution hub due to its central location, strong agriculture industry, and ability to transport via rail, road, river and air. Demand for industrial space, particularly distribution, warehouse, and cold storage has only increased since the pandemic started and consumers rely increasingly on e-commerce. As a result, fundamentals continue to be strong, with vacancies compressed below 5% through through early 2021. This has not only kept national tenants like Kellogg and Tyson Foods in the market, but also brought Google, Facebook, and encouraged Amazon to increase its footprint here. The retailer announced in October 2020 that it would add a 700,000-SF distribution center in Sarpy County, bringing around 1,000 jobs with it when it completes in 21Q4. Though positive demand returned late last year and demand for logistics space has only increased as more people order groceries and goods online in the wake of the coronavirus, the pace of asking rent gains has declined. Year-to-date average asking rent growth was flat in early 2021, following strong growth for logistics and flex properties and rent losses for specialized industrial properties in 2020. Developers have yet to slow down, with nearly 3.5 million SF underway in 21Q1. With almost 80% of the space preleased and continued strong demand here, the additions are unlikely to destabilize occupancies. While investment slowed initially with the onset of the pandemic and subsequent stress on the economy, strong economic growth in the latter half of 2020 encouraged investors. Sales volume stayed above $100 million through the end of the year and investors were already active in the market in early 2021, as roughly $30 million had changed hands.