Last year was a pivotal one for the Omaha industrial market. For nearly ten years, and fueled by high demand, the market has been characterized by a few consistent factors:

• • abundant new construction
  • consistently low vacancy rates
  • increasing sale prices
  • rising rents

 

Although these factors have been relatively consistent across the 18 submarkets that make up the roughly 107 million square foot, nine-county industrial market, one submarket dominates the new construction figures. If you watched the Omaha market the last several years, it will come as no surprise to read that submarket is Sarpy West. No other submarket comes close. You can read the complete Industrial Report on our website to see the exact figures and compare the activity in Sarpy West to various submarkets. The numbers are staggering, but that isn’t the only big story of 2023.

For the first time in almost twenty years, new submarkets are emerging as key players in our metro: Downtown Council Bluffs and Northwest Omaha. And our team projects that there will be more to follow in the coming years.

Downtown/Council Bluffs Submarket
The Downtown Omaha and Council Bluffs market (roughly defined as the area immediately east of the Missouri River to the South Expressway and everything north of I-80) has historically been dominated by large manufacturing operations, such as Warren Distribution, Tyson, and Swift, to name a few. In the decade since CoStar Group began tracking data in our market, little to no new industrial construction transpired within the submarket. The roughly four million square feet that called the submarket home (ranked 7 out of 18), saw little to no growth. Then came River Road Industrial Park.

River Road Industrial Park
Led by the Opus Group, River Road Industrial Park consists of two buildings on 40 acres northwest of the I-29/I-80 split, and it has started to redefine the submarket. The first building began construction in 2022, then completed 302,000 square feet in 2023, and it’s now fully occupied by national companies. Building two, with 236,000 square feet, is still under construction and has already pre-leased 157,000 square feet.
This marks a significant vote of confidence for not just the submarket, but for the Iowa side of the river. If the momentum continues, it may not be long until the entire area becomes a major player in the industrial market, which will likely involve other submarkets. The numbers signify a bright future ahead, fostering growth, prosperity, and an increased sense of community pride.

Northwest Omaha Submarket
The Northwest Omaha submarket is generally located between north of Dodge Street and West of 72nd Street, consisting of 8 million square feet across 356 buildings. Historically, it has been a relatively quiet submarket, dominated not by major operators, but by small businesses seeking affordable flex space to lease or small light industrial buildings to own and occupy. Although there were a few notable developments over the last 10 or so years, they were few and far between. That trend appears to have changed with the announcement of Google’s nearly 350-acre Data Center Campus, located northwest of Hwy 133 and State Street.

Although speculative construction hasn’t hit the submarket on a major scale yet, Sarpy West may bring clues as to what is in store. The development of data centers in that submarket also brought expansion of infrastructure–most notably, sewer–to the Highway 50 corridor. This could be argued as the primary reason for the hyper-concentrated development seen there in the last five to seven years. Time will tell if this northwest expansion will see additional industrial development, but it is starting to feel like a similar story to Hwy 50, even if on a smaller scale. The statistics aren’t ready to report, but Investors Realty believes there will be significant change in that portion of the industrial market.

Northeast Submarket is Also Growing
These aren’t the only two submarkets showing signs of new life. Northeast Omaha, adjacent to Eppley Airfield, has been dominated by a few large manufacturing operations. Among other projects in the works, the nearly $1 billion airport terminal expansion and renovation to Eppley Airfield will have an impact on the submarket and the Omaha Metro at large. It is worth noting two projects are nearing delivery in this submarket: one at Abbott Drive and Storz Expressway (150,000 square feet) and the other at N. 9th Street and Storz Expressway (202,000 square feet).

Main Takeaway
It’s an exciting time to be in the industrial market in Omaha. It would be difficult to find a time historically that matches the significance of what transpired in 2023. Looking forward, the market continues to be reshaped and grow in importance within the Midwest.

To view the full Omaha Year-End Industrial Report, please click here.

This article appeared in our company newsletter in March of 2024. Please click here to download the entire newsletter.