Omaha-Bluffs area touted as good spot for data centers

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Posted: Saturday, April 20, 2013 12:00 am

The chilly breeze blowing through Omaha on Friday was just one reason the Omaha-Council Bluffs metro area is well-positioned for the continued expansion and addition of data centers, experts told a gathering of real estate professionals.

Cool conditions, which lower energy costs for the power-hungry computing hubs, along with low electricity rates and isolation from natural disasters will make the region attractive as growth in demand for data centers outpaces growth of supply by 2-to-1, said Tim Huffman, an executive vice president at Colliers International and the national director of the firm's Data Center Solutions Group, based in Atlanta.

He spoke as part of the 24th annual CREW Commercial Real Estate Workshop, attended by about 500 brokers, attorneys, lenders, contractors and others in the industry.

Brokers have opportunities to work with companies to bring more data centers to the region, but brokers should know that finding the perfect site for a data center takes far more attention to detail than for a typical commercial site, said Courtney Dunbar of Olsson Associates.

There can be as many as 75 different “site characteristics” a firm will consider before deciding on the best location, Dunbar said. She said brokers can assess possible sites ahead of time and be prepared to market them when opportunity knocks.

Local and state economic development leaders are “aggressively” targeting data centers, which don't require a large workforce but do impact the availability of land. Google, Yahoo and Fidelity are among the firms that operate their own data centers, while CoSentry and the Scott Data Center are available for firms that want to “co-locate” in a multitenant center.

The region may look more attractive compared with coastal locations after Hurricane Sandy, Huffman said. The biggest problem wasn't wind or water, he said, it was the power outage and the lack of access to diesel fuel to run backup generators.

The panelists agreed that the rise of mobile technology is only driving future demand for data centers. Information stored in “the cloud,” after all, is really stored in data centers.

Consider the constant demand for online shopping, said Kevin Dohrmann, a vice president at CoSentry.

“People buy Barbie dolls all day long, all night long,” he said.

The annual CREW conference, held at the CenturyLink Center, is a one-day event intended to bring together a diverse group invested in real estate to share updates and trends.

Among other highlights:

» Jerry Slusky, a real estate attorney and founder of the event, launched the conference with a positive overview of what he called an “accelerating” commercial real estate market. “Lending has loosened,” he said, “dramatically paving the way for more development and acquisition.” He said the healthiest and fastest growing commercial market is in apartment complexes.

» Jeffrey Wyatt of Colliers International said Omaha's “organic job growth” and limited construction of speculative office space during the recession continues to push growing businesses to move up and into Class A office space, which has less than a 6 percent vacancy rate. As vacancy rates decline, landlords are raising rent. “My crystal ball predicts that we will see a number of single-tenant and speculative office buildings announced in the next 12 months,” he said.

» For the industrial and light manufacturing market, Kevin Stratman of Investors Realty described 2012 as a good leasing year for small to medium-sized companies. In 2011, demand was greater for bigger deals involving more space. This year, Stratman said, he is seeing demand “all across the board.” He said that points to job growth. But with building costs rising and rents low, Stratman said he doesn't foresee much new construction in that market for a while.

» Joel Russell, vice president of Millard Lumber Inc., told audience members that if they are relying on a construction budget that was created less than six months ago for a project, they should go back and redo the numbers. Some labor costs have risen 15 percent to 20 percent in the last six months, he said. And when it comes to building materials, he said, “everything is going up, basically, in varying degrees.” He said increased prices are, in part, related to greater demand.

» TD Ameritrade's new Old Mill-area headquarters, where employees have just started moving in, was named the Development of the Year. Tenaska's new headquarters, under construction in the First National Bank Business Park, was selected as Deal of the Year. The new Lincoln Public Schools headquarters redevelopment, called the District at O Street, was called the Redevelopment of the Year. The project includes a Whole Foods store and other retail shopping.

Contact the writer: 402-444-1224, cindy.gonzalez@owh.com

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