MARKET SNAPSHOT

Omaha 3Q 2024

AVERAGE RENT

$1,217 3Q 2024

OCCUPANCY RATE

95.1% 3Q 2024

QUARTERLY NET DEMAND

435 [YTD: 1,781]

YoY RENT CHANGE

3.5% 3Q 2024

YoY OCCUPANCY CHANGE

-10 BASIS POINTS

QUARTERLY COMPLETIONS

428 [YTD: 1,389]

KEY TAKEAWAYS

Rental demand remains strong in Omaha, largely driven by consistent employment growth and an expanding population, which have kept occupancy and rent growth rates well above the national averages.

While deliveries are expected to increase through the end of 2024, they are projected to decrease significantly next year due to the recent drop in project starts.

Despite the substantial amount of new supply, average rents in Omaha continue to rise at an annual rate of 3.5%, significantly outpacing the national average and placing the city among the top 20 metro areas for rent growth.

SUPPLY & DEMAND
  • QUARTERLY NET DEMAND

    435 UNITS
    [YTD: 1,781]

For the third consecutive quarter, rental demand—measured by net absorption—has outpaced new completions. This trend has supported high stabilized occupancy rates and consistent rent increases, well above the national average. Unprecedented employment growth remains a key factor driving this strong multifamily demand. Although absorption fell from a near-record high of around 900 units in Q2 2024 to 435 units this quarter, it is still on track to exceed the annual total for every year in the past decade, except for 2021, which saw an all-time high of around 2,900 units.

Fueled by employment growth in the high-paying information super-sector, as well as in middle-income segments such as education, health services, and manufacturing, absorption has been particularly strong for both high-end and mid-tier apartments. Omaha’s annual absorption rate, as a proportion of inventory for these product types, ranks fifth among all major U.S. markets. Notably, renter demand was highest in Northwest Omaha and the adjacent Elkhorn submarket, which accounted for over 40% of all units absorbed in the Omaha market over the past year. In contrast, Downtown saw only 79 units absorbed, representing just 4% of the metro’s overall total.

  • QUARTERLY COMPLETIONS

    428 UNITS
    [YTD: 1,389]

Due to high interest rates and a decrease in construction lending, construction starts over the past 12 months have significantly declined, reducing the under-construction inventory from a pandemic-era peak of 4,400 units to the current 3,400 units, with total deliveries for 2024 projected at around 2,400 units. However, there has been a recent uptick in development activity, with the pipeline increasing from a three-year low of 2,175 units in the previous quarter—a 56% jump. As a result, deliveries are expected to rise in the coming quarter. Nonetheless, supply pressure is expected to diminish rapidly over the next 12 to 18 months due to the significant decline in annual construction starts, driven by the high-interest rate environment and a shortage of skilled labor, which further intensifies cost pressures.

Construction activity has been unevenly distributed across the region, with several areas seeing renewed vibrancy in the post-pandemic era due to a recent surge in development. The bulk of new construction has been concentrated in the Elkhorn submarket, situated in the far western part of the metro area, which accounted for nearly 40% of all deliveries over the past year. Central Omaha and the Millard submarkets followed, each contributing 15% of the new deliveries.

Annual Demand vs Completions

Occupancy & Rent Trends

OCCUPANCY TRENDS

Strong renter demand has helped maintain stable occupancy rates in Omaha. The current overall average rate of 95.1% is consistent with the market’s ten-year average of 94.8% and exceeds the national average of 94.0%. Omaha is one of the few major metro areas in the country with occupancy rates comparable to pre-pandemic levels, while most others have experienced significant declines in the post-pandemic era. Consistent employment growth has driven substantial inbound household migration, which has helped absorb new supply and sustain elevated occupancy rates. As the construction pipeline contracts and absorptions remain steady, occupancy rates are expected to hold steady or even increase in the short-term.

Nearly all submarkets in Omaha maintained stabilized occupancy rates above the national benchmark. Washington County and South Omaha had the highest pent-up demand, with occupancy rates of 97.6% and 98.1%, respectively. In contrast, the Downtown Omaha and North Omaha submarkets underperformed, with occupancy rates of 93.3% and 91.1%. Occupancy rates were fairly consistent across different property tiers, ranging from 94.8% to 95.5%.

RENT TRENDS

Despite continued elevated deliveries, average rents in Omaha have shown remarkable resilience, with annual gains of 3.5% this quarter. This figure is significantly above the national average of 1.0%, placing Omaha in the top 20 housing markets nationwide. Omaha’s current annual rent growth also exceeds the 2015–2019 average of 2.5%, a period often considered a benchmark for normalcy. The region is one of only 15 major U.S. markets to surpass its five-year pre-pandemic average, and its outperformance compared to pre-pandemic levels ranks it among the top 10 largest markets in the country. Additionally, after peaking at 7.5% annual growth in Q2 2022, the current rent deceleration of less than four percentage points year-over-year is one of the lowest among major markets nationwide. In comparison, 15 of the nation’s top 50 markets have experienced a pullback of at least 15 percentage points, while the U.S. benchmark saw a slowdown of nine percentage points.

Suburban submarkets across the metro area led in rent growth, aligning with ongoing migration trends. These areas typically saw annual increases ranging from 4.5% to 6.5%, with Council Bluffs at the top of the range. Nine of Omaha’s 20 submarkets experienced rent growth above 4%, while only one, Cass County, saw a decline in average rents. Rent growth varied significantly by property type, with upper-tier properties seeing only a 1.1% average annual increase due to heightened competition, while lower- and mid-tier properties experienced average increases of 3.4% and 4.3%, respectively.

Submarket Rent & Occupancy

ECONOMY

Omaha’s growth trajectory is bolstered by a low unemployment rate and steady job creation, particularly in its manufacturing, education and health services sectors. As of August 2024, total nonfarm employment increased by 2.6% year-over-year, an above-average gain compared to peer regional economies in the Midwest. The education and healthcare sector led the way with an 8.1% increase, accounting for most of the job growth, followed by the information and manufacturing industries, which saw annual increases of 4.3% and 3.6%, respectively. The metro area’s current unemployment rate stands at 2.9%, just 40 basis points higher than in August 2023, yet well below the national average of 4.4%. Additionally, the current rate is 20 basis points lower than its pre-pandemic level for the same month, further highlighting Omaha’s full recovery from the pandemic’s impacts.

13.5K

August 2024 ANNUAL JOBS CREATED

2.6%

AUGUST 2024 EMPLOYMENT GROWTH

2.9%

AUGUST 2024 Unemployment rate
4.4% us August rate

Top 5 Employment Sector
Annual Change

Education and Health Services

Nominal Change
from August 2023
to August 2024: 6,800

Percent Change: 8.1%

Mining, Logging, and Construction

Nominal Change
from August 2023
to August 2024: 6,700

Percent Change: 2.1%

Trade, Transportation, and Utilities

Nominal Change
from August 2023
to August 2024: 2,300

Percent Change: 2.4%

Manufacturing

Nominal Change
from August 2023
to August 2024: 1,300

Percent Change: 3.6%

Government

Nominal Change
from August 2023
to August 2024: 1,300

Percent Change: 2.0%

SectorNominal Change from August 2023 to August 2024 Percent Change
Education and Health Services6,8008.1%
Mining, Logging, and Construction6,7002.1%
Trade, Transportation, and Utilities2,3002.4%
Manufacturing1,3003.6%
Government1,3002.0%
Leisure and Hospitality1,2002.1%
Information4004.3%
Professional and Business Services4000.5%
Other Services00.0%
Financial Activities-900-2.3%
MAJOR ECONOMIC DEVELOPMENTS

Tallest Skyscraper in the Plains State Region Being Built in Omaha

Mutual of Omaha is developing a new office building in Downtown that will become the tallest building in the region. The building will feature 800,000 square feet of office space and accommodate around 2,400 of the company’s 4,000 local employees. It is expected to generate additional ancillary economic activity in the area.

Warhorse Omaha Casino Opens

In August 2024, Warhorse Omaha Casino celebrated its grand opening at Horsemen’s Park in Omaha. The casino was developed by the Winnebago Tribe of Nebraska, which aims to use casino revenues to buy back land, expand housing, improve education, and strengthen the social safety net for the community.

University of Nebraska Medical Center Undergoing Massive Expansion

UNMC is nearing completion of a three-phase healthcare system expansion, which includes the construction of a 1.27 million-square-foot, 556-bed hospital and a new joint civilian-military medical surge center, along with expansions of existing regional facilities. Additionally, the University is developing the Edge District, a campus expansion project that will feature a 130,000-square-foot innovation hub and a 181,000-square-foot office and laboratory building.

MARKET OUTLOOK

The Omaha rental market continues to outperform regional peer markets and the national benchmark. It is one of the few major metro areas with an occupancy rate consistent with pre-pandemic levels, while many others have experienced substantial declines in the post-pandemic era. Growing rental demand has been fueled by population growth and economic developments, such as the UNMC expansion project, which is expected to create thousands of jobs over the next decade. Meanwhile, a significant reduction in supply-side pressure is expected to further tighten market fundamentals in the near term. Rent growth is projected to rise to 4% by year-end, up from 3% the previous year, and well above the national projection of 1%, while occupancy rates are forecasted to remain steady.     

Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics

Featured Omaha Research Reports:

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Kyle Winston

Senior Advisor
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Chris Wilson

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