Downtown Omaha's core need: more jobs

Not a strong job center


A renaissance over the past decade-plus has reawakened downtown Omaha, giving it a new vibe and 24/7 heartbeat.

Some longtime corporate giants have reinvested millions to revamp their downtown headquarters, reshaping the skyline.

There's been an explosion of new entertainment venues, from the new arena, ballpark and concert hall to thriving smaller arts and performance centers, bars and restaurants.

Downtown and midtown also have become a trendy place to live, fueling the addition of hundreds of new apartments and condos.

But while the makeover has provided much sparkle and life to Omaha's inner city, it appears to have fallen short in one important area: jobs.

According to a recent Brookings Institution study, Omaha's central core — defined as downtown and the area three miles beyond — shed nearly 12,000 jobs between 2000 and 2010.

WEAK INNER CORE

Midsize metropolitan cities ranked in the percentage of their jobs located within three miles of the central business district.

1. Bridgeport-Stamford-Norwalk, Conn. – 58.3 percent

2. Honolulu – 53.9

3. Allentown-Bethlehem-Easton, Pa.-N.J. – 50.3

4. Oxnard-Thousand Oaks-Ventura, Calif. – 47.4

5. Scranton-Wilkes-Barre, Pa. – 46.5

6. Modesto, Calif. – 45.5

7. New Haven-Milford, Conn. – 45.3

8. Palm Bay-Melbourne-Titusville, Fla. – 42.2

9. North Port-Bradenton-Sarasota, Fla. – 40.4

10. Bakersfield-Delano, Calif. – 40.2

11. Boise City-Nampa, Idaho – 39.4

12. Syracuse, N.Y. – 37.8

13. Des Moines-West Des Moines – 37.5

14. Poughkeepsie-Newburgh-Middletown, N.Y. – 37.2

15. Albany-Schenectady-Troy, N.Y. – 36.3

16. Wichita, Kan. – 36.3

17. Cape Coral-Fort Myers, Fla. – 35.6

18. Jackson, Miss. – 35.5

19. Lakeland-Winter Haven, Fla. – 35.3

20. Little Rock-North Little Rock-Conway, Ark. – 34.5

21. Provo-Orem, Utah – 33.8

22. McAllen-Edinburg-Mission, Texas – 33.6

23. Greenville-Mauldin-Easley, S.C. – 33.3

24. Colorado Springs, Colo. – 33.0

25. Springfield, Mass. – 32.8

26. Chattanooga, Tenn./Ga. – 32.6

27. Greensboro-High Point, N.C. – 32.2

28. Harrisburg-Carlisle, Pa. – 31.8

29. New Orleans-Metairie-Kenner, La. – 31.6

30. Birmingham-Hoover, Ala. – 31.3

31. Lancaster, Pa. – 31.2

32. Worcester, Mass. – 31.0

33. Rochester, N.Y. – 30.7

34. Ogden-Clearfield, Utah – 30.6

35. Stockton, Calif. – 30.5

36. Madison, Wis. – 30.1

37. Columbia, S.C. – 30.1

38. Youngstown-Warren-Boardman, Ohio/Pa. – 27.3

39. Albuquerque, N.M. – 26.7

40. Oklahoma City, Okla. – 26.4

41. Grand Rapids-Wyoming, Mich. – 26.0

42. Akron, Ohio – 24.9

43. Augusta-Richmond County, Ga./S.C. – 24.8

44. Dayton, Ohio – 24.5

45. Toledo, Ohio – 23.8

46. Omaha-Council Bluffs – 23.3

47. Fresno, Calif. – 23.1

48. Charleston-North Charleston-Summerville, S.C. – 21.7

49. Jacksonville, Fla. – 21.0

50. Richmond, Va. – 19.6

51. Tulsa, Okla. – 19.3

52. Tucson, Ariz. – 19.2

53. Knoxville, Tenn. – 18.6

54. El Paso, Texas – 18.5

55. Buffalo-Niagara Falls, N.Y. – 18.1

56. Raleigh-Cary, N.C. – 15.4

57. Baton Rouge, La. – 15.1

58. Memphis, Tenn./Miss./Ark. – 12.4

Source: Brookings Institution

What's more, the study found that compared with other midsize metro areas, Omaha's central core ranks as a weak job center. Among the 58 midsize metros in the study, Omaha ranked 46th in percentage of its jobs that were located in the inner core.

Many demographers and urban planners say the movement of jobs from a city's center to its suburbs — called job sprawl — can create challenges, often leading to strained infrastructure, increased energy consumption, and less access to jobs for low-income and minority residents. Even as central Omaha evolves into a stronger center of recreation and culture, the city still needs to maintain a thriving and varied base of jobs in its core to be healthy, the urban planners say.

“The heart helps make the rest of the place viable,” said Marty Shukert, a private planning consultant who formerly served as Omaha's city planner. “The old heart provides people with the quality of life, the resources and the features that make them want to live and grow and invest in the city.”

Though the results might surprise some, they didn't surprise Omaha native Shawn Mobley, who works as a commercial real estate broker across the Midwest. He's seeing a national trend of downtowns becoming centers for people to live, work and play. Local employers are increasingly adding or moving jobs downtown to attract young, creative workers drawn to a lively urban environment.

When the Chicago-based Mobley visits Omaha, he's amazed at its central core's evolution as a place to live and play. But when it comes to jobs, he hasn't seen it happening — at least not yet.

“In (downtown) Omaha, it's really live and play, but not work,” said Mobley, central region president for commercial real estate firm Cushman & Wakefield. “I can't say I fully understand why more job creators aren't drawn downtown. Maybe it's one of those things we'll look back five years from now and see it has changed.”

Indeed, some see that trend poised to take root in Omaha.

Joe Gudenrath, director of Omaha's Downtown Improvement District, noted grain trader Gavilon is preparing to open a new headquarters downtown.

“The urban neighborhood that is developing will bring jobs downtown,” he said. “Downtown is the desired workplace for young professionals, even as they grow and are replaced by younger professionals.”

However, others say that even if some employers are lured downtown, the long-term trend of jobs locating out in the burbs is likely to continue.

Even as Omaha's inner core has evolved in recent years, there has been a flurry of companies choosing to set up shop in suburban office parks — finance companies such as TD Ameritrade and Pinnacle Bank, Internet companies PayPal and Hayneedle, energy companies Green Plains and Tenaska and software firms ACI Worldwide and CSG International, to name just a few.

Steve Jensen, a private planning consultant in Omaha who formerly headed the city's planning department, is bullish on downtown Omaha's future. But he also couldn't help noting that while Gavilon completes a low-profile, five-story headquarters downtown, TD Ameritrade has opened its 12-story tower out west.

“You'd think you'd have the flip of those two things,” Jensen said. Some planners had urged TD Ameritrade to join Omaha's downtown skyline. Its leaders instead decided to build a suburban campus near the Interstate 680 and West Dodge Expressway interchange.

Brookings earlier this year sought to study job sprawl across the country, using ZIP code-based jobs data to look at where jobs are located within the nation's metro areas. The study defined the downtown central business district in each city and then charted 2010 employment within three zones: jobs in and within three miles of the central district, 3 to 10 miles out from it, and then from 10 to 35 miles out. The three-mile core in the Omaha metro generally extends to nearly 72nd Street on the west, to downtown Council Bluffs on the east, to Q Street on the south and Sorensen Parkway on the north.

The study found that Omaha's inner core, like that of most cities, was losing jobs between 2000 and 2010. Omaha's central core lost nearly 12,000 jobs, about 11 percent.

The 68102 ZIP code, the heart of downtown Omaha, came closer to holding its own but still lost nearly 600 jobs, about 2 percent. Nearly all Omaha ZIP codes east of 108th Street were losing jobs, with the highest losses in inner-core areas.

Conversely, nearly all of the metro job growth between 2000 and 2010 occurred in Sarpy County and in Douglas County west of I-680. The fast-growing 68154 ZIP code — the one that includes TD Ameritrade's new campus — now has more jobs than any other metro ZIP code, though the downtown ZIP code still has the most jobs per square mile by a significant amount.

The census data that served as the basis for the study doesn't specify what jobs were lost in the inner core, and trying to account for them is difficult.

It's known that some of the city's longtime employers have downsized in the past decade. For example, communications company CenturyLink's employment fell from roughly 2,700 to 1,250 over the term of the study. Several industrial plants around downtown Omaha and in north and South Omaha also shut down during that time.

Such losses appear to have been more than enough to offset the growth of major inner-core employers such as the University of Nebraska Medical Center, now the metro's largest employer, or from the attraction of companies like Gallup, which a decade ago set up a new campus on the Omaha riverfront.

But more striking was the study's findings on how Omaha job location compares with that of other metros nationally.

Omaha's percentage of jobs located within three miles of the central business district ranked in the bottom fourth among 58 midsize metros. Omaha correspondingly had one of the highest concentrations of jobs in the 3-to-10-mile ring, trailing only Tucson, Ariz., and Fresno, Calif.

At the same time, Omaha didn't sprawl its jobs as widely as many cities. Omaha ranked low in the percentage of jobs more than 10 miles beyond the inner core — 13th from the bottom.

Elizabeth Kneebone, the report's principal author, credited Omaha for locating many of its jobs that were outside the inner core within high-concentration job zones. Omaha ranked second among the midsize metros in such clustering, which along with a good transportation system can help keep jobs accessible to lower-income inner-city residents.

Some quirks of history, geography and timing likely play into Omaha's poor inner-city job standing.

Though jobs on both sides of the river are included in the study, the reality is most job growth in the Omaha metro area occurs on the Nebraska side of the Missouri River. That of necessity spreads Omaha jobs out farther than would be the case if the metro grew in a more concentric way. The 2010 end point of the study means it wouldn't have fully captured all the new jobs at Midtown Crossing and Aksarben Village.

Still, none of those factors is enough to alter the study's overall finding: that jobs in the Omaha metro have been continuing to sprawl away from its urban core.

Omaha commercial real estate broker Jim Maenner said the low job ranking for Omaha's central core isn't surprising if one steps back and considers the history of office space development in Omaha.

The vast majority of office jobs were centered downtown until the late 1960s, when the first suburban office buildings went up near 72nd Street and Mercy Road and on West Dodge Road at 84th Street. Suburban office parks took off from there, with subsequent developments in Regency, Old Mill, Miracle Hills and North Park.

The explosion of suburban office parks was simply a response to the market, Maenner said. As the city's population spread out, it just made sense for employers to locate within a five-to-10-minute drive from potential workers, as opposed to the 20 minutes downtown. Building rents were also cheaper in the suburbs and parking was more available.

The suburban parks “didn't get built because some city planner said to,” Maenner said. “They got built because there was demand.”

Over time, many employers shifted jobs from downtown or abandoned the central business district. The irony of the recent boom in downtown housing is that most of the units are being created in long-abandoned downtown office buildings.

A recent report by market information firm Xceligent suggests the total office space along Dodge from 72nd to Regency, Old Mill and Miracle Hills now rivals that found in downtown and midtown combined. And that doesn't include millions of square feet of office space built in other suburban locations.

The suburbs continue to be where most employees want to be, Maenner said. When cloud-based commercial lending firm WebEquity recently told its employees it was moving from downtown out west to gain more room to grow, a cheer erupted among its workers, most of whom live with their families in the suburbs.

Maenner speculates that over the next two decades, the I-680 and West Dodge corridor where TD Ameritrade built its headquarters could supplant downtown Omaha as the area's true central business district.

The reason, he said, is the old real estate axiom: location, location, location. No place in Omaha is more central to where people in the metro live. Downtown will remain the home of its current stalwart corporate employers, such as Union Pacific Railroad and First National Bank, and the center for government, Maenner predicted, and it will continue to evolve as an entertainment center.

But working downtown also has appeal, and some say its evolution is bound to make Omaha's inner core attractive to employers, too.

A little more than a decade ago, Shukert's 60-employee planning firm went against the trend and moved from 90th and West Dodge to an office downtown. He conceded that initially there was some pushback from workers. But after the move, employees embraced the change, liking the ability to walk places for lunch, he said. The number of bike commuters in the office grew from one to a dozen.

“You wouldn't find anyone who says they don't like where we are,” Shukert said. “They like the urbanity of it.”

Such sentiments could grow more common. The generation of tech-savvy college graduates whom employers clamor for today aren't interested in suburban office parks, Mobley said. They see the traditional office with its cubes, carpets and dropped ceilings as “their dad or grandpa's office.” They are drawn to urban environments, eschewing the culture of automobiles and looking to live in more sustainable ways.

Mobley thinks it's almost inevitable that major employers in Omaha will look to locate jobs in the inner city to appeal to those workers. “You just need that first 'Wow' announcement or two, and people will say 'That's a good idea,' ” he said.

It may already be happening. Commercial real estate brokers last month reported seeing signs of resurgence downtown, with two smaller firms saying they will locate workers there. One plans to move 100 employees from a west Omaha location.

Officials with the city and Greater Omaha Chamber of Commerce say downtown is getting increasing interest from a number of companies.

“We have some good momentum,” said Cassie Seagren, Mayor Jean Stothert's deputy chief of staff for economic development. “I think the next 10 years are going to be amazing downtown.”

Is there more the city could do to encourage inner-city development?

Seagren and chamber officials said they don't play favorites when it comes to siting businesses, working with companies no matter where they want to locate. A positive for the metro is it can cater to any company's need, whether it wants a downtown high-rise, a suburban location or to develop from scratch in a cornfield.

But they also say a healthy downtown is undoubtedly important to the entire metro's future.

“The heart and vitality of the whole area is judged by the vibrancy of downtown,” said Rod Moseman, the Omaha chamber's vice president for economic development.

The city historically has been able to encourage redevelopment within the inner city by offering companies tax-increment financing, or TIF, allowing them to use part of the property taxes they would pay on their development to fund infrastructure improvements associated with the project. However, it seems the city is increasingly making TIF available for more suburban development, too. TD Ameritrade received TIF for public improvements related to its new west Omaha high-rise.

Jensen, the former city planner, said improved public transit could help promote more inner-city jobs. An ongoing city study envisions a new transit system for downtown and central Omaha featuring rapid bus transport or light rail. That would make it easier for workers to move between home and office in downtown and midtown.

“You want to keep major employers downtown and create a place where people can live, work and seek entertainment,” Jensen said. “That's a balanced and vibrant downtown.”

World-Herald staff writer Matt Wynn contributed to this report.

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