Northern Nevada Real Estate A special publication brought to you by the
Volume 3, Issue 1
COMMERCIAL | INDUSTRIAL | RETAIL | LAND | OFFICE
Monday, May 2, 2016 | www.nnbw.com
Multifamily properties are hot commodity By Sally Roberts sroberts@nnbw.biz After a hectic 2015, sales of large multifamily properties decreased sharply for the first quarter of 2016 with the sale of only one large apartment complex recording compared to four last quarter. That reflects a decrease in apartments for sale, not decreased demand. Multifamily properties are a hot commodity. “We’re witnessing one of the strongest apartment markets in history,” said Aiman Noursoultanova, senior vice president investment properties for CBRE Capital Markets. “When I talk to owners, they say it’s a good time to be the owner of a rental community,” Noursoultanova said. “There’s not a whole lot of motivation to sell.” The only large apartment complex that sold in the first quarter was the 264-unit Bristol Bay apartments off Los Altos in Sparks. It sold in February for $35.5 million in an off-market deal. “$134,000 per door is pretty high and a pretty good price,” said Trevor Richardson, multi-family specialist with Dickson Commercial Group. “For those large properties, there’s a heck of a lot of demand in the last couple years.” Richardson said out-oftown investors see ownership of multifamily units, both large and small, in the Truckee Meadows as an “incredibly stable investment.” The vacancy rate has stayed below 3 percent for months, recently
as low as 2.3 percent, which is as low as it can go and still allow for vacancies between tenants. Interest rates are still low and the capitalization rate here is better than in coastal cities, Richardson said. “Large institutional (investment) firms find Reno/Sparks attractive,” he said. According to the Johnson Perkins Griffin report, apartment rents in large complexes throughout the Truckee Meadows, are going for an average of $950 per month. Rents have been climbing at about 6 percent year over year for several years. “That’s a huge increase in rent prices,” Richardson said. “Renters are not happy about that. “It’s hard for me to see that moving a whole lot higher. $1,000 per month is a big threshold.” As the second quarter of 2016 began, only two large apartment complexes were on the market. Lakeridge East, which was foreclosed on by CW Capital, is in the middle of a two-step auction process being conducted by TEN-X. It has 310 units. “It’s likely to attract fairly vigorous bidding,” said Floyd Rowley, senior vice president of investments, Johnson Group. Alder Creek Village, a 213-unit garden-style complex on Neil Road, went on the market in early April. For properties with fewer than 99 units, Midtown and Downtown are the hot spots with Sparks starting to pick up, Richardson said.
“We’re starting to see those in really high demand.” Recently, a duplex in Midtown sold for $168,000 per unit, recording less than two weeks after it hit the market. Each unit is 612 square feet plus a garage and very clean. “It was ready to go and I really think those types of properties appeal to investors from out of town,” Richardson said. They just want to get an investment in the market. Local investors would consider that price inflated. But for someone coming from California or out of state somewhere, that investment makes sense, he said.
“You get two tenants in and it’s a very stable investment.” With a tight sales market in both existing apartments and single-family homes, developers are beginning to see multifamily complexes as attractive projects. “Low inventory is driving multifamily development,” Richardson said. Approximately 1,000 multifamily units are currently under construction in the Reno/Sparks metro area. Another 5,000 or so are in different stages of planning. continued on page 11
The only large apartment complex that sold in the first quarter was the 264-unit Bristol Bay apartments off Los Altos in Sparks. It sold in February for $35.5 million. Photo by Sally Roberts.
Area industrial development charges ahead NNBW Staff Nevada may have lagged behind other parts of the country in coming out of the recession, but when it comes to industrial development, it’s clear the Silver State has firmly shaken the yoke of the economic downturn. With 1 million square feet of new inventory filled in the first quarter of 2016, and more than 1.4 million square feet of new construction ready to hit the market, industrial development is easily the hottest sector of the regional commercial real estate market. Two familiar northern Nevada players — Dermody Properties and Panattoni Development Company — are leading the development charge. Panattoni is putting the finishing touches on a 707,000-square foot-building at North Valleys Commerce Center, a 1.4 million-square-foot project being developed in partnership with the California State Teachers Retirement System. Photo courtesy Panattoni Development Company.
Doug Roberts, partner with Panattoni Development, says that industrial real estate in Nevada really started moving forward in 2013 after years of stagnation. “Nevada was at least two to three years behind most of the major East Coast markets coming out of recession,” Roberts says. “We didn’t really get going until late 2013 — that’s when we felt like we could pursue stuff with our capital partners who want to put money into Nevada.” Dermody Properties was the first to put the ball in play, Roberts notes. Dermody’s speculative development at Lemmon Drive was the first new continued on page 11
2 | Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com
Change and growth underway at Keystone By Brook Bentley bbentley@nnbw.biz Blackfire Real Estate Investors purchased 63 Keystone Ave. in January. The 12,990-square-foot office building was purchased from 3KC, LLC and sits about a block and a half north of the Truckee River. This area, west of downtown, is not located in the heart of the revitalization that is occurring in downtown Reno, but there are ventures coming into the area. Hatch, for example, is impacting the favorable growth of the area just west of downtown. According to their website, “HATCH provides 24/7 studio access to photographers, videographers and artists alike through a secure and reliable entrance. The company has two locations in the Reno area with more expanding soon. Both locations are nestled in two of the areas most vibrant neighborhoods. HATCH was created to bring like-minded creative artists together along with community leaders and like-minded businesses to better grow and inspire the art community in Reno through studio rental, workshops and community events.” The area near 63 Keystone also includes the McKinley Arts & Culture Center, Hub Coffee Roasters and what seems to be a positive attitude towards opportunity for more growth. According to their website, Blackfire Real Estate Investors is a real estate investment company with
an innovative outlook on the market. They believe value can be found where others may have overlooked it by combining creativity and discipline.
“HATCH was created to bring like-minded creative artists together along with community leaders...” Tilio Lagatta of Blackfire Real Estate Investors explained the upgrades and approach to the 63 Keystone Avenue building. The outside will be xeriscape with new signage, paint and lighting. The front of the building will receive an art installation during Sculpturefest May 6-8 that will stay with the building. The building is currently vacant, but the first and second floor reached completion in the beginning of April, meaning they will soon be looking to fill the vacant spaces. The building
Blackfire Real Estate Investors purchased the 12,990-square-foot office building located at 63 Keystone Ave. in January. Photo by Brook Bentley.
has 22 small suites that Lagatta described as open and clean space. He indicated the spaces range from 350 to 1200 square feet and they have the means to offer whole or half floors at 2,000 to 4,000 square feet. The building provides a communal conference room, modern kitchen/break room space as well as maintained bathrooms. Several tenants left and a couple stayed
through the transition, but the overall improvement of the location holds promise for Blackfire Real Estate Investors and their involvement with the location. Part of the objective, Lagatta explained, is to create a sense of community in the building. There is a bright future for Reno, and they believe in it,” Lagatta explained. ●
FOR SALE — $200K/Unit! NNN Investment up to 9.72% Cap (6) Flex Warehouse Condos Available 868 - 878 Cottonwood Lane • Fernley, NV
Property Specs • Year Built: 2006 • Warehouse Sqft: 2,520 +/• Total Sqft: 3,240 +/• (2) ADA Compliant Restrooms • Office/Retail Sqft: 720 +/- • 12' Grade Level Roll-Up Doors Optional Seller Financing is available to qualified buyers. • Purchase Price: $200,000/unit (Six Units Available) • Five of the six units are currently leased and offer an attractive investment opportunity. • For more information go to: http://www.loopnet.com/Listing/19739420/ 868-878-Cottonwood-Ln-Fernley-NV/
Contact:
Eric Lofgran eric@kellyinvestmentgroup.com Phone: 619-687-5000
Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com | 3
Office real estate holds steady in first quarter By Annie Conway aconway@nnbw.biz Rents for Class A office space are increasing in the Reno area due to decreasing vacancies and strong demand. According to Colliers International’s office market report, the vacancy rate for the Reno-Sparks market overall was 14.4 percent for the first quarter of 2016. The vacancy rate has remained steady as Colliers also reported a 14.4 percent vacancy rate in the fourth quarter of 2015 for the Reno-Sparks market. “For the first time (since the recession) it is turning back into a landlord’s market,” Melissa Molyneaux, senior vice president and executive managing director at Colliers, said. Colliers reported 18.3 percent vacancy rate for Class A office buildings in South Meadows, a 9.2
percent vacancy rate for Class A office buildings in downtown and only a 7.7 percent vacancy rate for Class A office buildings in the Meadowood submarket. Molyneaux said that with the upswing in the economy and the lack of product for Class A office buildings, they saw a lot of renewal activity in the first quarter. “The trend is many more renewals,” Molyneaux said. “It is less expensive to stay where you are than to move.” Some of the notable renewals included: The State of Nevada’s Department of Employment, Training and Rehabilitation (DETR) who renewed their lease for 23,790 square feet at 1325 Corporate Blvd., HewlettPackard Enterprise who renewed their lease of 11,637 square feet at 9850 Double R Blvd. and Barnard Vogler who renewed their lease of 6,857 square feet at 100 W. Liberty.
Everi games leased 17,138 square feet of office space at 887 Trademark Drive, the former home of WMS Gaming. The rest of the building is being re-tenanted. Photo courtesy CBRE.
Colliers reported one new tenant to the Reno market for the first quarter. Everi games leased 17,138 square feet of office space at 887 Trademark Drive in South Meadows. The State of Nevada also leased 12,622 square feet of new office space at 9670 Gateway Drive. While Class A rents are increasing, the rents for Class B and Class C are not increasing. According to Molyneaux, this may force businesses that are currently leasing Class A office space to downgrade to Class B and Class C offices. Typically, once vacancy rates fall below 10 percent, it is an indicator to build new office buildings. According to Colliers’ report, there had not been a ground breaking for a new office building over 10,000 square feet since 2008 in the Reno market. However, according to Molyneaux, Tanamera Construction is currently working on a new 15,000 square foot office building called Longley Professional Campus and McKenzie Properties is also building a new 40,000-square-foot office in the in the Meadowood submarket. According to the Dickson Commercial Group Office report, the lack of Class A offices have promoted renovations. S3 Development renovated 1 E. Liberty Street and Reno Engineering Company also renovated 11,000 square feet of office space on the second floor of Arlington Towers located on 100 N. Arlington Ave. Basin Street Properties also completed their renovations to 50 W. Liberty Street. They added a fitness center, a concierge and redid the lobby. According to Par Tolles, president of Basin Street Properties, the building has an 85 percent occupancy rate and is in the process of leasing space to another tenant,
which will bring the occupancy rate up to 90 percent. “The activity is really good,” Tolles said of commercial offices for the first quarter. “We are seeing a lot of organic growth with the economy improving and more action on the skill labor side.” Basin Street Properties also signed a lease with Kidder Mathew’s with 6,000 square feet at 50 W. Liberty Street this past quarter. Some of the notable office sales in the first quarter, as reported by Dickson Commercial Group, included: • The Pasha Group purchase of a 13,400-square-foot building at 590 Double Eagle Court. • Eagle Fitness, LLC purchase of 26,982-square-foot office space at 1535 Los Altos Parkway. • 13,386 square feet of office space at 9590 Prototype Court was sold for $2 million. • One Lion Group, LLC purchase of The CUBE at MidTown located at 800 Haskel Steet. The 16,800 square foot building sold for $1,850,000. Molyneaux explained that each of the three major submarkets tend to attract different tenants. Meadowood attracts tenants who rely on the northern Nevada market while South Meadows attracts tenants who service businesses outside of the market while Downtown attracts a mix of both. Molyneaux said that while they had steady activity in the first quarter it was not as much activity as they were expecting. “Brokers were anticipating more activity from Tesla and the hype of Tesla,” Molyneaux said. The increase of activity is still going to occur she said, just not as quickly as expected. ●
Momentum in Midtown, Downtown and the University markets helps set regional commercial real estate records By Steve Funk editor@nnbw.biz It’s pretty well understood that commercial real estate is blazing hot though Midtown and into the area around the University of Nevada, thanks to vision and efforts shared by many in Reno. Now, a handful of recent deals are illustrating how planning and collaboration are paying big dividends and setting the stage where record deals are being made. That’s a perspective shared by Randy Pease of the Cushman Wakefield Retail Team who’ve set new bars recently for the industry. According to Pease, “Momentum is really the driver now and the mindset in the community is to make the most of it.” Pease and his team have had an historic six months, having brokered the highest price ever paid for restaurant space in Reno ($763.63 p/sq.ft) in the sale of the Giant Burger location to Roberto’s Tacos. The team also brought nine parcels into escrow at a record land price on the block south of the university bordered by Evans St., 9th St., Record St. and I-80, for new ground floor retail, university office space and student housing. Pease says, “The new momentum is pinned to the excitement around the
new jobs coming into the market and big name companies planting their flags here for manufacturing, distribution, retail and tech development.” So who is reaping the most benefit, locals or outside investors? “Some of both,” he says. “Properties around the university have seen broader interest, much from outside, but when it comes to revitalization, Downtown and in Midtown, the local developers, architects, bankers and builders get it and are making it happen.” Pease and his team have just sold the 800 Haskell Building in Midtown, once home to the Nevada Department of Employment, Training & Rehabilitation, to Las Vegas Uniforms, the largest uniform store in the state, who are expanding into the Reno market. The building was empty through the recession until purchased by The CUBE @ Midtown start-up business incubator, who restored it with help from Microsoft and local businesses. According to CUBE principles, Norman Smith and Ky Good, the time was right to make the sale, reap the benefits and expand their programs for entrepreneurial education. “One of our great good fortunes at The CUBE is our depth of connection in the community and we have history with Randy Pease, so the Cushman
Wakefield team was a natural and comfortable choice,” says Smith. Good adds that, “there is enough pressure on our young start-ups, and on us, that it made sense to focus our efforts on entrepreneurship and let others act as landlords.” The CUBE @ Midtown will remain at 800 Haskell in its collaborative space upstairs under new executive director, Estella Hunt. “Midtown is an extraordinary place and we love being here. The energy and collaboration have been increased by downsizing our footprint. We took the advice we give our start-ups… stay focused on what you do well and don’t divert.” The new landlords are also to be tenants, according to Las Vegas Uniforms founder, Dimitrios Stavros. “Timing is everything… we’ve been growing by leaps and bounds down south have an already established customer base here in the north via our protective body armor division, Las Vegas Tactical serving local law enforcement. We intend to replicate our innovative Las Vegas operations here and bring all three divisions along to serve our customers, many of whom, like Switch, are expanding their own operations from Las Vegas to Reno/ Sparks.” Besides the so-called ‘Blue Goods” for law enforcement, a ‘White
Goods’ division will serve the culinary industry and a Logos & Embroidery division will all operate locally and provide new jobs in Midtown. “We love the property, it’s a perfect location. It’s in the heart of Reno, just as we are in Las Vegas. No matter where you are in Reno, you’re not far from us,” Michael Hoffert, director of sales, said. Like many of the institutions it will serve, Reno Uniforms will be innovative. It’s voucher based wraparound services for uniformed workers allows client organizations to streamline operations. According to Stavros, “not many in our industry are willing to do that because it represents a large capital investment, but we feel it’s the best thing to do to live up to our goals in customer service.” The target date to open to the public is May 15, with a possible soft open in early May. A Google virtual walk-through on the website reveals an innovative retail environment that super serves clientele. Pease is enthusiastic about what these early successes mean to longterm goals. “Building a team focused solely on the needs of Midtown, Downtown and the University District is paying great dividends for us and for the shared vision of the city. It’s all about building on this amazing new momentum.” ●
4 | Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com
Retail real estate improving region-wide By Dean Schermerhorn editor@nnbw.biz In the first quarter of 2016, the Reno-Sparks retail real estate market, “definitely has improved a little over the last quarter of 2015,” said Gary Tremaine, senior retail broker at Dickson Commercial Group. Dickson Commercial Group tracks 32,688,333 square feet in retail shopping centers. This does not include Meadowood Mall or Summit Sierra. The community has fewer empty storefronts, as the vacancy rate has dropped to 10.7 percent from the previous quarter’s 10.9 percent. The current rate also compares favorably with the 2015 first-quarter rate of 11.4 percent. Indications are positive for continued improvement, as the area has seen “an uptick in tenants looking for new locations in the market,” Tremaine said. The prospective tenants are still in negotiation, however, so the deals have not been inked yet. Tremaine sees a “very active” second quarter of 2016, as those tenants who have been looking begin signing deals. While he saw no retail construction during the first quarter, Tremaine forecasts that new restaurant spaces will need to be built. The vacancy factor for restaurant space is low, and restaurant tenants are looking for new spaces while others are moving into the area. The first quarter of 2016 has witnessed some notable sales. The 118,000 square-foot Iron Horse shopping center in Sparks sold for $11,750,000. Among other single tenant net lease sales were the investment sale of O’Reilly’s auto
parts building on Longley Lane to a private investor from Chico, Calif., for $1,710,000. Legends at Sparks Marina saw the sale of the Popeye’s restaurant to Los Angeles-based Dunn Sparks LLC, for $2 million and the Taco Bell to Michigan-based 2555 Corp Inc., for $2,550,000. In Carson City the first-quarter retail vacancy rate was 14.2 percent. Total absorption was 5,963 square feet, and new construction amounted to 2,556 square feet. NAI Alliance tracks 14 million square feet in retail shopping centers. This does not include Meadowood Mall or Summit Sierra. This amounts to 112 shopping centers that are more than 20,000 square feet. “For the first quarter of 2016, the Reno-Sparks area had a 14.4 percent vacancy rate,” said Kelly Bland, senior vice president with NAI Alliance. “Of that total, the anchorstore vacancy rate was 12.07 percent, which amounted to 17 buildings being available, with a total of just over one million square feet.” The line-shops vacancy rate was 17.8 percent and amounted to just over one million square feet. These first-quarter 2016 statistics compare favorably with previous years. At the end of the fourth quarter 2015 the vacancy rate was 14.35 percent. The rate for anchor stores was 12.14 and line shops had a rate of 17.51. In the first quarter of 2015 the vacancy rate was 14.76 percent overall, with anchor stores at 11.68 and line shops at 19.14 percent. Bland expects the vacancy rate “probably to go down a little bit.” “We have recovered a bit. We still have numbers to chip away at, but they are coming down in general. The numbers show a relatively steady improvement since 2012 and 2013,”
Bland said. In 2012 the area had an 18.6 percent vacancy rate, which has declined to 14.4 percent. In 2013 line shops were 23.46 percent vacant compared with 17.48 percent for the first quarter 2016. Anchor stores reached 15.8 percent vacancy in 2012 compared with 12.07 percent in the first quarter 2016. Absorption has slowed in the last couple of quarters. For the first quarter of 2016, the net absorption was negative 7,195 square feet. For the fourth quarter of 2015 the net absorption was positive 23,386 square feet. Gross absorption was about 60,000 square feet, and Bland expects that to continue to pick up. Some of the gross absorption has come from tenants moving around in the market to upgrade their real estate. Closure of several Scolari’s grocery stores has accounted for some of the greater than normal vacant square footage. One of those sites, on Robb Drive, has been filled by Saint Mary’s Medical Group. The Hancock Fabrics bankruptcy also has
resulted in closed stores during the current quarter. Besides the Iron Horse shopping center sale noted earlier, Ridgeview Plaza, at Mae Anne and McCarran, sold on January 14. Two good indicators for the retail real estate market are the tight housing stock and the job growth in the area. “In general we have seen an uptick in people looking, and we hope to translate that into signed deals. More people have been looking in the past month and a half,” Bland said. “Investors and developers are paying attention” to the approaching job growth, so commercial realtors “are anticipating more tenant activity.” Carson City is “slowly recovering, the same as with Reno and Sparks,” said NAI Alliance broker Andie Wilson. In January 2015, the capital had a 16.85 percent vacancy rate. Wilson estimates that the vacancy rate is at 15 percent now. As the region climbs back from the recession, retail real estate continues to show slow but steady improvement. ●
O’Reilly’s auto parts building on Longley Lane sold for $1,710,000 in the first quarter of 2016. Photo by Sally Roberts.
CREW prepares its members for success By Brook Bentley bbentley@nnbw.biz CREW Network is influencing the success of the commercial real estate industry by advancing the achievements of women. According to their website, their core purpose is to advance the success of women in commercial real estate. Their core values are professional community, excellence, leadership and commitment. Their envisioned future is to achieve parity in opportunity, influence and power in the commercial real estate industry. They believe this vision will be met when CREW Network is the premier resource and referral network for the commercial real estate industry, women of diverse backgrounds have unlimited opportunities in the commercial real estate industry because of CREW Network’s success and women have attained an equal number of seats at the commercial real estate table. Andie Wilson and current president, Cheryl Evans discussed what CREW northern Nevada means to women in commercial real estate in the region, in an interview with NNBW. Today, CREW of northern Nevada still has five founding members from 11 years ago. They work to mentor women into commercial real estate. Wilson and Evans talked about how CREW has worked to change with time. They addressed real facts like, women typically moving toward salary positions while men move into commission based positions. Wilson
explained how they encourage women to take the opportunity to roll the dice if the occasion is right for them. They teach women to be comfortable in a situation that may feel risky by providing them skills and confidence to apply their knowledge. The industry in commercial real estate is not equal in saturation of women to men. Broker positions see even more disparity. Wilson and Evans recounted just a couple northern Nevada women who are industrial brokers; Wilson being one of them. Industrial, for some reason, holds a stigma of being a man’s industry. CREW wants to provide women the skillset they need to feel confident venturing into a predominantly male field. It is a very challenging field and takes a strong set of skills to drive and succeed in that field, Wilson recalled with Evans confirming. CREW wants to educate women, but that is not to say CREW of northern Nevada is a women only network. They will welcome their first male president next year as their 12th president. Nation wide, CREW is about 23 percent male. Wilson emphasized, they are a very professional chapter promoting parody. She talked about the 2015 CREW Network Benchmark Study Reports and the findings. The report worked to measure progress for women in commercial real estate over an unprecedented 10-year span. According to the highlights on the report’s website, in 2015, the median total annual compensation, including bonuses, compensation and profit sharing, was $150,000 for men and $115,000 for women in commercial real
estate. This income gap of 23.3 percent demonstrates that North America still has a long way to go to achieve gender wage parity. The report also highlighted experience and position finding that, men continue to outnumber women in C-Suite positions (17 percent of men surveyed versus 9 percent of women). While consistent with the previous study results, the relative difference is shrinking. The report also found women’s satisfaction with career success is now – for the first time in CREW Network’s surveying – exactly equivalent to men’s. The findings in this report are part of what CREW focuses on changing. They hope to foster a person who will do better. Wilson explained, “with coaching and mentoring a real difference can me made.” They also work to teach composure and attitude that allows women to feel confident in business interactions. Parity programs are what initially draw people to CREW, but they also strive to work on confidence, strengths and weaknesses and networking to create career wide benefits for CREW members. Industry wide networking, includes events that collaborate with organizations such as Certified Commercial Investment Members (CCIM) and National Association of Industrial and Office Properties (NAIOP). Wilson and Evans explained CREW wants to help people find what they love in the commercial real estate field and give them a support system and resources to be able to succeed
at it. Wilson highlighted her personal experience with CREW and the foundation of networking and skills it provided that allowed doors to leadership opportunities with CCIM and NAIOP. Wilson also explained that she “would have never survived the recession without CREW.” The network it provided her was crucial through really difficult times. She also commented about her history with public speaking. She used to avoid any form of public speaking and now, as Evans phrased it, Wilson is the go to for any public speaking requirements. Wilson addressed the fact that a fear of public speaking can dramatically prevent a person’s career from moving forward. They applied this example to CREW providing the opportunity to be taught public speaking, self-confidence and selfesteem. They want women to capitalize on these skills, if they are ready. Evans phrased it as, “you have to be willing to play or go home.” In reference to CREW, Evans said that educating women on opportunities and what can happen if you open your mouth makes a great impact on their career opportunities. CREW of northern Nevada has about 60 to 75 members. They had about 100 at the height of the economy and a third of that in 2009 and 2010. They work to hold events that allow quality speakers and platforms to open people’s minds. The organization is continuing to grow since the recession and looking forward, they have room and hopes to grow. ●
Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com | 5
Iron Horse center steams ahead to renewal By Sally Roberts sroberts@nnbw.biz Expect to see the Iron Horse Shopping Center in Sparks get a new look soon. Plans are moving ahead to give the center a one million dollar-plus face lift to “bring it back to a vibrant center,” said Roxanne Stevenson, senior vice president of retail services at Colliers International, Reno. Stevenson brokered the sale of the property to Irvine, Calif.-based Shopoff Realty, which closed Feb. 18, and is representing the buyer as the listing broker for the shopping center. Shopoff “specializes in this sort of turn around,” she said in a phone interview. “They’re the perfect buyer for this property.” “This is an underutilized space in a growing market — an ideal combination for our experienced team of turnaround experts,” William Shopoff, the CEO of the investment company, said at the time the purchase was announced. Stevenson’s team has been working feverishly behind the scenes to secure contracts to repave the parking lot, refurbish the landscape, and paint the buildings. Work begins in May. The now-closed Save Mart grocery store is not part the Shopoff purchase, but also is undergoing changes. The grocery chain will convert the store to its budget label, FoodMaxx. That transition should happen at the same time as improvements to the shopping center
“This is an underutilized space in a growing market — an ideal combination for our experienced team of turnaround experts.” as a whole, which Stevenson expects to take about four months. “I’m excited about that too,” she said. Shopoff Investments purchased the property at the corner of E. Prater Way and North McCarran Blvd. for $11.75 million. It’s been in receivership for several years, resulting in little attention paid to maintaining the center. “Our strategy is always to uncover hidden or unrealized potential,” David Placek, Shopoff executive vice president, said in a written statement at the time of the purchase. “With this asset, we were able to capture a well-positioned center, at a great price based on current revenue. However, what makes this property really exciting is
the upside to be captured by leasing the existing inline vacancy and the 100,000-square-foot box.” The big box is a former Target building that closed in 2008 when the Target in the Outlets at Sparks opened. There has been a lot of interest in the center. Stephenson said she’s had talks with a company interested in the long-empty Target building. She said she’s expecting a letter of intent from a national company wanting to move into the out pad that once housed an Arby’s. Currently, the Iron Horse center is 33 percent occupied, but that’s misleading as it includes the empty Target building. The center has a strong core of long-time tenants. “We’re not losing anyone,” said Stephenson, who is working on
renewing tenant leases. Pizza Plus has been at the center for 22 years. Stevenson is talking to the business owner about expanding. Adam & Eve Hair & Nails has been in the center for 20 years, she said. Additional tenants include Dollar General, Payless Shoes, Sizzler, Jack in the Box, El Pollo Loco, and many more. Shopoff Realty Investments has 24-years experience turning commercial properties around and an aggregate value in excess of $4 billion, according to a press release. The company has extensive investments in southern California and nationwide. Currently, the Iron Horse Shopping Center is its only investment in the northern Nevada market, but Stevenson said they are considering additional properties in the area. ●
The Iron Horse shopping center at the corner of East Prater and North McCarran in Sparks has new owners and plans for refurbishing. Photo by Sally Roberts.
Summit Awards Magazine publishes June 6, 2016
For more information contact your NNBW advertsing representive today. Wayne O’Hara • 850-2283 James Arden • 850-2285 wohara@nnbw.biz jarden@nnbw.biz
6 | Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com
In his own words: Kevin Sigstad
dealing with people’s largest investment. You have to believe in yourself and know that you are the best person for them to get the job done. NNBW: Has there been someone who was especially influential in helping you establish your career or in reaching your higher goals? If so, who and how?
Name/Title/Company: Kevin Sigstad, President, RE/MAX Premier Properties Number of years with company: 11 Number of years in the profession: 39 Education: BS, Accounting from University of Nevada, Reno Last book read: The Fearless Mind by Craig Manning Favorite movie: The Matrix Favorite musical group or genre: Sting Spouse, kids or pets: Wife Lisa married 16 years, son Justin 23, no pets Northern Nevada Business Weekly: Tell us about RE/MAX Premier Properties and the duties of your position. Kevin Sigstad: RE/MAX Premier Properties is a full service real estate company. We handle sales, leasing and management of residential and commercial properties. We manage 800 residential units, and 600,000 square feet of commercial property. We have 15 sales agents, four full-time residential property managers and one full-time commercial manager along with the administrative staff and five full-time maintenance techs. As the President, I wear many hats including setting the goals and directing the course of the company, hiring staff and agents, legal, marketing, training, etc. As the licensed broker with the State of Nevada, I am responsible for all of the activities of the agents and property managers. In this role, I handle ongoing training, compliance, transactions, complaints, licensing, and a variety of day to day issues. NNBW: Are there any trends coming down in commercial real estate that are making waves in the Reno-Sparks or northern Nevada regional market? Sigstad: The commercial market is currently expanding with all of the new companies moving to town and the existing companies that are expanding. The current activity is without the so called “Tesla effect” meaning the jobs that are projected to come as a result of the construction of Tesla’s Gigafactory are all in addition to the already busy market we have today. The expansion of companies and jobs is causing a drop in unemployment rates, an increase in hours worked per week, and an increase in the number of people relocating to the area. This in turn is causing a shortage of rental property and property for sale which is pushing the rents and sales prices up. NNBW: How competitive of a market is it between commercial real estate brokerages, especially when it appears that so many companies are wanting to enter the northern Nevada market? Sigstad: The commercial brokerages in town are a small close-knit group of brokers and we work together every day. There is some competition but more so we all work together to get deals done for our clients. NNBW: How did you get into this profession?
Sigstad: My wife Lisa and I own the business together and she works alongside me handling all of the accounting for the management and the business. She is the best partner I’ve had and her being in the office has allowed me to participate in the leadership at the Reno Sparks Association of Realtors as well as the Nevada Association of Realtors for the last eight years. NNBW: Do you belong to any professional/networking organizations? How has membership benefitted your career? Sigstad: I belong to WIN, EDAWN, Ronald McDonald House Charities, IREM, CCIM, Reno Sparks Association of Realtors, Nevada Association of Realtors and the National Association of Realtors. The memberships have benefitted me in multiple areas. I have met so many people through these organizations that have helped me personally and professionally. There are many people that I may not have met otherwise. That has been amazing. The organizations have also made me more professional in the knowledge that I gain through belonging to them. NNBW: Is there any educational advancement that is essential for someone in your career field? Sigstad: I think every bit of education that someone can get will be beneficial in their career. There are certifications in almost every area of real estate and if you are practicing in that area, I would advise an agent to become certified in that area. They should get as much knowledge as they can. I would highly encourage any real estate professional, young or old, to continue their education as the knowledge demanded in real estate is changing all of the time. NNBW: How do you manage your time between the responsibilities of your profession and your personal life? Sigstad: We are getting better at making time for ourselves. For example, we go to Washington D.C. each year to lobby Congress and have taken extra time to visit different parts of New England. NNBW: Why did you choose a career in northern Nevada? What do you like about living/working here? Sigstad: I have had the pleasure of visiting many different areas in my business. Over the years, Lisa and I have talked about where we might want to move either before or after retirement. We keep coming back to northern Nevada as the greatest place to be. We have all of the entertainment, outdoor activities and business opportunities that you would want. There are lots of areas that are appealing but there’s only one northern Nevada. NNBW: What was your first job? Sigstad: I worked at the Burger Chef restaurant on Plumb Lane starting when I was 15. It was a great training ground for the rest of my life. I was young and full of myself and the owner was former military and very stern. I learned a lot about responsibility and customer relations from that first job. NNBW: What are your hobbies? How do you spend your time away from work? Sigstad: I enjoy golfing with my wife along with hiking, snowboarding and I work out at the gym about five days a week. NNBW: Do you have a favorite vacation spot?
Sigstad: I decided to get my real estate license when I was going to UNR. It was a profession that I thought would be interesting at the time. I moved to Incline Village and sold property up there while I continued to go to school. I started my first real estate company in Incline Village in 1985.
Sigstad: We love to travel and enjoy seeing new places. We drove down the Oregon coast last summer for the first time and it was beautiful. I think we will go back again. I’m not sure we have a favorite place as we enjoy wherever we go.
NNBW: What do you enjoy most about working in your field?
NNBW: Is there a place around the world you have never been to that you would like to visit?
Sigstad: There are a couple of levels of satisfaction. The first is the agents and staff we have at the office. We have 20 staff and 15 agents and they are a great group of dedicated people. The second is the fact that we provide housing for a thousand people and business locations for about 200 businesses each year. It is very satisfying to be able to help so many people with something that is very important to them. NNBW: What is the most challenging part about your job? Sigstad: It’s hard to tell someone no when they don’t qualify for their home or office or no, your offer to purchase a home was beat by another offer. The other side of that is that we are in such a competitive market that there are multiple offers on properties for sale and for rent and it’s getting more difficult for some clients to find a place to live. NNBW: What advice would give someone who wants to get in your profession? Sigstad: Gain as much knowledge as you can, work smart and work hard. There are lots of agents in the profession that think they can get to work at 10:00 and leave at 3:00. That just doesn’t work. If you are going to be successful in this business, you need to educate yourself continually and put in 100 percent or more to be successful. NNBW: What was the best advice anyone ever gave you either professionally or personally? Sigstad: Believe in yourself. Being a Realtor means you are opening your own business. You have to market yourself, attract customers, work to get them into an agreement and then get it closed. It is not an easy business and you are
Sigstad: I would love to see the pyramids in Egypt, Red Square in Moscow, downtown Hong Kong, the Great Barrier Reef in Australia, the Great Wall in China, the list is endless. NNBW: If you had enough money to retire right now, would you? Why or why not? Sigstad: I enjoy what I’m doing and I’m not ready to stop. It doesn’t matter if I have enough money or not. I don’t think it’s about attaining the goal of retirement. As long as we can take time to travel and enjoy life, we may never retire. NNBW: If you had the chance to have dinner with someone, who would that be and why? Sigstad: I’d really like to have dinner with Warren Buffett. I think he has achieved singular success in business and I would enjoy getting insight into how he built his business. NNBW: If you had one moment in time to cherish for the rest of your life either professionally or personally what would it be and why? Sigstad: There are lots of moments that I cherish but my marriage to Lisa and the birth of Justin have to be the all time high points. NNBW: Last concert or sporting event attended? Sigstad: We went to the playoff game for UNR basketball against Morehead state for the championship. That was fun. The last show we attended was the performance of Annie at the Pioneer Theater. That was also a great show.
Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com | 7
Former IGT property being transformed into South Valley Commerce Center By Annie Conway aconway@nnbw.biz Alston Construction has started construction on two industrial buildings totaling 390,000 square feet. The development, known as South Valley Commerce Center, is located between Sandhill Road and Trademark Drive in South Meadows. Panattoni Development Company acquired the 20.27-acre property for $3,972,933 back in December 2015 from International Game Technology (IGT). IGT put the land up for sale after the company was acquired by GTECH in April 2015. The land was fully approved for development when Panattoni
purchased it. One building will be a total of 209,000 square feet with a clear height of 32 feet and the second building will be a total of 180,792 square feet with a clear height of 30 feet. Both buildings will have LED lighting and higher-level office finishes. According to Doug Roberts, partner with Panattoni Development Company, the buildings will house six to 10 tenants. While Panattoni does not have any tenants lined up yet, he anticipates that it will be easy to find occupants for the space. “South Reno is a submarket with less than 3 percent vacancy rate,” Roberts said in a phone interview. Prior to this development, Panattoni had mostly developed
office buildings in South Meadows. However, the low vacancy rates and desirable location drew the company to purchase the land for the premiere industrial park. “Land constraints, proximity to executive housing and other amenities as well as the submarket’s low vacancy makes this a very desirable business park,” Roberts, said in a press release. “The south Reno market represents 11.6 percent of the overall industrial market and there is very little product available to lease.” Tectonics Design Group, a Renobased architecture and engineering firm, is the architect on the project. Total cost for construction of the project is estimated at $15.5 million.
Construction for both buildings is scheduled to be complete in December of this year. Panattoni also purchased IGT’s 38-acre campus in Las Vegas for $75 million last December. The property is being converted for multi-tenant use. ●
South Valley Commerce Center is currently under construction in South Meadows as seen in this rendering. The two industrial buildings totaling 390,000 square feet are scheduled to be complete in December. Photo courtesy Meagan Noin.
Upcoming Issues... August 1, 2016 Space & Copy Due: Monday, July 18
November 7, 2016 Space & Copy Due: Monday, October 24
For more details contact your advertising representative today. Wayne O’Hara • 850-2283 • wohara@nnbw.biz James Arden • 850-2285 • jarden@nnbw.biz
8 | Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com
S3 Development and Dickson Commercial Group bring first mixed use development to Midtown Special to the NNBW The first mixed-use development project in the Midtown district of Reno is being developed by S3 Development Company, LLC, a leading edge residential and commercial development company, and Dickson Commercial Group, a locally owned and operated, fullservice commercial real estate brokerage firm. 1401 Midtown is the name of the commercial part of the development, located at 1401 S. Virginia Street, and was previously the headquarters for Heritage Bank of Nevada. Upon completion in summer 2016, the new development will grow from 9,000 square feet to 21,000 square feet. It will be the home of Bristlecone Holdings, SDL Jewelers, part of Michael & Sons Jewelers, and Morgan’s Lobster Shack & Fish Market from Truckee, Calif. The development will add 31 on-site parking spaces and 12 on-street parking spaces. The heart of the project will showcase a 1,800-square-foot plaza and patio area, which will be designed for al fresco and patio dining, and be furnished with fireplaces, a bar area and modern décor. It will also have spectacular views of the Sierra
Nevada Mountains. “1401 Midtown will further define the district with a hip, contemporary dual-purpose development,” said Blake Smith, chairman and CEO of S3 Development. “We took an older, brick building, added to it, and are creating an outdoor gathering space that appeals to urban dwellers, professionals and Millennials alike. We uncovered the beautiful brick walls from the building – which haven’t seen the light for over 62 years – and have modernized the experience, making this project very attractive to the entire community.” Dickson Commercial Group provides the leasing for the project. “We have pre-leased 87 percent of the building prior to the completion of construction,” said Dominic
Brunetti, CCIM and principal of Dickson Commercial Group. “The development has incorporated the smart use of land planning, especially with the additional parking spaces.” Blake has implemented a vision for what the demand in our market is. “These are great indicators of its future success.” Approximately 3,200 square feet remains as available space for lease. Adjacent to the 1401 Midtown commercial development will be the residential component, called Tonopah Lofts, which will consist of eight, 2-story, 1,700 square feet townhomes. The modern, urban townhomes will feature rooftop decks for entertaining, an open space plan concept connecting the kitchen to the entertainment/living area, a parking
S3 Development Company, LLC, and Dickson Commercial Group are bringing the first mixed use development project to Midtown District of Reno. Photo courtesy S3 Development Company, LLC.
garage and views of the Sierra Nevada Mountains. The townhomes will be priced in the $300,000$400,000 range and are projected to be completed in the early fall of 2016. According to Brunetti, there are currently record low vacancies in Midtown for residential living. The area is also the highest per square foot in home sales and rental rates. As a testament to the growth in the area, S3 Development will soon break ground on 11 more townhomes on the corner of Sinclair and Stewart streets, in a new project called Midtown Lofts. Smith plans to add six new 3-story townhomes, three 2-story bungalows and keep two existing homes in this development. The townhomes will feature a private deck with views, parking garage, clear floor space kitchen and living/ entertainment area and pitched roofs. “Our first acquisition downtown was the US Bank building,” said Smith. “When we realized its success, it made us even more excited and optimistic about our future Midtown projects. These developments will bring a new wave of vibrancy and resurgence to the neighborhood.” Smith is a longtime developer in Reno, who oversaw the creation of the award-winning master-planned Somersett community. ●
Once completed, 1401 Midtown will grow from 9,000 square feet to 21,000 square feet. Construction is scheduled to be completed in summer 2016. Photo courtesy S3 Development Company, LLC.
UNR student residence receives LEED Gold distinction Special to the NNBW Opened in fall of 2015, Peavine Hall has received a Leadership in Energy and Environmental Design certification from the U.S. Green Building Council. This is the first University of Nevada, Reno campus facility to receive a gold distinction. Peavine Hall is a five-story facility that features suite-style living, stateof-the-art security systems, a bicycle storage room, energy- and waterefficient systems and LED lighting. It currently houses more than 400 students and was built with the goal of gold-level LEED certification.
The hall emphasizes a “wellness theme” through residents’ participation in a wellness challenge, which is a self-directed journey toward achieving personal wellness goals with guidance and help from supporting teams. “The gold distinction for Peavine Hall really ties back to a sense of community,” Scot Orchard, project manager at UNR’s Facilities Services, said. “Residential Life and Housing really pushed for the gold distinction for Peavine to give the residents, campus community members and others a building with high environmental standards, which is
something they can be proud of.” Construction for the project started in spring 2014, requiring high levels of recycling and waste management to meet the requirements of LEED Gold certification. The project’s construction site recycled 96 percent of building materials. The LEED scorecard shows that the building’s exterior landscaping uses 50 percent less water than average irrigation expectations. Inside the building, energy is optimized with air flow and effective use of sun lighting and windows for natural daylighting of the interiors of the building.
These many efficiencies save the University in operating costs each year. Other LEED certified facilities on campus include the Joe Crowley Student Union the Joe Crowley Student Union, Mathewson-IGT Knowledge Center, Marguerite Wattis Petersen Athletics Academic Center, Center for Molecular Medicine and the Nevada Living Learning Community. Although not all new construction buildings are planned to become LEED certified, the campus standard for new facilities is LEED Silver equivalent. Nevada was recently ranked sixth in the nation for LEED-certified buildings. Peavine Hall is one of more than 15 LEED-certified buildings in Reno. The next residence facility, Great Basin Hall, will be built to LEED Gold standards. Peavine Hall, constructed by Sundt Construction, is located on the south end of campus at the intersection of Sierra Street and 11th Street. ●
Peavine Hall is the first University of Nevada, Reno campus facility to achieve a LEED Gold distinction. Photo courtesy University of Nevada, Reno.
Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com | 9
BANKING MEANS SOLUTIONS You have ideas. Plans. Opportunities. Whether it’s retail, office, industrial, or multi-family, our Commercial Real Estate team is here, ready to help you turn your plans into reality. From competitive rates to quick decisions, put our experience and local know-how on your side. Together, we can make this happen. BRING YOUR BANKING HOME.
nsbank.com | 866.451.5018
Loans subject to credit approval. Terms and conditions apply. ZB, N.A. NMLS# 467014
Commercial Real Estate BY THE NUMBERS Retail Industrial
Source: Miller Industrial Properties
Source: CBRE
Office
Multifamily
ABSORPTION RATES
VACANCY RATES
Source: CBRE Source: Colliers International
Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com | 11
Multifamily
continued from p1
“Expect 2017 to be a huge year for development of new multifamily,” Rowley said. “That’s a significant pipeline,” Noursoultanova said of the number of units under development. “Granted, they’ll not materialize for two to three years from now. When they hit the market, there will be relief in rents.” Fountainhouse in Victorian Square in Sparks and Edge Water at Virginia Lake — both being developed by Silverwing Development — are the largest complexes currently under construction. Both are urban-style with about 40-units per acre and both are in in-fill locations. Tenants have already started moving into Edge Water and the first phase of Fountainhouse is expected to be ready for tenants in late spring. “It’s a cool property. High Density. Urban product,” Noursoultanova said.
Industrial
continued from p1
industrial project since the bottom fell out of the regional economy. Landing Amazon into Logisticenter 395 was a coup for the entire region and kickstarted additional development. Prior to that, Roberts says, rents were fairly static and there was little motivation to undertake new speculative projects. But the industrial landscape has changed dramatically since then. Panattoni purchased a foreclosed plot of land at Lemmon Drive and N. Virginia Street and is putting the finishing touches on a 707,000-square foot building at North Valleys Commerce Center, a 1.4-millionsquare-foot project it’s developing in partnership with the California State Teachers Retirement System. The roof is finished, and the building is being painted and the grounds landscaped. Work should be completed the second week of May. Panattoni plans to construct three buildings at the 96-acre site. It will move forward with the other two structures once the initial building is at least 50-percent leased, Roberts says. The industrial team at Kidder Mathews is handling lease negotiations for North Valleys Commerce Center, which are underway. Dave Simonsen, senior vice president of the industrial team and partner at Kidder Mathews, says his group has fielded a lot of inquiries regarding the new space but to date they’ve not yet landed a tenant. But it’s just a matter of time before the building fills. “We have a significant number of active users looking at leasing all or a portion of the building,” Simonsen says. “Things are very active within the industrial market right now. There are a number of new projects, a number of existing tenants looking to expand, and new tenants are looking at the market. Although there is a significant amount of new construction, the tenant interest has increased to a level that matches or exceeds the amount of new product being built.”
Construction of LogistiCenter 395 Phase II is well underway, as seen in this aerial photo taken March 31. The LogistiCenter is a Dermody development by United Construction. Photo courtesy United Construction.
“Probably the largest project we’ve seen in Reno/Sparks. Typically, (Renoarea companies) build suburban, garden-style apartments. “In terms of density, Fountainhouse is pretty much making
history in Reno/Sparks.” In south Reno, Sierra Summit, LLC, with Chip Bowlby as the principal, is preparing to break ground on the 584-unit Summit Club, near the Summit Mall in South Reno, which will
feature an 80/20 mixture of marketrate and workforce housing. Numerous smaller projects are also underway including the conversions of hotels into apartments in Sparks, and both Midtown and Downtown Reno. “There are a tremendous amount of units on the doc right now that we can show for 2016,” Richardson said. “It shows an increased demand for apartments.” “Ten years ago it was all singlefamily, single-family, single-family,” Rowley said referring to the housing boom that went bust in the recession. “Now its industrial, commercial, and multifamily (construction). It continues to be broadly based.” ● Workers pave the sidewalk in front of the Fountainhouse apartments under construction in Sparks. The complex next to the Century Sparks Theater will include 236 multifamily units and 8,400 square feet of retail space. Pre-leasing is expected to begin in spring 2016. Photo by Sally Roberts.
Panattoni also has a spec project underway in South Meadows. It broke ground a few weeks ago on South Valley Commerce Center, a 388,000-square-foot project split between two buildings at Sandhill Road and Double R Blvd. Dermody Properties has remained busy since breaking ground at Logistcenter 395. It’s already built two more buildings of 402,000 and 224,000 square feet, and though the larger building still is vacant a tenant is expected to sign a lease for the entire smaller building soon, says Eric Bennett, first vice president with the industrial team at CBRE. Dermody also has phase 2 of Logisticenter 395 under construction at Military Road and Lemmon Drive. The first building, 722,512 square feet, should be completed by June of this year. Upscale outdoors clothing manufacturer Marmot has taken down 271,832 square feet of that building. A second building totaling
903,648 square feet is planned for the site, but Dermody isn’t ready to go vertical on a spec basis for that building, Bennett says. Dermody also has a project underway near Boomtown. Logisticenter I-80 West is a planned four-building industrial park. The first phase consists of two buildings of 223,619 and 184,451 that are divisible to smaller spaces of 39,000 and 50,000 square feet. Bennett says the buildings will be a higher-end product unlike any other in the market. “We feel like west Reno has matured with northwest community and Somersett, Cabela’s, and the influx of manufacturing companies coming from California,” he says. “It’s a site that will be different from north Reno, south Reno or Sparks, and the proximity to California can’t be beat.” With overall vacancy rates at 7.24 percent, and lease rates averaging 34 cents a square foot,
new development finally makes sense. But despite the wave of new development, Kidder Mathews’ Simonsen says developers still haven’t forgotten the dark days of the recession when they spent much of their workday playing Mahjong and solitaire on their computers. “We haven’t seen this degree of new development since 2007,” he says. But it’s not as extreme as 2007 — developers are a little bit more cautious. They are building this time around because the market has been crying for new development the past 24 months. All this activity is being done with minimal Tesla effect,” Simonsen adds. “Tesla should accelerate activity in the market over the next 18 months. Vacancy should remain stable, with new construction supply coming online being matched with tenant activity in the marketplace absorbing those new buildings.” ●
12 | Northern Nevada Real Estate Journal | Monday, May 2, 2016 | www.nnbw.com