Mixed Bag COMMERCIAL REAL ESTATE RESILIENT DESPITE VOLATILITY

deliveries for five consecutive years, resulting in vacancy rates reaching their lowest level since 2015,” Maurer said. “With Omaha’s retail vacancy rate sitting near an all-time low, high retailer demand has increased average asking rates by across the metro by 5.8%.”

However, Maurer continued, this has not slowed retail leasing in areas such as The Capitol District, which he said will feature three new tenants (including two regional bar concepts, The Roxxy and The Stuffed Olive, and local restaurant Frank’s Pizzeria).

“Two new-to-market concepts, Walk On’s Sports Bistreaux and Yeti, have announced they will be coming to Nebraska Crossing Outlet Mall,” he said.

Maurer stated that the firm continues to see activity in investments, but rising interest rates are forcing investors to be more stringent with underwriting and to evaluate where and how they invest.

“Sellers are coming to grips with the fact that current market conditions are not what they were six to eight months ago, and expectations are following suit,” he said.

“Conservatively optimistic” is how Ted Zetzman, executive vice president and director of development at Noddle Cos., describes the current local CRE climate.

“The office leasing market segment continues to be active for high-quality buildings particularly those in walkable amenity-rich locations,” Zetzman said. “Successful, stable tenants that can afford it continue to look to upgrade their office environments to better quality buildings, as there are fewer new buildings under construction due to lingering questions about ‘back-to-the-office’ trends, construction cost escalations and elevated interest rates.”

Class B buildings, Zetzman continued, have some large vacancy blocks.

“But several of those are getting leased due to lack of inventory of large blocks of space otherwise,” he explained. “Retail is very active, particularly in second-generation space with retailers encouraged by retail sales growth but seeking the most cost-effective solutions.”

And, he said, industrial leasing volume is low – again, because of the lack of inventory with small to mid-sized vacancies leased as fast as they become available.

Leasing activity is similar to the first quarter of 2022, albeit with slightly less net absorption due to “residual post-COVID pent-up demand that was satisfied in 2022,” according to Zetzman.

“Current retail sales growth is slightly off the pace of last year’s sales growth,” he added.

Over the last 18 months, Zetzman’s team has worked hard to generally lease up its office portfolio.

“A new downtown office construction project is underway and a new medical office building delivers next month,” he said.

Zeroing in on Projects

Colliers’ Fleming spoke at greater length to bright spots in