Office condo project new for Omaha
'Omaha is ready for it'

by Deborah Shanahan World-Herald Staff writer

A rendering shows what planned office condos for Omaha could look like, based on existing projects in the Minneapolis-St. Paul area. >>

Construction has begun at the 72nd and West Center Road site and is expected to be completed in the spring.

Bremcon Vice President Bryan Breems said the company picked Omaha for a series of office condominiums because founder David Ficek has had success with them in the Twin Cities area and Breems, whose wife is from Omaha, saw a void here.

"Our brokers tell us they think Omaha is ready for it," Breems said. "They say a lot of people are asking about owning office spaces."

Bremcon is working with Joel McNeil and Michael Earl at the Lund Co. on the Omaha office condos. The spaces are being offered at about $135 to $145 per square foot for a completely finished product, including customized space planning and interior design services provided by Group One Interiors.

Breems said office condos are a good fit for the smaller service companies that are the fastest-growing part of the current economy.

A good percentage of buyers are financial planners, accountants and lawyers - people who understand the numbers and benefits of owning versus leasing, Breems said. Among those benefits are the growth of real estate equity and a tax deduction for depreciation.

The condos also appeal to investors who buy them and find tenants to lease the space, he said.

"Business owners like the idea of investing in something tangible," he said.

Bremcon designs office parks with multiple threeplex buildings, spreading the land costs among multiple owners. The office condos work like residential condos, with owners paying association fees for snow removal, lawn mowing and other maintenance. Breems said the 72nd and Center location, for example, will have six buildings with three units each. The center unit of each building will be about 3,000 square feet and each of the end units about 2,800. Units can be combined to enlarge the space.

This artist's drawing shows another design of office condos built in the Twin Cities area. This style also could be built in Omaha.

Some businesses, Breems said, buy more space than they need and lease out excess until they grow into it.

Historically low interest rates have prompted more businesses to consider buying their space and more developers to provide the properties. Phoenix is considered the office condo capital, with 73 projects recently completed, 20 under construction and more than 30 planned.

Whether the rapidly expanding niche of office condos will continue to flourish or be a short-term phenomenon was the focus of a recent survey of developers, appraisers and brokers in 42 U.S. markets by Grubb & Ellis and PNC Real Estate Finance.

Nearly 60 percent of the respondents gave future office condo development a yellow light - proceed with caution - while more than 30 percent gave such developments a green light. Less than 10 percent said it wasn't a good idea.

Breems said he believes buying will continue to make sense as long as interest rates remain less than 8 percent.

The town home-style office condos have been popular in the Minneapolis-St. Paul suburbs. The more than 1 million square feet of new office condo construction in the past tow years has been called a bright spot in a Twin Cities office market that has vacancy rates of more than 20 percent in many areas.

Bremcon president Ficek started building office condos in the area in 1997 and has built about 200 as part of another company. Now Bremcon has projects under way in Overland Park, Kansas; Minnetonka and White Bear Lake, Minnesota; and Omaha.

Bremcon's offices purposely have a residential feel. The millwork and paneled doors, kitchenettes and fireplaces all are taken from residential construction.

"These are a little more neighborhood friendly," Breems said. "They provide a nice transition from residential neighborhoods to commercial properties."

Source: December 20, 2005 Omaha World Herald