Research & Forecast Report OMAHA | INDUSTRIAL Second Quarter 2020

Omaha Market Rides Market Indicators Relative to prior period Q1 2020 Q2 2020 Q3 2020* the Covid-19 Wave VACANCY NET ABSORPTION

The Omaha industrial market vacancy rate still hovers around 3 CONSTRUCTION percent, landing at 3.1 percent in the second quarter of 2020. The vacancy rate for the Omaha industrial market has been 4 percent RENTAL RATE or lower for 24 straight quarters, since the second quarter of 2014. Over 280,000 square feet of absorption took place in the Omaha * Projected industrial market in the second quarter and over 210,000 square feet of industrial square feet were completed and added to the industrial inventory for the quarter. Average asking rents remain about $6.00 Consolidated Supply Company occupied 18,000 square feet near per square foot, landing at $6.62 per square foot in the second 90th and J Streets and Applichem Inc. occupied 16,590 square feet quarter. in Council Bluffs.

By submarket, Council Bluffs, Northeast, Southeast and Southwest Eight newly constructed industrial properties totaling 211,140 square are all operating at lower than market vacancy rates with 1.5, 1.6, feet were delivered to the market in the second quarter. All but 1.4 and 2.3 percent vacancy rates, respectively. The Sarpy West 24,000 square feet were located in the Sarpy West Submarket. Over submarket continues to be the most active submarket with over 56 percent of the delivered space was pre-leased or build-to-suit. 200,000 square feet of absorption in the second quarter. The The largest property is Pella Windows and Doors’ 54,205-square- vacancy rate in the Sarpy West submarket is higher than market at 4 foot property located in on the northwest corner of Highways 370 percent, due primarily to the addition of over 575,000 square feet of and 50 in Papillion. A speculative 41,844-square-foot flex property completed inventory year-to-date. was completed south of 108th Street and Giles Road in La Vista with 3,000 square feet leased and occupied. Another speculative property By subtype, flex properties continue to show the highest vacancy near 120th Street and Portal Road was completed in the second and asking rental rates. Vacancy for this subtype is 9.8 percent with quarter. The property is 39,600 square feet with 6,600 square feet an average net asking rent of $8.47 per square foot. Manufacturing leased and occupied in the building. Metro Stars Gymnastics moved properties boast the lowest vacancy rate with 1.7 percent vacancy. into their new 20,740-square-foot facility northeast of Highway 370 Vacancy in warehouse space also performs below market with a and 114th Street. Two speculative properties totaling 30,720 square vacancy rate of 2.6 percent. feet were completed in the Flying “A” Industrial Park near Highways 370 and 6 in Gretna. One of the properties was 100 percent leased The biggest driver of absorption for the quarter was Walmart’s and the other has 7,680 square feet available. Two properties totaling lease of 120,000 square feet in the second warehouse constructed 24,000 square feet were completed in the northwest submarket. in the R&R Commerce Park located on the southwest corner of One of these properties delivered with no spaced pre-leased and the Highways 370 and 50. Elliott Equipment Company moved to a larger other only has 1,680 square feet left to fill. 208,917-square-foot space in the Southeast submarket from three separate spaces that totaled 117,435 square feet, resulting in over There is currently over 480,000 square feet under construction in 30,000 square feet of net absorption. Continental Siding occupied the Omaha market, with over 80 percent already pre-leased. All 33,120 square feet near 102nd and I Streets, Bish’s RV company of these projects were already in the construction pipeline prior occupied 32,150 square feet near 72nd and L Streets, Sundberg to Covid-19 and several are build-to-suit projects built to meet the America occupied 19,000 square feet near 132nd and F Streets, demand for industrial spaces in the market. Larger build-to-suit projects include Streck’s 78,482-square-foot facility near 118th and Industrial Vacancy Harrison Streets, CyrusOne’s 60,000-square-foot facility in Council Bluffs, Aircraft Specialities’ 47,725-square-foot property near 132nd Total Market Street and Cornhusker Road and Groundscapes’ new facility in Valley. Other area companies with build-to-suit properties under way 8% Warehouse/Distribution include New Age Manufacturing, Quin Global USA, CLAAS America Academy and H&H Lawn and Landscape company. There are seven Light Industrial speculative industrial properties under construction totaling 119,700 square feet. Flex 4% Average net asking rents are north of $6.00 per square foot for the third quarter in a row. Average asking rents for warehouse space is $5.75 per square foot while the average for flex space is $8.47 per square foot. 0% Q4 18 Q2 19 Q4 19 Q2 20

Warehouse/Distribution Total Market A NOTE REGARDING COVID-19 Light Industrial Flex Now, and prior to Covid-19, the Omaha industrial market has been operating at a vacancy rate at or near three percent. The market has Asking Rental Rates seen great demand for warehouse space coupled with a conservative construction rate. Additionally, the state of Nebraska recorded the $9 lowest unemployment rate by state for May 2020 at 5.2 percent, compared to the United States at 13.3 percent and the highest unemployment rate by state of 25.3 percent in Nevada. It is clear that our local industrial market entered the Covid-19 crisis in a healthy $7 state. While business leaders may be reluctant to make long-term decisions at this time, International believes that this crisis will be more short-term in nature than the great recession that began in $5 2008.

Nationally, Colliers International reported a slight increase to 5.2 $3 percent in the national industrial market in the first quarter of 2020 Q4 18 Q2 19 Q4 19 Q2 20 from 5.1 percent in the fourth quarter of 2019. Colliers believes that Warehouse/Distribution All Subtypes the industrial sector will not be hit as hard by the Covid-19 crisis as Manufacturing Flex other commercial real estate sectors. According to Colliers, “for U.S. industrial properties, the good news is that the impact of the pandemic Quarterly Absorption is expected to be softer in the industrial sector, with demand for (in Thousands) e-commerce products and grocery items increasing daily. Moreover, 1.2M the shift in supply chain strategies from a “just-in-time” inventory Completion system to increased levels of safety stock should bolster the need for All Subtypes industrial inventory and keep development pipelines active.” In fact, Warehouse/Distribution Absorption Colliers expects that there will be increased demand for industrial 800,000 capacity post Covid-19 due to the growth of e-commerce, increased Manufacturing inventory levels to maintain safety stock inventory and a growing use 400,000 of third-party logistics providers. Flex

Increased demand coupled with a conservative development and 0 real estate community in Omaha will result in an even healthier local industrial market. The national industrial market will likely fare well through the Covid-19 crisis as well. -400,000 Q4 18 Q2 19 Q4 19 Q2 20

Absorption Completed

Recent Transactions - LEASE AND SALE ACTIVITY (*COLLIERS | OMAHA INVOLVED IN TRANSACTION)

Lessee/Buyer Lessor/Seller Property Size SF/Sale Price

TKG III Nebraska LLC Warehouse Investors LLC 14015 Industrial Road $3,985,000

EmanCo LLC TC Accommodator 170 LLC 4421 & 4427 South 76th Circle $3,680,000

Vincentini Properties LLC Vincentini Plumbing Inc 5808 North 16th Street $2,140,000

2675 N 9th Street LLC Lake Resources LLC 2675 North 9th Street $1,682,195

Westchester Capital LLC Elliott Equipment Co 3514 South 25th Street 208,917 SF

2 Omaha Research & Forecast Report | Second Quarter 2020 | Industrial | Colliers International Market Overview

Omaha - Industrial Overview (Includes owner-occupied buildings. See complete data standards on last page.)

VACANCY ABSORPTION CONSTRUCTION RENTS

Total Vacancy Vacancy Net Absorption Under Const Rental Rate

Submarket SF SF % Q2 YTD SF Avg ($/SF)

COUNCIL BLUFFS 5,718,803 87,340 1.5% 16,590 24,747 60,000 $4.85

NORTHEAST 10,276,408 162,039 1.6% 1 24,583 - $6.60

NORTHWEST 6,278,130 342,809 5.5% 11,694 6,023 56,000 $6.92

SARPY COUNTY 1,818,493 80,394 4.4% (6,168) (6,168) - - EAST

SARPY COUNTY 15,150,425 607,411 4.0% 200,115 371,509 304,438 $6.67 WEST

SOUTH CENTRAL 19,469,170 720,487 3.7% (89,524) (385,103) 33,720 $6.08

SOUTHEAST 8,035,915 109,490 1.4% 165,719 155,051 - $4.90

SOUTHWEST 8,434,062 193,669 2.3% (17,448) 16,699 28,800 $8.19

TOTALS 75,181,406 2,303,639 3.1% 280,979 207,341 482,958 $6.62

3 Omaha Research & Forecast Report | Second Quarter 2020 | Industrial | Colliers International MARKET CONTACT: 68 countries Melissa Torrez Director of Market Research | Omaha +1 402 763 1744 $3.5 [email protected] billion in CONTRIBUTORS: annual revenue Cori Adcock | Vice President Colm Breathnach | Broker Associate 2.0 CONTACT US: billion square feet Colliers International | Omaha under management 6464 Center Street, Suite 200 Omaha, Nebraska | USA

+1 402 345 5866

15,000 professionals and staff Colliers International North American Data Standards: Single and multi- tenant industrial and flex buildings greater than or equal to 10,000 square feet in size, including owner-occupied buildings are included in the tracked inventory. Only properties in the Omaha metro area are included. Properties in Cass, Mills, Harrison, Saunders and counties are not included. $129billion in total transaction value

*All statistics are for 2019, are in U.S. dollars and include affiliates.

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