Q4 2021 Industrial Market Research Report Page

Omaha is a natural distribution hub due to its central location, strong agriculture industry, and the ability to transport via rail, road, river, and air. Thanks to the diverse array of demand drivers serving the region, Omaha’s industrial market has remained remarkably robust in the face of a confluence of extraordinary challenges – the COVID-19 pandemic, supply chain bottlenecks, soaring construction material prices, and persisting labor constraints. Bolstered by surging demand for e-commerce and the expansion and transformation of supply chains and distribution networks, demand for Omaha’s industrial space is at record levels. Trailing 12- month leasing volume reached an all-time high as of the end of 21Q3, registering over 50% more leased SF than the metro’s 10-year annual average.
Meanwhile, with one of the most diverse employment bases in the nation, the profile of tenants leasing space in Omaha’s industrial market continues to broaden and span across various segments and business types. While e-commerce firms, third-party logistics providers, and traditional retailers drive demand for warehouse and distribution space, the rebound in the production oriented, goods-producing economy has also supported heightened demand for various manufacturers. With historic demand originating from a wide variety of business types and segments, coupled with historically restrained deliveries largely devoid of pure speculative developments, the metro’s availability rate fell to an all time low in 21Q3. Omaha’s current availability rate of 2.7% is markedly lower than the national index of 6.7% and more than 200 basis points below the metro’s historical average. Record low availability rates and shifting ownership profiles have fueled record-setting rent growth. Buoyed by the market’s largest-ever quarter-over-quarter rent increase from 21Q2 to 21Q3 (2.0%), outstripping the previous record in 21Q2 by roughly 50 basis points, annual rent growth in Omaha’s industrial sector reached an all-time high in 21Q3. At 5.9%, year-over-year rent growth now roughly doubles the metro’s average annual rent growth witnessed over the past decade. A perfect storm of torrid demand-side conditions, structurally tight fundamentals, unprecedented rent growth, and a chronic supply-constrained environment have incited historic development activity