Commercial Real Estate
Lincoln is a hotspot for the commercial sector, in a state that celebrates its business successes and focuses on economic development for companies of all sizes. Nonetheless, the uncertainty and economic punch delivered by the COVID-19 pandemic has put some strain on the local commercial real-estate market. That said, resiliency is the name of the game, and commercial agents in Lincoln remain resolute and positive about the long-term marketplace.
In fact, Greenleaf Properties Director of Brokerage Services Brett Harris says that even with the dramatic changes in the marketplace of late, Lincoln has some big commercial projects underway, which provide some stability for the industry as a whole.
“There are a number of large development projects happening in Lincoln right now,” Brett said. “The south beltway is now under construction after decades of planning and discussion. The new engineering college and the new football practice facilities at UNL are both underway. The LIED Place project and the new Holiday Inn Express at 9th and O streets are both under construction downtown. In the Haymarket, the Olsson expansion is nearing completion, and construction is just starting on the Canopy Park apartment project on Canopy and N streets.”
Guided by Consumer Trends
The retail and office sectors, on the other hand, continue to fluctuate with changing consumer and business practices and habits. Greenleaf Properties is spotlighting a 24,000-square-foot space that it has listed for lease at SouthPointe Pavilions, in the former IBM building directly north of Marcus Theatres.
“The retail sector has experienced some vacancy and turnover of big-box retail spaces in recent years as online retail continues to change consumer habits and has resulted in established retailers either closing or downsizing,” Brett said. “The office market is also experiencing some changes with more people working remotely and design trends that favor open floor plans and fewer private offices, requiring less square footage per employee.”
Still, the biggest hurdle the commercial real-estate market has faced in recent years is the repercussions of the coronavirus, according to Harris and other local agents.
“The COVID pandemic has created a lot of uncertainty in the commercial real-estate market right now,” Brett said. “In the short term, activity levels have slowed down, as prospective tenants and buyers are reluctant to make commitments until they have more confidence in the economy. Existing tenants and landlords are often working together to get through these lean months, but some business closures are likely, particularly in the retail and restaurant sector.”
Looking for the Bright Side
Obviously, nobody wants to see once-thriving businesses shutting down, but it’s important to search for the upsides in every pitch the economy throws. Take interest rates, for example, says Krueger Development Commercial Property Manager Allison Santana.
“With COVID-19, people are cautious and fearful, so business has slowed down a little bit,” Allison said. “In the midst of chaos, however, there is a great opportunity for people to get incredibly low interest rates. Pre-COVID, there was more competition and higher rates, which had the potential to make business more difficult. Amid the crisis, though, people have the capability to lock in good rates and save thousands—literally thousands!—of dollars.”
Krueger has 2,453 square feet of incredible built-out medical space available at 2455 Pine Lake Rd. It features a well-designed interior that includes four exam rooms with plumbing, four offices, one break room, a trendy reception area, vestibule, and a rock garden. It’s a five-star spot worth considering if you’re looking to open a new office or move to a more convenient location.
As for the economy rebounding from the COVID repercussions, Allison has faith in the adaptability of American consumers.
“In past centuries, novel influenza pandemics, polio, measles, and other infectious diseases have caused illness, death, and disruption within society,” Allison said. “Mankind is resilient, flexible, and adaptable. Imagine that mankind will be creative and businesses will continue to operate. Society is ever-evolving, and the demand still exists. People still have their skillsets, talents, and trades. I predict that society will continue to conduct business as usual, and new businesses will be cultivated along the way.”
Understanding and Cooperating
Thanks to the community of Lincoln that can empathize with each other and work together, Cathy Kottwitz, a broker and property manager for Guiderock Commercial Realty maintains a positive longer-term outlook for the industry, despite the effects of the pandemic on the short term.
“Concerns surrounding COVID-19 are at the forefront of commercial real estate right now—and with good reason,” Cathy said. “It’s very hard to make decisions when the future is so uncertain. We are seeing some businesses moving forward with plans to open or relocate, but many have put things on hold until the economy stabilizes again. Leasing activity has slowed down quite a bit, but we are still seeing interest for both owner-occupied and investment sales.”
What’s reassuring to Cathy is how commercial landlords and tenants are working together to find a happy medium that makes compromises to fit the current “normal.”
“We are seeing a lot of discussion among landlords and existing tenants about expectations and how to balance the needs of both parties,” she said. “For the most part, everyone understands that cooperation is needed in the short term and that will lead to better outcomes overall.”
That cooperation, plus Lincoln’s somewhat more-insulated size and location is what Cathy believes will bode well for the market’s long-term outlook.
“Lincoln has historically been more insulated than other larger markets when downturns come,” she said, “and I think that will be the case again. We will likely see some businesses close but probably not at a level that is more broadly damaging to the community, and we will also likely see a quicker recovery.”
Navigating and Adapting
HIP Realty, Inc. (Holroyd Investment Properties) Founder and President Michael Holroyd share’s Cathy’s optimism in a recovery for the commercial real-estate market in Lincoln and is adapting practices to fit the trends of the time.
“I’m optimistic, but what we’re going through now is rough,” Michael said. “We’re sure getting a lesson in how to navigate through tough times, and hopefully that will help us in the long run because we are learning to look at things with a knowledge that they can change at any time. Moving forward, we can be smarter about our visions and how we structure leases for survival.”
In the current environment, that navigation means negotiating middle grounds to keep commercial tenants and his real-estate business going.
“We are trying to work with our commercial tenants that are going to be able to ride through this,” Michael continued. “We have the mortgages, so we need to keep paying in, and then we have the income side from tenants. We’re working with people more than we normally would be able to because we know that they’ve fallen on tough times, too. If someone is honestly trying to work through it in their heart and they have a good game plan that makes it realistic for them to catch up, then we’re working with them.”
HIP currently has a great location for commercial/industrial use available for lease at 3621 N 40th St., near Cornhusker Highway. It’s a 2,700-square-foot standalone building that would be perfect for a construction company, body shop, or other service-type tenant.
In recent years, HIP also has reaped the benefits of commercial “executive suites,” whereby it leases an office to a professional—everything from attorneys to stockbrokers to therapists—and then provides shared common areas, like a kitchen and conference room. An executive suite also comes with a shared receptionist to answer calls and welcome guests.
“The demand for these types of facilities is strong,” Michael said. “And it rolls well with the trend that has more people working remotely, especially now. We have options that allow people to work from home but basically lease a receptionist and a professional address for their business. It will be really interesting to see if there’s a lot more of that when our current situation with COVID is behind us.
Even with all of the challenges in the current commercial real-estate marketplace, those super-low interest rates are so attractive for companies looking to buy, and the outlook is good.
“Those rates make it appealing to purchase property,” Michael said. “It’s such a good time to buy, but there’s so much uncertainty that people are apprehensive to jump into something new. It’s a bit of a Catch-22, but I am optimistic about the long term. Once we get kick-started and get the momentum moving forward as an industry, we’ll recover real well.”
Clearly, Lincoln is home to highly qualified commercial real-estate companies of every form. So, if you’re looking for a bigger or new location for your business or startup, be sure to seek out the very best commercial real-estate company for your particular needs.