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The state of Nebraska paid $2.2 million last fiscal year to lease office space at 245 Fallbrook Blvd., where it houses around 525 employees.
The lease cost the state about twice as much as state agencies pay for space in state-owned buildings downtown. Nebraska's chief operating officer said Monday that the state is "reviewing every lease" it has with commercial real estate companies after Nebraska's auditor flagged a $6 million spike in state spending on privately owned office space over the past five years. Lee Will, Nebraska's COO who also leads the department responsible for the state's real estate strategy, said the state could look to end some of its high-dollar leases in the coming years as Gov.
Jim Pillen seeks to reduce government spending. Will "I don't want to speak for prior administrations, but (the) current administration is making sure if we're renting out leased space: 'Does it make sense both in the short- and long-term?'" Will told the Journal Star. "And if you look at the costs on some of these, I would say you definitely have to question it.
" His comments came after Auditor Mike Foley penned a letter to lawmakers warning that the state paid nearly $22 million to lease privately owned office space last year — a 37% increase from 2019, when the state paid less than $16 million to rent commercial space. People are also reading..
. Foley said Monday he "was stunned" to learn the state leased more than 1.5 million square feet of office space last year in 193 privately owned buildings across 37 counties, including in Lincoln, which is home to the bulk of the state's workforce and its five most expensive commercial leases.
The state pays more than four times as much per square foot for some of its commercial leases compared to state-owned buildings, where state agencies paid a total of $7.98 million in rent last year. The state's widespread reliance on privately owned office space — and the rising cost of its commercial leases — raises questions over the state's real estate strategy, which Foley urged lawmakers and the state's Department of Administrative Services, led by Will, to examine.
Foley "It's hard to fit a purchase into a state budget, but over the course of time, it would be a good strategy to think long-term ...
and say, 'What are we really paying from all this rent money going down the drain?'" Foley said in an interview. "At the end of the month, at the end of the year, what do you have to show for it? Just a lot of money that went away, and you've got to do it again next year — and it'll be more expensive next year." Foley's office's probe of the state's commercial leases focused on the state's five priciest contracts with private companies or other entities, including for three office buildings state departments moved into under former Gov.
Pete Ricketts. The state paid $2.68 million in rent last fiscal year to NEBCO Inc.
, a Lincoln-based developer that charged the state $466,591 for office space at 1010 Lincoln Mall and another $2.2 million for space at 245 Fallbrook Blvd. When approximately 525 state employees moved into the Fallbrook building from various other offices in July 2022, state officials said the building reduced the government's physical footprint by about 60,000 square feet and would save Nebraska taxpayers about $700,000 per year .
But the state paid more to lease the Fallbrook office than it did any other office space last year. The $2.2 million lease cost the state $17.
24 per square foot — about twice as much as state agencies pay for space in state-owned buildings downtown. The state's annual rent at the Fallbrook office is scheduled to increase to $3.16 million by the end of the 20-year lease state officials signed with NEBCO in 2021.
It's a contract the Pillen administration, which took office in 2023, is reconsidering. "We're also looking at Fallbrook. We're looking at every state asset that we lease from," Will said.
"I think, in the next couple of months to years, you'll see a fair amount of consolidation in that space, especially on high-cost real estate." The state signed all three of its most expensive leases for office space in Ricketts' second term. Nebraska's Department of Education paid State Farm $2.
39 million last year to lease the insurance company's sprawling former complex near 84th and O streets that the state moved into in 2021 . The department's annual rent there is set to rise to $2.69 million by 2028.
The Nebraska State Patrol, meanwhile, paid $1.46 million to lease the former Verizon Wireless call center from an LLC managed by the owner of Speedway Properties, according to Foley's office's audit. The state signed a 20-year lease there in 2021 and is scheduled to pay $1.
64 million in the final year of the contract in 2041. Meanwhile, the state abandoned plans it announced in 2020 to build a new state office building near 17th and K streets that, at the time, was projected to cost $56.2 million to build — but projected to save $35 million over 30 years compared to leasing commercial office space.
Foley seemed to question that move in his Monday letter to lawmakers, but Will said more recent estimates indicated it would cost $70.5 million to build a new office. Foley, too, questioned the state's decision to seek a broker to facilitate the sale of its Omaha State Office Building at 1313 Farnam St.
, a move that would force the state to find — and potentially rent — new office space for 452 state workers. But Will said the state doesn't intend to sell its downtown Omaha office without buying — not renting — cheaper office space elsewhere in Omaha. Myron Dorn Sen.
Myron Dorn of Adams, the chairman of the Legislature's Performance Audit Committee tasked with assessing the efficacy of state laws and spending, said he would urge the committee to examine state leases this year in response to Foley's letter. "Quite often, you hear this in government: 'Well, if the government's gonna rent it, we can charge them a higher rate,'" Dorn said Monday. "I hope that's not happening.
I don't know if it is or not. But at least we would have ..
. a better understanding of what's going on." Defense of legal system sought; LPS grant pulled; city election is Tuesday Top Journal Star photos for April 2025 Gov.
Jim Pillen (center) speaks to reporters surrounded by representatives of the UNL College Rodeo team and former Husker volleyball Coach John Cook (far left) in front of the Governor’s Residence on Monday in Lincoln. Nebraska head football coach Matt Rhule cheers as Will Compton (not pictured) bench presses during the Husker Games on Saturday at Memorial Stadium. Lincoln Southwest's Tanner Drought (left) and Norfolk's Isidro Rosas battle for the ball on Friday, April 25, 2025, at Seacrest Field.
Opponents of LB89, also known as the Stand With Women Act, react as Sen. Merv Riepe of Ralston (not pictured) announces that he will vote for the Stand With Women Act, during a floor debate at the Capitol Tuesday. Former Nebraska head coach John Cook (left) and and player Heinrich Haarberg warm up before the roping contest during the Husker Games on Saturday, April 26, 2025, at Memorial Stadium.
Lincoln Stars fans celebrate with players after Alex Pelletier (first left) scored a goal during Game 2 of the USHL Western Conference Finals series on Saturday at the Ice Box. Nebraska Defensive linemen David Borchers digs into wings during a wing eating contest to cap the Husker Games event on Saturday, April. 26, 2025, at Memorial Stadium.
Young fans Camden Eriksen (from left), 4, Andre Jackson, 6, and Denzel Jackson, 8, all of Dakota Dunes, S.D., cheer during the Husker Games on Saturday, April 26, 2025, at Memorial Stadium.
While sitting in chairs for sale, Cora, 8 and Delilah Hardy, 11 watch videos on their phone while their grandmother Cindy LaPole holds their brother, Theo, 2, as he sleeps during the Husker equipment sale at the Hawks Championship Center on Saturday, April 26, 2025, in Lincoln. The equipment sale is a bit of a "garage sale," where fans can buy clearance and discounted team merchandise from Nebraska Athletics. Items for sale include jerseys, helmets, apparel, memorabilia, collectibles, promotional items and more.
Gail Perry (left) sorts her plants with help from volunteer Kimberly Klein before checking out Thursday at the Nebraska Statewide Arboretum's annual Spring Affair plant sale at the Sandhills Global Event Center. The plant sale, which features more than 800 varieties of perennials, annuals, grasses, herb, shrubs and trees, ends Saturday. Hours are 9 a.
m. to noon. Lincoln East's Carter McPeak (center) celebrates his grand slam against Omaha Skutt on Tuesday at Sherman Field.
(From left) Eleanor Isaacson, Aspen Isaacson, Levi Isaacson and Norah Isaacson empty their plastic easter eggs of candy on Saturday, April 19, 2025, at Woods Park in Lincoln. An opponent of LB89, also known as the Stand With Women Act, holds a LGBTQ+ pride flag up to a window as Sen. Jane Raybould of Lincoln prints something off during a floor debate at the Capitol on Tuesday.
Papillion-La Vista's Ryan Thompson breaks his bat as he hits the ball against Lincoln East on Monday at Sherman Field. Jadyn Olesen (center) embraces Olive Brethouwer (left) and Violet Brethouwer (right) after her performance on Monday at the Railyard in Lincoln. Violet considers Olesen her hero, and even cut her hair to resemble the singer’s.
Lincoln Southwest's Peyton Tiernan (14) and Lincoln Southwest's Yai Tong (18) vie for possesion of the ball against Lincoln Southeast's Jack Talley (6) during the first half at Seacrest Field on Saturday, April 19, 2025, in Lincoln. Protesters gather on the north steps of the Capitol during an anti-Trump demonstration on Saturday. Charlotte Eberle, 8, leaps over rows of tulips while picking flowers with her family at SR Pumpkin and Flower Farm near Ceresco on Friday.
Construction worker Gustavo Leverman works on a home in the 800 block of West Avondale Street on Tuesday. Rising costs for building materials like lumber due to tariffs have raised the average cost of building a home. Luke Shaner peeks through a fake dinosaur egg with his toy T-Rex at the Jurassic Quest event Friday at the Sandhills Global Event Center.
Lincoln East's Carter Harmes (3) high fives his teammates after scoring a run as he heads back inside the dugout in the second inning of the HAC baseball championship at Den Hartog Field on Wednesday, April 16, 2025. Lincoln Star goalkeeper Yan Shostak (33) blocks a shot by Sioux City's Nikita Klepov (92) as he is backed up by teammate Gio Digiulian (17) during the second period in Game 1 of a USHL Western Conference semifinals series Friday, April 18, 2025, at the Ice Box. Damien Rodriguez (front to back), Jason Bell and Cesar Gonzalez, who competed as the team “Three Blind Mice,” pull a plane on Saturday during the Woman in Aviation Cornhusker Chapter's 2nd Annual Plane Pull at the Lincoln Airport.
Loren Eiseley Society vice president Thomas Lynch (from left), society president Bing Chen, and Mayor Leirion Gaylor Baird unveil a new historical marker honoring writer Loren Eiseley on Friday at Irvingdale Park. Mary Abebe (left) returns to her seat after being named the 2025 Scottish Rite Educator of the Year as Brenda Barnett and Stacie Coatman congratulate her on Friday at Adams Elementary School. Abebe, who teachers computer science, started at Lincoln Public Schools in 1995 and moved to Adams in 2019.
Lincoln Northeast's Lazerek Houston poses for a photo during the 2025 Super State photoshoot at the Lincoln Journal Star on Saturday, April 5, 2025, in Lincoln. Omaha Skutt's Molly Ladwig poses for a photo during the 2025 Super State photoshoot at the Lincoln Journal Star on Saturday, April 5, 2025, in Lincoln. Nebraska head coach Rhonda Revelle (from left) embraces player Natalia Hill at the top of the 6th inning next to Jordyn Bahl during the Creighton game on Wednesday at Bowlin Stadium.
Zemi Wolfe records as she dumps water on her mother, Rudi Wolfe, on Saturday at Zeman Elementary School. The school hosted a color run, picnic, splash towers and other family-friendly events with proceeds going to support the school's summer activities. Protesters with the American Federation of Government Employees union (AFGE) hold a rally outside of the Lincoln VA Clinc at on Tuesday, April 8, 2025, in Lincoln.
The American Federation of Government Employees (AFGE) local representing Department of Veterans Affairs employees at the Lincoln VA Clinic rallied Tuesday to stop the attacks on the federal workforce. Cows graze in the fields below as Sandhill Cranes take flight at sunrise along the Platte River on Sunday, April 6, 2025, in Kearney. The Cranes eat corn from the grain fields and then sleep on the sandbars.
The largest congregation of sandhill cranes occurs from February to early April along the Platte River in Nebraska. Gretna East senior Sonora DeFini scores against Lincoln Southwest with a header during a high school soccer game on Monday, April 7, 2025, at Beechner Athletic Complex. Sen.
Ashlei Spivey during debate on a bill that would return Nebraska to a winner-take-all presidential election system at the Capitol on Tuesday. Halsey, a Great Horned Owl, looks through a kaleidoscope of mirrors on display on Saturday, April 5, 2025, at Indian Center Inc in Lincoln. Lincoln Southwest's Sole Jones (center) competes against other athletes in heat one of the girls 400m during a track and field invitational at Union Bank Stadium on Thursday, April 3, 2025, in Lincoln.
A bee covered in pollen buzzes from flower to flower on Sunday, April 6, 2025, at the Sunken Gardens in Lincoln. Jarrek Renshaw, a lead mechanic, works on an engine in a testing area at Duncan Aviation on Wednesday. Duncan is expanding its engine overhaul facility, which will allow it to test engines for Canadian aerospace manufacturer Pratt & Whitney.
University of Kansas students Remi Ward (left) and Jess Judd test out their concrete canoe Friday at Holmes Lake. The University of Nebraska-Lincoln College of Engineering hosted a competition in which college students from across the region used their own concrete mixes to design and build canoes -- some more than 20 feet long and weighing more than 300 pounds. The canoes were tested for buoyancy and raced at Holmes Lakes.
The event was part of the American Society of Civil Engineers' Mid-America Student Symposium hosted by UNL from Thursday through Saturday. Rutgers’ Yomar Carreras (left) slides into home as Nebraska’s Will Jesske tags him out on Sunday at Haymarket Park. An early voter drops off her ballot at a drop box at the Lancaster County Election Commission Office, 601 N.
46th St., on Friday in Lincoln. The primary election is Tuesday.
Nebraska defensive line coach Terry Bradden talks to players during a team practice on Tuesday, April 8, 2025, at Hawks Championship Center. Sandhill Cranes excitedly dance with one another as they begin to stir along the sandbars on the Platte River the morning of Sunday, April 6, 2025, in Kearney.' Hundreds of thousands of Sandhill Cranes have been converging on the Platte Basin for their annual migration to their northern breeding grounds.
Every spring, as sandhill cranes are migrating to their breeding grounds, cranes without partners will start pairing up. During this time, the cranes perform dancing displays. Although the dancing is most common in the breeding season, the cranes can dance all year long.
Sometimes the dance involves wing-flapping, bowing, and jumping. Jacob Huebert, president of the Liberty Justice Center, argues at the Nebraska Supreme Court in a case over the city's ban on guns in public places on Thursday, April 3, 2025, at the Capitol. Gov.
Jim Pillen (right) greets World War II veterans Clare Sward (from left) and Jay Cawley on Tuesday in Lincoln. Lincoln Pius X's Tatum Heimes (from left) and Ana Patera look on as Gretna East's Lily Frederick (far right) celebrates a goal with teammate Madi Shelburne during a high school soccer game on Monday, March 31, 2025, in Lincoln. Reach the writer at 402-473-7223 or awegley@journalstar.
com . On Twitter @andrewwegley Get Government & Politics updates in your inbox! Stay up-to-date on the latest in local and national government and political topics with our newsletter. State government reporter {{description}} Email notifications are only sent once a day, and only if there are new matching items.
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