Lincoln, Nebraska, is in many ways a thriving city. This can be seen not only from its population growth but also from the booming local interest in commercial real estate. We strive to stay ahead of the curve and keep our finger on the pulse of this expanding market. Let’s take a moment to discuss a few of Lincoln’s commercial real estate trends.
Steady Overall Demand
Lincoln, Nebraska, is well known for its sizeable small business community. It’s no mystery why this city boasts one of the lowest unemployment rates in the U.S. Paired with a consistent recovery from the past two years of disruptions, Lincoln continues to see a steady demand for commercial real estate.
There’s been a history of consistent demand for commercial real estate in Lincoln. As of the end of June 2022, the Lincoln market continued to see strong activity for retail and industrial properties as well as areas of improvement in the office sector. One of the constant drivers of demand in Lincoln is the presence of countless small, locally owned businesses. Some of these companies have thrived in recent years as consumers gradually shifted their preferences to local providers.
With ample space to grow that many cities lack, Lincoln draws large firms that seek to establish offices or headquarters in the Midwest. Many of these firms tend to buy or build new commercial properties. However, the majority of Lincoln’s commercial real estate is leased over time.
This is unsurprising considering Lincoln’s flourishing small business community. Leases often carry less long- and short-term risk for most organizations. They’re generally ideal for small organizations that plan to grow or relocate in the near future. Even established companies enjoy this increased flexibility given the dramatic economic uncertainty in recent years.
Commercial Construction Continues
Commercial building activity remains steady in Lincoln. Despite supply chain issues and rising material costs, Lincoln continues to see a consistent volume of commercial construction projects. In fact, Lincoln exceeded $1 billion in total public and private building permits last year for the first time in its history.
Several notable new construction projects were recently announced, as well. The Lincoln Airport began a multimillion-dollar project aimed at expanding and modernizing its decades-old terminal. Starbucks is building two new locations in southeast Lincoln, and Krueger Development is constructing a 10,000 square foot flex space within the Yankee Hill Business Center. Also, Bryan Health announced the new 140,000 square foot Sampson Cancer Center, which is expected to open next year.
Industrial Space in Short Supply
In general, Lincoln commercial real estate is in steady demand. There’s also a strong need for warehouse space. Today, many developers struggle to supply the Lincoln commercial real estate market with adequate industrial infrastructure.
At the end of June 2022, the industrial vacancy rate in the area was only 1.1%, the lowest in at least a decade. However, the per-square-foot selling price of industrial space had risen by 15% since the end of 2019. This illustrates a strong trend of demand that is likely to continue despite rising energy and construction costs.
Future of Work May Impact Commercial Demand
Currently, many employees are either working remotely or in a hybrid capacity. This significantly affects the need for dedicated office space, and the Lincoln commercial real estate market is still adjusting to this shift.
As companies decide how to best align their organizational structures in the future, their goals regarding commercial real estate are likely to change. Some companies may downsize into smaller spaces as they see less need for in-person collaboration. Others might try to capitalize on the large amount of vacant downtown office space.
Taken together, these commercial real estate trends imply continued future demand in Lincoln, Nebraska. This thriving city relies on small businesses that appreciate the flexibility of long-term leases. Industrial space is likely to remain valuable moving forward, and a record amount of new commercial construction investment may spur further economic activity.
We’re always available to support your organization’s real estate needs. If you’re in the market for commercial real estate in Lincoln, then we hope you’ll reach out today. We proudly provide tenant, buyer, and property management services, as well as sales, leasing, and customized consulting for our clients. Our advisors look forward to helping you make the most out of Lincoln’s commercial real estate trends.