Commercial Real Estate December 2008 Omaha’s retail Space Market 2009 Picture for Omaha’s retail market is experiencing more vacancies in 2008 than in previous years. Suburban strip spaces Retail Stores with no major retail anchor are the most affected. is Bleak National closings by Starbucks, Linens & Things, Wild Oats, Bombay, Harold’s and Baker’s have grabbed the local headlines. Many others are on the watch list. We Sales& are also seeing some locally owned retailers closing Leasing their doors, while others continue to assess their John Dickerson, CPM options and ability to keep their doors open. Lee Ehlers, CCIM Brian Farrell Steve Farrell, CCIM, SIOR Omaha rents are down about National Headlines Dan Fishburn 10 percent from their Grab Attention Stephen Forbes peak two years Ember Grummons, CCIM In November Forbes.com reported Target John Heine ago. Tenant Jerry Heinrichs, CCIM Improvement Stores would reduce its capital spending by Jerry Huber, CCIM Allowances and $1 billion to “conserve capital while the Tim Kerrigan, CCIM other concessions retail and credit environment remains Brian Kuehl Mike Moylan, CCIM have increased as challenging.” This report echoes similar RJ Neary, CCIM, SIOR landlords try to help projections within the retail trade sector. J.P. Raynor merchants through Patrick S. Regan the current economic Nationally, predictions are that retail store Clint Seemann closings could double in 2009. Closings in Ryan Zabrowski, CCIM slowdown, and national retailers are seeking rent 2008 are expected to be around 6,100. In reductions as they 2009, predictions are that closing may negotiate 2009-2010 lease renewals. reach 14,000. Forbes magazine says retail Property will see its worst Christmas shopping Management New construction on retail projects is down although season in 17 years. Retailers are closing Cary Allen construction continues on several projects. At Aksarben under-producing stores, slowing or Carla Chin, CPM Village there are five restaurants, two hair salons, two suspending expansion of new stores, Correen Harrell John Krecek, CPM banks and a grocery that have opened or will open by cutting back spending on long-term Molly Pearson, J.D. Spring of 2009. Wohlner’s Grocery, Security National projects and reducing inventory. Jeni Sadler, CPM Bank, Jimmy D’s and Blue Planet Natural Grill opened Jeanette Weber recently. Midtown Crossing at Turner Park recently Shopping Center Business predicts the Debbie Wojcinski current retail environment marks the end opened its condominium showrooms and has announced commitments for a health club and hotel, of a robust growth in new stores and the although no restaurant or retail store announcements beginning of a new retail cycle. They also have been made. predict that 2008 holiday sales will be flat. They believe the increase in store closings Other large retail projects under construction are the and bankruptcies reflect structural issues shops surrounding SuperTarget at 168th and Maple, that will need to be changed before we see which include PetSmart, Sports Authority, and Hobby retail recoveries. The recovery will be slow, Lobby. with women’s apparel struggling the most. Commercial Real Estate DIGEST December 2008 402-330-8000 Property management team thanks vendors for service to clients On September 25, the Investors Realty Property Management team said “Thank You” to the many vendors who help them provide services to our property management clients. Members of the Property Management team hosted 37 vendors at a barbeque lunch served by Ozark Smoked Meats. But it wasn’t a “free lunch.” John Krecek, Director of Property Management, thanked the vendors for their service and asked them to complete a survey about their relationship with Investors Realty. Vendors were also encouraged to give us suggestions on how we can improve our communications with them and give better service to our clients. NACPO watches 2009 legislative issues Papio NRD Considers New Storm Water Control Plan The Papio Natural Resource District is considering a new plan for storm water The Nebraska Association of control. This plan has to be in place by The Nebraska Commercial Property Owners next summer to enable the NRD to (NACPO), will watch the action continue their contract with the Unicameral’s federal government. on bills concerning storm water 2009 session is fees, property tax valuation and Washington County is pushing coming soon! bills affecting swimming pools for the plan to include at multi-family properties. alternative measures for storm Pressure to pass storm water fee legislation water control versus building more grows with each legislative session as more dams. Alternative measures Nebraska cities become eligible for would include pervious requirements under the National Clean Water paving systems, larger water Act. NACPO in coalition with other retention systems on organizations will continue to monitor this issue. developments, rain barrels, etc. None of the nine bills introduced to deal with the way the Tax Equalization and Review committee handles appeals The plan would require commercial and multi-family made it out of committee in 2008. NACPO plans to have developments to pay fees of approximately $10,000 per another bill introduced in the next session. acre. In addition, a considerable amount of land in northern Douglas County and two areas in Sarpy County The swimming pool bill would have required pool would be highly restricted to development. NACPO operators of Class B pools to have an operator on duty encourages the commercial development industry to get the entire time the pool was open. Last session, it was involved in this discussion or risk reduction of future killed in committee. It is on the watch list for next session. development potential. Commercial Real Estate DIGEST December 2008 402-330-8000 Did you hear us on Husker Game Days? Investors Realty was a sponsor of Nebraska football game broadcasts on KFAB radio. The commercials highlighted properties being leased, sold and managed by Investors Realty broker and These Investors Realty property managers. In addition to the radio employees cleaned up the Keystone Trail in September: broadcasts, Investors and property owners have displays at the Big Red Breakfasts held every Friday Jeni Sadler, Chris Thranm, Nicole Morrison, during the football season. Laurie Alvord, Juli Ray, Val Dekle, Angela Sanchez, Jeanette Weber, Molly Pearson, “We know these broadcasts are very popular Carla Chin, Tiffany Simmons, Shana Walinski, around the region, and we think this is a good way Julie Messer, John Heine, John Krecek, Dan for us to let companies know about properties for Fishburn, and Jerry Huber 3 lease in the Omaha area,” said Tim Kerrigan. “Just like Coach Pelini will evaluate his team at the end of the season, we’ll evaluate this advertising campaign to make it more effective for next year.” join the Investors Team Investors Realty is Correen completed her MBA with an accounting concentration at the pleased to welcome University of Houston-Victoria. She earned a bachelor of science in business Correen Harrell, management at LeTourneau University in Longview, Texas, and is a controller and chief graduate of St. Cloud Business College, St. Cloud, Minnesota. administrative officer, CORREEN HARRELL Lisa Webb, accounts Lisa is a graduate of the University of Nebraska payable and Lincoln where she earned a degree in Business receivable clerk, and Administration. Prior to joining Investors, she Cary Allen, property worked for NEI Global Relocation. maintenance Cary, along with three management other full time specialist, to our team. maintenance staff, LISA WEBB Correen is responsible for overseeing the provides services to accounting, human resources and office properties managed by administration functions. Investors Realty. Prior to joining Investor Realty, Prior to joining Investors Realty, Correen worked for Pitney Bowes-PSI in Cary was an apartment Omaha. She relocated to Omaha in 2007 from the Houston area where supervisor for three years. her accounting experience included controller positions for privately ALLEN CARY and publicly held companies. We’re pleased to have all three on our team. Commercial Real Estate DIGEST 402-330-8000 2-3 December 2008 Greer predicts years of pain in Commercial Real Estate market “Most of the big stuff has already of buildings in relationship office buildings are in somewhat hit the fan. Now we will feel the to the demand and the better shape, and apartments appear pain slowly for the next two to vacancy rates are tolerable, to be the best real estate products in three years,” said Everett “Allen” he explained. this market. Greer, director of research for Bank of America’s However, he said, the Many lenders are closing or reducing Real Estate Risk troubles are in volume as financing costs have Assessment Division, consumer risen. Rents and vacancies should during the October confidence, and in continue to perform okay, but 2008 SIOR (Society of the interest and property values will undergo a Industrial and Office financing issues correction of two-thirds of the real Realtors) conference in facing the real estate value of the property before creeping Minneapolis. industry. According to back up to the property’s actual Greer, borrowing rates value. Greer feels the worst for commercial real problems in the real estate estate will rise. He predicts that REITs are now at market have surfaced, but their low and will stay down for a that it will take several He predicted that the long time. Rents will continue to years before the correction growth in rent will lag grow unless the American consumer is complete. His predictions are behind the Consumer Price doesn’t begin to buy again. That that Commercial Mortgage Index (CPI), and that value would hurt every real estate sector. Backed Securities (CMBS) will growth will lag rent growth by He feels the health care sector, come back but with a new 30 percent. Property values are especially CCRCs (Continuum of Care business model more like the one down 5 to 15 percent and cap rates Retirement Communities) will catch that existed in the 1980s. are up 2 to 2.5 points. on and get bigger and bigger. Greer told the gathering the Retail products are in the worst fundamentals of the real estate shape, Greer said. Industrial and industry are “not terrible.” The supply On June 27th straight-line winds in excess of 100 miles an hour blew through the Omaha metropolitan area leaving a path of destruction from western Douglas County into Iowa. Properties managed by Investors Realty sustained in excess of $625,000 in damage. Most of the damage was to HVAC units located outside and on roofs. Eighty-seven units were repaired and 75 replaced with a total cost of $415,000. Big winds cause Damage to roofing and siding cost another $210,000. Earlier in 2008 Investors Realty arranged a blanket insurance policy covering many client accounts. In addition to reduced insurance premiums, the owners and tenants also benefited from a single $1,000 deductible for the multiple building account. That meant that our clients paid only $67 per building for repairs. damage WHA WE’VE DO T NE December 2008 TEL LA Y LAND PENDING 3.9 acres industrial land at 109th & Rainwood Avenue busy! SOLD 1.3 acres residential land at 419-29 South 83rd Circle SOLD 1.0 acre office land at 204th & West Dodge Road, Elkhorn SOLD 0.8 acres industrial land at 35th & Harlan Lewis Road, Bellevue We’ve PENDING 0.7 acres commercial land at Lots 11 & 12, Metro Crossing, Council Bluffs been BUILDINGS LEASED 119,330 sq. ft. commercial building at 360 North Saddle Creek PENDING PENDING PENDING 48,000 sq. ft. commercial building at 25th & Capehart, Bellevue 39,892 sq. ft. office building at 102nd & F Street 37,000 sq. ft. industrial building at 120th & Cary Circle, La Vista Helping PENDING SOLD SOLD 26,400 sq. ft. commercial building at 1012 South 74th Plaza 25,146 sq. ft. apartment building at 16th & Adams Street, Blair 16,871 sq. ft. industrial building at 3215 South 66th Avenue Circle tenants Grow LEASED 16,338 sq. ft. commercial space at 15th & Cuming, to Barley’s Tip Top, Inc. Creighton Family Medicine LEASED 11,000 sq. ft. industrial space at 14th & Nicholas Streets, to Weathercraft Expands in the Old Market LEASED 10,656 sq. ft. industrial space at 94th & G Streets, to Netflix, Inc. LEASED 10,025 sq. ft. commercial space at 156th & West Center Road, to I Think Fit, Inc. PENDING 9,113 sq. ft. commercial building at 3021-25 Farnam What’s the big deal about a little deal? It can SOLD 7,021 sq. ft. commercial building at 14th & Farnam lead to big things. Leasing a small 900-square- LEASED 5,700 sq. ft. office space at Harvell & Fort Crook Road, Bellevue, to Science Applications foot space in 1996 for a start-up medical International Corporation practice in downtown Omaha to Dr. Mark LEASED 5,655 sq. ft. office space at 146th & California Street, to Nebraska Title Company, Inc. Goodman began a sequence of events LEASED 5,000 sq. ft. industrial space at 10th & Capitol, to The Market Church LEASED 4,909 sq. ft. commercial space at 180th & Q, to Paradigm Educational Center occurring over 12 years in the Bakers Supply SOLD 4,835 sq. ft. commercial building at 1624 Nicholas Building at 14th & Leavenworth Streets. LEASED 4,000 sq. ft. office space at 204th & West Dodge Road, to Vincent & Laura Rothe LEASED 4,000 sq. ft. commercial space at Eglin Street, Rapid City, to Cellular, Inc. By 2009, Creighton Family Medicine along with SOLD 4,000 sq. ft. industrial building at 35th & Harlan Lewis Road, Bellevue Dr. Goodman, and now four other doctors, will LEASED 3,730 sq. ft. office space at 110th and Q Streets, to Midland Computer, Inc. be in their fourth expansion of the Old Market LEASED 3,672 sq. ft. industrial space at 20th & Harney Streets, to ConAgra Foods, Inc. SOLD 3,056 sq. ft. office space at 107th & O Street, to Phys Med Clinic. Because of their growing patient counts LEASED 2,937 sq. ft. commercial space at 339 North 78th Street, to Nebraska Cardiac Care, P.C. and additional providers, Creighton Family LEASED 2,883 sq. ft. commercial space at 72nd & Dodge, to Erin McNeal Medicine is now making a long term LEASED 2,800 sq. ft. industrial space at 90th & Sorensen Parkway, to Jeremy Toubl commitment by expanding to fill almost 10,000 LEASED 2,800 sq. ft. industrial space at 90th & Sorensen Parkway, to Roberts Pool & Spa square feet in three historical buildings, which LEASED 2,800 sq. ft. industrial space at 90th & Sorensen Parkway, to Sparkle Wash of Omaha LEASED 2,785 sq. ft. office space at 19th & Harney, to Julia Stommes are being combined into one. LEASED 2,027 sq. ft. commercial space at 203rd & Roberts, Elkhorn, to Heartland Family Karate LEASED 2,017 sq. ft. commercial space at 124th & West Maple Road, to Blonde, Inc. Originally constructed in the 1880s and 1920s, LEASED 1,690 sq. ft. commercial space at 156th & West Maple Road, to The Art Mill these buildings are being retrofitted and when LEASED 1,641 sq. ft. office space at 148th & California, to Leo Panzer complete will provide a total of 15,000 square LEASED 1,609 sq. ft. commercial space at 84th & Park Drive, Ralston, to Chervalier, LLC feet of office space on the first floor and 12 loft SOLD 1,408 sq. ft. industrial building at 44th & Izard apartments on the second floor. Still available in LEASED 1,357 sq. ft. commercial space at 1851 Madison Avenue, Council Bluffs, to Radcliff Enterprises the building is a 2,400-square-foot office space. LEASED 1,283 sq. ft. office space at 10855 West Dodge Road, to N. Harris Computer Corp. The site is unique to Downtown Omaha in that it LEASED 1,280 sq. ft. commercial space at 108th & Prairie Hills Drive, to Deborah S. deNourie has 70 on-site parking stalls and 14 garages. LEASED 1,279 sq. ft. office space at 90th & Maple Street, to WhettStone Business Solutions, Inc. Past users include a beer distributor, meat LEASED 1,246 sq. ft. office space at 72nd & Halleck Street, Papillion, to Hudson wholesaler and bakery supply businesses. Neuropsychology Consultants, LLB LEASED 1,200 sq. ft. commercial space at 1002-1040 South 74th Plaza, to Jason Murtaugh LEASED 1,000 sq. ft. office space at 81st & Maple Street, to Integration & Welfare for Communities The construction challenges have included LEASED 1,000 sq. ft. office space at 81st & Maple Street, to Felicia Hawkins some unique activities such as the hydraulic LEASED 1,000 sq. ft. office space at 87th & Dodge, to Peterson Brothers Realty, Inc. lifting of two stories of columns to straighten the LEASED 1,000 sq. ft. office space at 115th & Davenport Street, to PayPlus, LLC floors, sawing through 24-inch brick walls and tearing down two-story brick walls and rebuilding them with recycled brick. We are happy to be able to help this important service provider to Downtown Omaha expand, saving these historical buildings in the process. The process involved using historical tax credits, Tax Increment Financing and market-rate mortgages.
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