Nebraska Furniture Mart foresees growing pains in Omaha

The furniture giant confronts potential barrier to modernization

By: - January 25, 2022 6:00 am

Nebraska Furniture Mart’s main campus near 72nd and Jones Streets in Omaha. Courtesy of NFM (Nebraska Furniture Mart)

OMAHA — Nebraska’s furniture titan is swiftly expanding its footprint, in king-sized ways, outside the city where it was founded 85 years ago. 

The Omaha-based Nebraska Furniture Mart, which has stores also in Iowa and Kansas, recently announced its mega role in a $400 million project near Austin, Texas, which is to feature an NFM store alongside a new convention center, hotel and more.

The 180-foot-tall Ferris wheel at NFM’s Grandscape complex in suburban Dallas includes climate-controlled, musical gondolas. (Courtesy of Nebraska Furniture Mart)

Last year in the Dallas area, the NFM-backed $1.5 billion Grandscape complex added a 180-foot-tall Ferris wheel with climate-controlled, musical gondolas to the 433-acre mix of business, residences and entertainment.

But when it comes to the mothership in central Omaha, any talk of big-ticket renovations has been sidelined until officials reassess a flood-plain related regulation that threatens growth, said Ryan Blumkin, who oversees the retailer’s  real estate.

He said the dilemma, which has stirred thoughts of relocating from the longtime 72nd and Jones Streets site — possibly even outside the Omaha city limits — stems from a city code ordinance that puts a cap on “cumulative substantial improvement” that can be made to structures in the flood plain.

Modernization limitations

While aimed at reining in compensation risk and flood insurance rates for businesses and residents, Blumkin said the regulation limits modernization efforts at the Omaha headquarters, which harkens back a half-century and today stretches across some 80 acres. 

He figures that in five or six years, the dollar amount of improvements allowed on the existing main furniture and flooring building would be maxed out, leaving the costly option of tearing down and rebuilding under newer flood plain specifications, which require structures to be built at higher elevations.

A building that houses a flooring warehouse and countertop fabrication facility is even closer to the ceiling on allowable improvements.

“That is what necessitated our thinking about whether this was the right place for us over time,” Blumkin said. “If we can’t stay relevant, up to date, fresh, that causes us substantial problems.”

“If we can’t stay relevant, up to date, fresh, that causes us substantial problems.”

– Ryan Blumkin, NFM

Both he and City Planning Director Dave Fanslau say they are confident a resolution can be worked out. A change to the city code language has been suggested by city planners but must be vetted by the Federal Emergency Management Agency and the Papio-Missouri River Natural Resources District.

The goal, Fanslau said, is to keep a deep-rooted and revenue-generating business in the city, yet not hurt others paying for flood-plain insurance.

“We realize you can’t have a store, or any place, stuck in time,” he said. 

Building permit denied

According to NFM, the company employed more than 2,000 people in Omaha in 2020 with a $104 million local payroll. Store sales and use tax generated an annual $4.3 million for Omaha, NFM reports, and $24.4 million for the state. Warren Buffett’s Berkshire Hathaway bought a 90% stake in the company in 1983.

Fanslau noted that the flood-plain ordinance  — while capping cumulative improvement investment at 50% of an existing structure’s assessed value — doesn’t restrict ordinary maintenance such as painting or decoration.

NFM officials started tuning into the rule and its impact about a year and a half ago, Blumkin said, after it was denied a building permit for a renovation project. That turned out to be an application mistake and was fixable, but Blumkin said it shined a light on potential problems.

The issue surfaced more prominently during a daytime trip a City of Omaha delegation took last summer to the Dallas area. Mart officials invited and paid for plane transportation so Mayor Jean Stothert, Fanslau and the mayor’s economic development aides could tour the Grandscape campus that opened a couple of years ago.

Blumkin said the NFM is eager to get the issue resolved so it can engage in long-range planning.

He said new proposed flood plain maps expected to come out in February likely will place even more of the NFM property in the flood zone.

Fanslau said the city’s balancing act involves trying to maintain high flood-plain management standards so that all affected property owners continue to get a break on flood insurance.

“The better we do at managing the flood plain, citizens get a better deal on flood plain insurance.”

Hefty public incentives

Blumkin said the Omaha headquarters site already has limitations, given its landlocked site and the age of surrounding infrastructure. He said he didn’t want to give the impression the Omaha headquarters might become the next Grandscape — that Texas project is to fill out over multiple years and was developed in a newer, more open area with newer infrastructure.

Grandscape complex in suburban Dallas. (Courtesy of Nebraska Furniture Mart)

The more recently announced Austin-area complex is to cover 117 acres overall and is expected to generate $435 million in net new city tax revenue within 25 years of opening. Like the Dallas-area Grandscape, most of the land for the Austin-area project is owned by NFM, Blumkin said.

Both Texas projects came with hefty public incentive packages.

Blumkin said NFM would like Omaha facilities to stay en vogue and sharpen with customer preferences.

At this point, Blumkin said, NFM hasn’t seriously looked at new spots for the Omaha headquarters, though a move remains a consideration.

“We love Omaha and we hadn’t started those efforts because we wanted Omaha to help solve this problem,” he said. “They’re stepping up to the plate to help us.” 

Down-sizing plans

New development led by Nebraska Furniture Mart west of its main Omaha campus is continuing but as a pared-down version of what originally was planned. 

Spokesman Ryan Blumkin has made a point that, while NFM owns the land, the projects are not an expansion of Mart stores.

Slated to rise at the site along the east bank of the Little Papillion Creek is an 80,133-square-foot Floor & Decor store. A couple of fast-food restaurants earlier planned along Dodge Street and Rose Blumkin Drive have been scrapped for now. A huge dirt hill now marks that spot.

Construction zone on NFM land east of McDonald's
Construction zone off Dodge Street between NFM buildings and a McDonald’s. (Cindy Gonzalez/Nebraska Examiner)

“The roadway system here can’t accommodate any more cars than it’s already got,” Blumkin said of Rose Blumkin Drive. “We have infrastructure limitations there that we have to be honest with ourselves about.”

As brand-new construction, Blumkin said, the Floor & Decor store will follow newer flood plain rules, so it wouldn’t be impacted by the same restriction that currently caps cumulative renovations at 50% of assessed value. 

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Cindy Gonzalez
Cindy Gonzalez

Senior Reporter Cindy Gonzalez, an Omaha native, has more than 35 years of experience, largely at the Omaha World-Herald. Her coverage areas have included business and real estate development; regional reporting; immigration, demographics and diverse communities; and City Hall and local politics. She has won awards from organizations including Great Plains Journalism, the Society for Advancing Business Editing and Writing (SABEW) and the Associated Press. Cindy has been recognized by various nonprofits for community contributions and diversity efforts. She chairs the board that oversees the local university’s student newspaper.

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