Back in the Vault: Lincoln CRE’s 2026 Midyear Checkup

Summer break is over, school-zone lights are flashing, mushrooms are taking over the yard, and Mike and Marc are officially back in the CRE Vault.

In this episode of In the CRE Vault with Mike and Marc, the guys dig into the first half of 2026 Lincoln commercial real estate market and break down what they’re seeing across office, retail, and industrial properties. From the flight to quality in Class A office space to tightening retail vacancy and an industrial market where available space remains hard to find, they give their boots-on-the-ground perspective on where the Lincoln market stands.

They also talk about why a great landlord can make all the difference, how service businesses are helping fill retail space, where industrial rents may be headed, and why trying to put together a data center deal can feel a lot like making a cheesecake without a recipe.

Plus, a well-deserved shoutout to the behind-the-scenes market-report wizard who somehow keeps all the numbers straight.

In the CRE Vault with Mike and Marc is brought to you by NAI FMA Realty, serving Lincoln and the surrounding area with commercial real estate brokerage, property management, and market expertise.

Welcome back to the Vault.

Thanks for tuning in to In the CRE Vault with Mike and Marc—where we break down commercial real estate without putting you to sleep. Powered by NAI FMA Realty in Lincoln, Nebraska. For more, visit naifmarealty.com. 

Transcript

SPEAKER_01 0:06

Welcome to the podcast in the TRE vault with Mike and Mark. Alright, welcome back to the vault with Mike and Mark. How you doing, brother? I'm doing good. How about you? I'm doing alright. I'm thinking I'm gonna try to mow the lawn again before we're supposed to get some rain the next couple days.

SPEAKER_02 0:23

Yeah. Yeah.

SPEAKER_01 0:24

And did you get any mushrooms growing in your yard recently?

SPEAKER_02 0:28

Yeah. We live on an acreage, so we always get the mushrooms, and I gotta step on them. Otherwise, I think the dog would eat them.

SPEAKER_01 0:33

That's my thought too. If you if you come home and your dog's uh making pancakes in an apron, you know he ate the mushrooms. Yes, that is so true. It is, or you ate the mushrooms and you're seeing something.

SPEAKER_02 0:48

Yeah, that's that that's about right. Yeah, we get pretty big ones out there in big patches. So I'm sure that's a sign of something, but I don't know. Oh, I don't know. It's who knows, but summer's over. I mean, it's uh kids are going back to school and school's in.

SPEAKER_01 1:00

I saw the 25 uh mile an hour lights today, and I thought, what the hell is this? So it yeah, it's it's wild.

SPEAKER_02 1:09

Yeah, yeah. The summer went by quickly, and uh it was it was it was a good summer.

SPEAKER_01 1:13

It was quick, it was quick and good, but you know, here's the thing, you know, as we're wrapping up and getting back into off our summer sabbatical. Uh, we probably just kind of touched base on what the hell's going on in the Lincoln commercial real estate market. What are we seeing for numbers? And you know, just this is very high level. This is a drive time talk, you know, office retail industrial.

SPEAKER_02 1:38

We do, and we've mentioned this before, we do twice a year. We do a market report that just recaps the exact market. Um, we we have a home run of a human. Carrie does this herself. She runs all the numbers. She she she bolts us down in the conference room on each and um on each sector and and says, What do you where's where's rents here? This happened, this sold, this filled, this went vacant. I just she recaps everything. And I I can honestly say it's it's it's funny. I I can honestly say that there's nobody in the office that could do it better than her.

SPEAKER_01 2:15

She's the wizardess of Oz.

SPEAKER_02 2:17

Yeah, and if we did not have her, I just don't know if this would get done. And if it did, it wouldn't be to this.

SPEAKER_01 2:22

The whole office would shut down.

SPEAKER_02 2:23

Yes, and she would. It's funny because when she sets us down and makes us answer all the questions, nobody ever has ever asked her, how do you do this? Because nobody wants to know.

SPEAKER_01 2:35

Yeah, it's it's almost like um it's a magic trick that you don't really want to know the solution to.

SPEAKER_02 2:41

Yeah, I don't think anybody does.

SPEAKER_01 2:43

I don't want to know how the Queen of Spays got into my back pocket.

SPEAKER_02 2:46

Because you don't want to get called upon in case she needs help. I no nobody has ever asked her, hey, what's the spreadsheet look like for this? And and how do you do all how do you find this stuff out? Because she has an immense amount of information somewhere. Yep. So um, so we we did finish up the second half uh uh second half market report. I'm sorry, first half market report for 2026. So it's the first six months of the year. Uh we make sure that all the transactions and and all the comparables actually did either transfer, fill, or go vacant in in the first half. Because she'll as she's asking us those questions. If we have stuff uh that that is in June, we she's always asking us the date because she wants to make sure uh that it's the you know end of month for the first half of the year. For sure. So, you know, uh office, you know, vacancy. Well, an office is its own beast, but uh uh on a high level over all quadrants, and and and she breaks it down to into five levels. You got southeast, southwest, northeast, northwest, and then you got CBD, which is near center of town. Um, she combines all those. Looks like vacancy stayed the same. Yeah, um, a little bit of absorption and and av the asking rate on an average level went up to about $21 a foot, and we had a little bit of new construction. Yeah. Talk about, you know, you got a nice C B D building, class A. Um, talk about what you're seeing. Are you getting showings on your class A?

SPEAKER_01 4:14

Yeah, we've we've had um we've had some few deals actually come to fruition. A couple of them were I would say quarter four of last year. We had one um we had one good expansion um of a tenant this year, and we've had some good some good action on it. I think between uh my building and the building we're in, typically if someone's looking downtown, they're looking at both. Um you know, I'm a little biased, but I think those are the two really class A buildings downtown. Um you know, with good amenities, good visibility, all those kind of things. But you know, it's I'd be lying if I if I didn't say I wish it was busier, you know, as far as those interests and stuff like that. But um showed it a few times, a lot of things fizzle out, um, because there's just a lot of product available um for people to to pick and choose. And if they're looking here, they're usually looking at you know, Haymarket, Telegraph, those are different, you know, office pods they can pick from too.

SPEAKER_02 5:22

I think there's just in the in the in the reading of in watching webcasts and and listening to podcasts, there is a huge market for that class A, class A plus, and and that's what people are moving to, that shift of quality. Um, and we've talked about that many times, but I I think there's a good it's nice to have activity for that building that you that that we manage. Um, you know, there's two, I'm gonna say two class A, class A plus buildings in the C B D district, and we handle both those. And in and one of those that I was asking you about is is it's just a home run of a building.

SPEAKER_01 5:56

Oh, it's awesome.

SPEAKER_02 5:57

Yeah, on-site parking and and and just everything about it is great ownership, really good people to work for.

SPEAKER_01 6:04

Yeah, it's it's a it's a nice one for sure.

SPEAKER_02 6:07

And a lot of times, and I think you can back this up, a lot of times when you have a property and you have a home run of a landlord, you you typically sell that landlord just being a home run in part of your showing. Because I think landlord, landlords can make or break um any any deal or just any tenancy over the years. I mean, uh there's rough landlords out there that are really hard to work with, and and uh I mean that'll make or break a deal.

SPEAKER_01 6:36

100%. And that's really I think that's why this building we're in, um shameless plug, Union Bank Plaza, Emeritus. I mean, it's it stays really occupied. Yeah. And people really like it. Um they plug. We manage it. Um, I think we truly treat and we're we're very reactive. Um but this isn't a plug for that, but just more so the landlord is very, very um very good, very good to its tenants. And so that's that not not only creates the the new client, but keeping the client.

SPEAKER_02 7:13

I think it's a vision of the long-term dollar. I think a lot of there there's landlords out there that just try to suck every dollar out. Yep. And you and you just can't do that, especially with buildings like this, because it it'll slowly, slowly diminish, and then all of a sudden you got a building that's half full, and then it's a battle because you're you know, you're just trying to make ends meet.

SPEAKER_01 7:32

Then where's your cash for you know, you got to get a new roof or you gotta you have a um chiller go out or whatever, then you're really kind of up a creek.

SPEAKER_02 7:42

Yeah, yeah, that's very true. So retail, um, retail is I mean, retail's nice now. I mean, I'm thinking 10 years ago, retail was kind of the dog of a of the conversation. And and retail vacancy came down, it's down to 4.1 percent on a on a on a national level, um, a little bit of absorption, but the average rate, uh asking rate is is four fourteen sixty-four a foot, yeah, which it it on a triple net basis is raising. And you know, I have I'm gonna use an example of a small little strip that I have on O Street, and that strip, oh, five years ago, six years ago, was probably half full. And we are 100% full on that one. Yeah, and while I want to take the plug myself on on the ability to market that and fill it up, it's not so much me. It goes again back to the landlord. It's just a home run of a home run of ownership and nice, nice little strip. And I think retail's changed dramatically locally, um even on a national level.

SPEAKER_01 8:43

Yeah, I think a lot of it, you know, we were seeing the major e-commerce, you know, and that's still very prevalent. I mean, how easy is it just to click on Amazon and say, oh, it's coming tomorrow. But I think people really want to feel something tangible, they want, you know, more of an experience, they want to check it out. Um you know, the shop, shop slash buy local, I think is really big in Lincoln. Um so yeah, I think that really helps retail.

SPEAKER_02 9:08

I think the vape shops have slowed down a little bit because we got two on every corner. Um, but just your general services, your your nail salons, you know, hair, um, tattoos or throw that, throw that out there. I just think there's just general services that are starting to kind of uh backfill in some of those places.

SPEAKER_01 9:26

100%. Then you can go chiropractor, um, insurance, you know, kind of that, you know, I'd call it saw, you know, that kind of gray area between retail and office.

SPEAKER_02 9:38

Yeah. Yeah.

SPEAKER_01 9:39

That's filling some of those too.

SPEAKER_02 9:41

Well, I think the last one is industrial. Um, you know, that one. I just I have so many stories for industrial. I do a lot of industrial and and uh vacancies down to 1.9%, which is pretty much, I mean, when you got a vacancy that low, I I think at one point a couple years ago it was like 0.9%. I mean, what 0.9, 1.9 might as well be zero. It's zero, right? I mean, there's just how how are you gonna figure, I mean, when you have when you're talking industrial in industrial form, your buildings are 20,000, 30,000, 100,000 square foot. And I mean, how do you even figure a vacancy level on that? And the one thing I've seen is just a kind of a slow climb of of rental rates. Uh, the average rental rates have gone up to 875 a foot, eight seventy-three a foot, triple net, which is nice. Again, low vacancies, supply and demands kind of meeting. I would say there's not a I think we're gonna slow down on industrial because we're just slowing down on on where they can go.

SPEAKER_01 10:47

I think that's true. And I think uh correct me if you're not in the same thought process of this, but I think with you know, probably the last five years, I feel like rents have nearly doubled, but now you know they've shot up really quick, and now they're kind of um I'd say plateauing, kind of leveling off. Yeah, and maybe pulling back a little bit.

SPEAKER_02 11:09

Yeah. Just depends on the size. Yeah. I think contractors are slowing down. Your contractor base of 1,500 square foot. There's just not a much much of a demand for that. There's not a lot out there. Um, so I think it's just kind of uh it's just kind of changing slowly.

SPEAKER_01 11:25

Yeah, I think so too.

SPEAKER_02 11:27

And and the data centers are still trying to figure out. I heard locally we're not gonna allow any more data centers to come in the market. So, you know, that's always fun. That was even a conversation when we were in Milwaukee.

SPEAKER_01 11:39

That's right.

SPEAKER_02 11:39

Was the data centers and and and what that looks like. And it's hard to find a broker that can actually have a conversation about that because yeah, I don't even think it's something that we understand.

SPEAKER_01 11:48

No, we were we were eating lunch with a guy that was kind of chasing those. Remember that? Yeah. And he he said, Man, I had just a couple of huge home runs. And he goes, but it got to the point where there's so much red tape, and it's kind of like he basically said it wasn't worth the chase anymore because it was so hard to get one pushed through.

SPEAKER_02 12:08

I think it would be our day, our daily challenges are sometimes ownership, sometimes tenants, sometimes both. But when you bring a data center conversation into play, you're dealing with you're dealing with possible contractors, you're dealing, and you're dealing with the city.

SPEAKER_01 12:24

Yeah, government, uh, you got easements, you got all kinds of stuff. I mean, you basically you're trying to make a cheesecake without a recipe.

SPEAKER_02 12:33

Yeah.

SPEAKER_01 12:33

And you hope it turns out all right.

SPEAKER_02 12:35

Yeah, and it's gonna take you a lot of different, it's gonna take you a lot of time to figure out. So um I I think all in all, I think we're we're steady as we usually are. You know, we joke as brokers that we grow 2% a year and we're happy with that, and you know, it's just the way it's been all these years.

SPEAKER_01 12:52

For sure. We just we keep on keeping on, man.

SPEAKER_02 12:55

We're busy. I wouldn't say we're busy, but I think we're busy enough. Yeah, for sure. All right, Mikey. I'm glad we got to recap that.

SPEAKER_01 13:03

And uh good to be back in the vault. This is great. It's always welcome back to school, welcome back to Thunderdome.

SPEAKER_02 13:10

Thanks so much, Mikey.

SPEAKER_01 13:11

We'll see you next time, buddy. See ya. Bye.

SPEAKER_00 13:26

The views, thoughts, and opinions expressed are the speakers' own and do not represent the views, thoughts, and opinions of any high FMA realty. The material and information presented here is for general information purposes only. Any high FMA realty disclaims any liability or responsibility for any individual's views or reliance on the information presented in this podcast.