Q2 2012 Omaha, Nebraska Commercial Real Estate Economy

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Q2 2012 Omaha, Nebraska Commercial Real Estate Economy

Prairie Oasis. The Omaha economy shows considerable strength. According to the On Numbers Economic Index recently created by American City Business Journals, Omaha ranked fifth in the nation as of October 2012 in “relative economic vitality.” Among its assets, according to the survey, was a low unemployment rate, recent home price appreciation, income growth, and favorable rates of private sector job growth. Indeed, according to data provided by the U.S. Bureau of Labor Statistics (BLS), the Omaha Metropolitan Statistical Area (MSA) may place itself among those metro areas nationwide in which employment has returned to pre-recession levels (that number has been growing).

There’s been no shortage of plaudits. Earlier this year, for example, Forbes ranked Omaha seventh on its list of Best Cities for Jobs and, in June, placed the metro area 11th in its Best Places for Business and Careers rankings. “Here in Nebraska right now, we have one of the top 10 economies nationwide,” an executive at the Omaha office of the Kansas City Federal Reserve informed The Omaha World-Herald in September. “Our 4.0% unemployment rate is second lowest in the nation. We’re ninth nationwide in personal income growth.” On the other hand, the same executive reminds World-Herald readers, while the Nebraska economy has outperformed the nation during recessions since the Second World War, “economic expansion here begins to sag… when the rest of the nation begins to recover.”

For the moment, at any rate, the data are highly favorable. According to BLS data, total non-farm employment, as noted, has returned to and now exceeds pre-recession levels. Preliminary data for August 2012 show a 1,100-job (0.2%) margin over the total recorded four years earlier. Two factors are at work—the MSA’s relatively shallow dip due to the recession (compared with the nation) and strong recent job creation. Thus, employment per the latest August was up 9,300 jobs (2.0%) from 12 months prior and was up 12,200 jobs (2.6%) over 24 months. The additional good news embedded in these figures is the increase in the pace of job creation indicated for the latter 12-month span—at a time in which a slowdown in job growth was common across the country. Gains, moreover, are spread across most major employment sectors. Included is a large, 2,200-job (3.3%) 12-month gain in the centrally important Professional and Business Services sector. BLS data also indicate significant employment growth in the Education and Health Services, Manufacturing and in Construction sectors as well.

As indicated, favorable signs are apparent in the local housing market. According to Omaha Area Board of Realtors and Great Plains Realtors MLS, 8,891 residential sales (new and existing combined) were completed through the first three quarters of 2012, up 16.8% year-over-year. At 17,239, the average number of homes placed up for sale during the period was down 3.9%. At $169,488, the average selling price year-to-date was up 4.2%. According to the U.S. Bureau of the Census, the 2,414 residential units permitted for construction in the local MSA during the first eight months of the year were up 33.2% from the comparable span of 2011. Of the latest total, 1,603 were for detached single-family homes, a gain of 8.5%.