INDUSTRIAL DEVELOPMENT MARKET DEMAND AND ANALYSIS FOR THE GREATER OMAHA / COUNCIL BLUFFS REGION November 2017
Project Steering Committee • Cheryl Brandenburgh • Trudy Johannsen Black Hills Energy Corporation MidAmerican Energy Company • James Caraway • Devin Meisinger Sarpy County Economic Development Omaha Public Power District (OPPD) Corporation • Andrew Rainbolt • Bruce Fountain Sarpy County Economic Development County of Sarpy County Corporation • Don Gross • Lisa Scheve Metropolitan Area Planning Agency (MAPA) Gateway Development Corporation • Cecilia Harry • Jennifer Serkiz Greater Fremont Development Council Cass County Economic Development Corporation • Paula Hazelwood • Mark Norman Advance Southwest Iowa Greater Omaha Chamber
Scope of Study • Comparison of the greater Omaha metro region’s industrial inventory to the following comparable markets: Des Moines, IA Oklahoma City, OK Memphis, TN Salt Lake City, UT Columbus, OH Kansas City, MO/KS
Omaha MSA – Industrial Building Availability Average YTD Market Size Asking Cost / Absorption Deliveries (sq. ft.) Square Foot (sq. ft.) Vacancy Rate (sq. ft.) Q4 2016 68,291,937 $5.27 410,472 3.2% 548,405 Q2 2016 68,638,408 $5.11 22,811 3.1% 238,900 Q4 2015 68,372,811 $4.72 470,568 3.0% 197,410 Q2 2015 68,222,531 $4.53 32,668 2.9% 305,663 Q4 2014 68,152,586 $4.26 1,400,000 3.0% 534,484 Q2 2014 68,035,144 $4.28 1,011,807 3.3% 12,800
Historical Average Asking Price PSF – All Tranches $7.00 $6.00 $5.00 Price/Square Foot $4.00 $3.00 $2.00 $1.00 $‐ Omaha, NE Des Moines, IA Oklahoma City, OK Memphis, TN Salt Lake City, UT Columbus, OH Kansas City, MO Community Q4 2016 Q2 2016 Q4 2015 Q2 2015
Deliveries 4,000,000 3,500,000 3,000,000 2,500,000 Square Foot 2,000,000 1,500,000 1,000,000 500,000 ‐ Omaha, NE Des Moines, IA Oklahoma City, OK Memphis, TN Salt Lake City, UT Columbus, OH Kansas City, MO Community Q4 2016 Q2 2016 Q4 2015 Q2 2015 Q4 2014 Q2 2014
Deliveries by Percent of Market Size 2014‐2016 5.00% 4.41% 4.50% 4.00% 3.50% 3.00% 2.72% 2.50% 2.17% 2.00% 1.50% 1.35% 1.21% 1.04% 0.90% 1.00% 0.50% 0.00% Omaha Des Moines OK City Memphis Salt Lake Columbus Kansas City Average Annual Deliveries Average Annual Deliveries Competitor Markets
Absorption (sq. ft.) 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 Absorption ‐ Sq. Ft. 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 ‐ (1,000,000) Omaha, NE Des Moines, IA Oklahoma City, OK Memphis, TN Salt Lake City, UT Columbus, OH Kansas City, MO Community Q4 2016 Q2 2016 Q4 2015 Q2 2015 Q4 2014 Q2 2014
Vacancy Rates 12.00% 10.00% 8.00% Percent 6.00% 4.00% 2.00% 0.00% Omaha Des Moines Oklahoma Memphis Salt Lake City Columbus Kansas City MSA Q4 2016 Q2 2016 Q4 2015 Q2 2015 Q4 2014 Q2 2014
Development Trajectory • Not all encompassing of need • Based upon historical demand • Can be vastly improved with development of business case • Evidence of demand often follows inventory
Projected Square Footage Needed ‐ Low Growth Based on Total Market SF Growth 18,000,000 16,208,866 16,000,000 14,239,151 14,000,000 12,000,000 Square Feet 10,000,000 7,544,767 8,000,000 6,000,000 5,296,323 4,652,709 4,259,437 4,000,000 2,489,940 1,909,852 1,631,879 1,391,791 2,000,000 633,445 538,556 205,081 68,292 ‐ Omaha Des Moines Kansas City Oklahoma City Memphis Columbus Salt Lake City Community Projected 2017 Projected 2018 Projected 2019
Projected Square Footage Needed ‐ High Growth Based on Historical Market SF Growth 35,000,000 33,066,003 29,047,794 30,000,000 25,000,000 23,088,466 Square Feet 20,000,000 15,000,000 10,592,646 9,305,418 10,000,000 8,689,230 7,754,378 7,469,820 4,993,871 5,000,000 2,783,582 2,533,779 2,069,314 1,615,669 682,919 ‐ Omaha Des Moines Kansas City Oklahoma City Memphis Columbus Salt Lake City Community Projected 2017 Projected 2018 Projected 2019
Annual Lost Opportunity Gap by Average Deliveries (by % of Market) Square Feet – 2014‐2016 7,000,000 6,000,000 5,000,000 4,000,000 1,570,134 3,000,000 (2,341,512) 725,857 (856,191) 2,000,000 7,869 (2,573,853) (2,110,732) 1,000,000 ‐ Omaha Des Moines OK City Memphis Salt Lake Columbus Kansas City (1,000,000) (2,000,000) (3,000,000) Avg Annual SF Growth Growth Expected by Avg Comp Delivery Growth Gap (Expected Comp Delivery ‐ Local Avg Delivery)
Annual Lost Opportunity Gap by Market Growth (by % of Market) Square Feet ‐ 2014‐2016 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 (1,522,290) 434,838 2,000,000 (281,141) 959,981 (1,422,901) (11,142) 324,930 1,000,000 ‐ Omaha Des Moines OK City Memphis Salt Lake Columbus Kansas City (1,000,000) (2,000,000) Average Annual Growth in Market Size Annual Growth Expected by Avg Comp Growth Gap (Avg Market Growth by Comp ‐ Local Growth)
Annual Lost Opportunity Gap by Absorption (by % of Market) Square Feet ‐ 2014‐2016 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 (242,727) (395,988) (1,696,017) 858,049 444,439 1,000,000 (108,530) 118,795 ‐ Omaha Des Moines OK City Memphis Salt Lake Columbus Kansas City (1,000,000) (2,000,000) (3,000,000) Average Annual Absorption Growth Expected by Avg Competitor Absorption Gap (Avg Annual Absorption ‐ Avg Comp Absorption)
Lost Opportunity • Lost Opportunity Greater Omaha 2014-2016 Average Annual Deliveries of 612,000 SF Annually between 400,000 to 1,500,000 SF lost opportunity based on competitor averages Based on 40% Building to Land Ratio » Between 70 and 250 Acres Lost Between 2014-2016
Improving Trajectory • Identified buildings to meet market demand • Shovel-ready, controlled site availability suited to targeted uses • Proactive marketing of verticals suited to the local market • Multi-jurisdictional cooperation on infrastructure off-site extensions and capacities upgrades • Rapid entitlement process • Land concessions or applicable incentives availability
Where Do We Go From Here? • GO Ready Sites – Good Momentum, Keep it Going! • Mega-Site Task Force – Identify and Pursue Development Strategies for Large Sites • Finance Task Force – Identify New & Innovative Tools – How to Lower Risk for Developers • Seeing Increased Speculative Interest – R&R Development – White Lotus Development – Others
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