Condos, Office Buildings Increase Curb Appeal in Downtown Omaha

By Maura Webber Sadovi
From

Once better known for steaks and stockyards, Omaha has been adding a little sizzle to its skyline. Since 2000, the unassuming birthplace of billionaire investor Warren Buffett and former President Gerald Ford has seen about $2.5 billion in new development downtown and along the riverfront.

Among the additions to Nebraska's largest city by population: an approximately $291 million arena and convention facility known as the Qwest Center that has hosted rock concerts, basketball games and the annual shareholder meetings of Mr. Buffett'sBerkshire Hathaway Inc. Also added is the 45-story First National Tower, now the state's tallest building and the headquarters for First National of Nebraska Inc. The city's revitalized waterfront is soon to include a $22 million pedestrian bridge linking Omaha across the Missouri River to Council Bluffs, Iowa, where several casinos are located.

"There's been a real effort to increase Omaha's curb appeal," says Ernie Goss, a professor of economics at Creighton University in Omaha. New condominiums are also part of the mix. Omaha-based Mutual of Omaha plans to begin construction this spring on a $250 million project called Midtown Crossing at Turner Park near the insurance company's headquarters. It will include about 200,000 square feet of retail space and 600 residential units.

Omaha anchors a metropolitan region of more than 800,000 residents that includes parts of Nebraska and Iowa. Unlike some Midwestern areas where economies have been harder hit by a downturn in manufacturing, Omaha's affordable housing, corporate headquarters and associated professional-service firms have helped drive above-average population growth and median income in recent years, which in turn have fueled commercial and residential construction. While the insurance, food-processing and transportation sectors remain important, a strong leisure and hospitality sector lifted by casinos in Council Bluffs also have boosted the economy in recent years, says Chris Lafakis, an associate economist at Moody's Economy.com.

Though job growth is beginning to slow, for now the office and retail markets have remained fairly strong despite significant building in recent years. Store vacancies are rising slightly but have held in the 8% to 9% range even as national retailers have sought to grow by expanding into such smaller markets as Omaha, says Scott Heider, president of Grubb & Ellis|Pacific Realty in Omaha, a real-estate services firm.

On average, investment sales prices in apartment and office properties trended higher in 2006, though industrial and retail prices fell and Omaha prices remained well below national averages, according to Real Capital Analytics, a New York-based real-estate research firm. Rental apartment units in the region sold for $78,947 in 2006 through Dec. 29, up from $50,308 in 2005, based on transactions of $5 million or more surveyed by Real Capital. Investors paid an average of $134 a square foot for Omaha-area office buildings, up from $75 in 2005. Nationally, apartment units sold for $96,939 a unit in 2006 through late December, while office buildings fetched about $221 a square foot.

"The outside investors who park money here...like the predictability and the affordability," says Mr. Heider.

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