The office sector continues to experience some uncertainty as many employers are assessing their space needs and adjusting to the hybrid work model. The shift to remote work that occurred during the pandemic has transformed the workplace for many companies, providing employees with much more flexibility in regard to where they perform their job. This shift has led many office users to downsize, reconfigure and reimagine the work environment in response to the new normal.
The vacancy rate for Lincoln’s office market moved up during the first half of 2022, from 8.5% at the end of 2021 to 8.9% at the end of June 2022, continuing a gradual upward trend. Average office rental rates across the Lincoln market remained fairly stable, ending the first half of 2022 at $12.95 per square foot on a triple net basis, down slightly from the end of year 2021.
Most new office construction continues to be owner-occupied or build-to-suit with very little speculative development taking place. Projects that are currently underway or recently completed include the new multi-tenant office building housing Nebraska Realty located at 70th & Hwy 2, the new medical office building housing the Nebraska Pain Institute located at Hwy 2 and Pine Lake, the new 45,000 square foot multi-tenant office building at Glynoaks near 84th & Old Cheney, and the new 21,000 square foot Nebraska Neurosurgery Group Health Plaza at 27th & Old Cheney.
Looking toward the second half of 2022, Lincoln’s office market should remain relatively stable. However, it could certainly experience a continued upward trend in vacancy as leases expire and companies re-evaluate their space needs going forward.
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