Dive Brief:

• Insurance company Mutual of Omaha started construction last month on its new 44-story headquarters tower in downtown Omaha, Nebraska, according to a company press release. Kansas City, Missouri, construction firm JE Dunn is the general contractor for the project.
• The $600 million tower, called Project Beacon, will include approximately 800,000 square feet of office, meeting, collaboration and amenity space, as well as parking for 2,200 vehicles, according to the company.
• Mutual of Omaha expects the 677-foot-tall project, which will have a transformative impact on the skyline of the city known as the Gateway to the West, to open in 2026, according to the release. Once complete, the skyscraper will be the tallest building in Nebraska.

Dive Insight:

The price tag for the downtown office tower project jumped from approximately $443 million to $600 million, said Jason Lanoha, president of Lanoha Real Estate Company, the Omaha-based developer for the project, during a Omaha City Council meeting in May.

Lanoha cited the “economic climate” as the major cause for the increase in cost. Similarly, the MSG Sphere project in Las Vegas also raised its price tag about $180 million in November due to the ongoing impact of inflation and global supply chain pressures.

Construction activity in traditional office projects has been muted since the pandemic as multitudes of employees across various industries continue to work from home. Sarah Martin, Dodge Construction Network senior economist, said to continue to expect weakness in traditional office projects in 2023, especially as remote and hybrid work continue to be prevalent.

Nevertheless, Omaha Mayor Jean Stothert supports the Mutual of Omaha headquarters, claiming the project will help realize the city’s vision for downtown.

“Mutual of Omaha is part of our promising vision for downtown Omaha as a center for business and commerce,” said Mayor Stothert in the release. “We applaud Mutual’s investment, which will create more development.”

The Omaha City Council approved the insurance firm’s request to use more than $60 million in public tax-increment financing, according to the Nebraska Examiner. TIF is a tool to finance the public costs associated with a private development project.

That means with TIF, the property tax revenue generated by the tower can be used to repay the public investment instead of going to traditional recipients, like school districts.

Lanoha said that financing structure was critical for getting the Mutual of Omaha tower off the ground, adding during the city council meeting that “this project would not occur but for TIF.”