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Volume 4, Issue 3
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Monday, November 6, 2017 | www.nnbw.com
Aging industrial building in Sparks to get facelift By Rob Sabo info@nnbw.biz The owners of one of the largest – and oldest – industrial buildings in Northern Nevada are breathing new life into the property and plan to reposition the building for lease beginning next year. Kin Properties, the management arm for the owner of the shuttered Kmart distribution facility at South McCarran Boulevard and Greg Street, will spend more than $12 million to demolish sections of the building to open up the site for better tractor-trailer movement and parking, increase the number of external docks, and upgrade existing infrastructure such as electrical and heating to modernize the building. Kin Properties plans to demolish about 120 feet of depth on the facility’s south side. Work is expected to begin in early 2018 and be completed by the third quarter. A general contractor has not yet been selected for the job. Constructed in 1970 and expanded in 1973, the Kmart distribution center sits in the heart of Spark’s industrial core. The facility totals just over 1.55 million square feet; however, due to its age, the facility does not meet many of the requirements for large industrial users. It has tight interior column spacing (40’x40’) which inhibits the flow of goods and materials inside the
building, outdated office facilities (25,000 square feet), limited external docking, and 24-foot clear heights. Industrial buildings constructed today often have 36-foot clear heights, which allows for much more storage racking in a smaller footprint. Once the renovation work is complete, the property will be marketed in spaces ranging from 150,000 to 200,000 square feet. The industrial team of Chris Fairchild, Greg Shutt and Bryce Wiele at Colliers International will market the spaces for Kin Properties. The privately held commercial real estate investment company headquartered at Boca Raton, Fla., owns more than 750 properties in primary and secondary markets throughout the U.S. and Canada. “Because of the building’s obsolescence, the owner is taking offline about a million square feet and will redevelop the building to make it more usable,” Shutt said. Once renovations are complete, the footprint of the building will total about 1.27 million square feet on 56.6 acres. The renovated facility is a prime location for mid- to large-size industrial users looking to relocate or establish operations in Northern Nevada, Fairchild said. Potential usage includes call centers, company headquarters, distribution, manufacturing and storage. The building also could be leased to one
entire user, if desired. “The owner is doing a significant remodel on this building to make it much more functional for many more years,” Fairchild said. “It’s kind of a new slate as to what we can do with the building and who we can put into it. The landlord has no debt on the property and can add significant capital improvements per tenant needs.” Location is one of the property’s primary benefits. Fairchild says prospective tenants can pull labor from the entire Reno-Sparks Metropolitan Statistical Area since it’s easy to get to and located on the Regional Transportation Commission bus line – there are three bus stops adjacent to the property, he said.
This 1.55 million-square-foot industrial building in Sparks has been empty since 2014 when the Kmart Distribution Center shut its doors. Constructed in 1970, it no longer meets the needs of the modern warehouse industry, so owners have planned a $12 million renovation. Photo courtesy Colliers International
“It’s central to Sparks and that whole submarket immediately surrounding it,” he added. “It’s within one mile of Interstate 80, and it’s right on the McCarran loop. If (a new tenant) is coming in and hiring new people, that location gives them an advantage.” continued on page 7
Office market: ‘Going in the right direction’ By Bill O’Driscoll wodriscoll@nnbw.biz There’s sustained life in the office sector of the Reno-Sparks commercial real estate market as the broader industry continues its post-recession recovery. For the July-September third quarter, total office vacancy rates shrank by a full one-half of 1 percent, according to Colliers International Reno office. Another report put vacancy rates at all-time lows. In addition, net absorption continued in a modest — but still positive — vein: More office space — 36,041 square feet — was filled than was vacated over the three-month period, according to Colliers data. That followed a second quarter also showing positive net absorption, specifically a net of 51,475 square McKenzie Properties is building a 40,000-square-foot office building south of the Kietzke Lane-Neil Road roundabout in south Reno set to open in 2018. Photo by Bill O’Driscoll
feet of office space filled in the AprilJune period. While the third quarter gains were less, “It’s still going in the right direction,” said Melissa Molyneaux, Colliers senior vice president/ executive managing director in Reno. At Dickson Commercial Group, Principal Dominic Brunetti said his data also shows continued improvement. “We’ve had a nice run, quarter to quarter, of positive absorption, nine quarters so far over two years or so,” he said. At the same time, office vacancy rates are at all-time lows, according to Brunetti’s assessment of the third quarter, with rates in the continued on page 7
2 | Northern Nevada Real Estate Journal | Monday, November 6, 2017 | www.nnbw.com
South Meadows evolution First Sprouts and its neighbors added retail, now The Loop is set to add dining, entertainment and recreational amenities By Sally Roberts sroberts@nnbw.biz In the region’s post-recession commercial growth, South Meadows is evolving from a bedroom community surrounded by industrial buildings to a destination hub of retail and recreational activity. The South Meadows Promenade has brought an assortment of retail, fast foods and more, anchored by Sprouts Farmers Market’s first foray into the region. One of the fastestgrowing retailers in the country, the natural food store opened its 30,000-square-foot South Meadows Sprouts in September, and a second store is planned for Spanish Springs. The Promenade also features Chase Bank’s first brick-and-mortar office in the area, plus Starbucks, Chipotle Mexican Grill, Panda Express, Marshall’s and Jersey Mike’s. Other new fast food venues such as Steak and Shakes are opening nearby. As South Meadows Promenade finishes construction,a few blocks east at South Meadows and Double Diamond, another new development is just starting to take shape. The Loop is a $30 million, privately funded development designed for people to gather for socializing, dining, entertainment, recreation and all kinds of fun. “We’ve been working on this concept for about seven years,” Anthony “AJ” June, president and developer of The Loop, told the developers, city officials, neighbors and media gathering on Oct. 17 to hear details about the project. The Loop, set to open in stages in 2018, will include two distinct features: Rounders, a family-friendly area with multiple entertainment options and food service; and Zeppelin, an adults-only space for fine-dining that includes patio seating. In addition, the owners of Reno Sportsdome, Owen Blake and Kanish Ali, plan to construct their second location in The Loop. Named Reno Sportsdome XL, the 120,000-squarefoot sports facility will be triple the
size of the current facility in North Reno — which is at capacity — and provide more space for more participation. “The Reno Sportsdome has been a place to play sports, but also a place to socialize and meet people,” Blake said. “The new Sportsdome XL will allow us to significantly increase our offerings to accommodate more leagues and teams as well as individuals looking to join a team and facilities for birthday parties. We are very excited to be part of The Loop, as we are like-minded in our desire to be community builders.” The Loop investors are starting with an existing 75,000-square-foot building, constructed by GBC Global. During the Great Recession, progress stopped and plans changed, June said. “We really looked at what could we do as business owners and as developers to bring a new scope and new perspective to this wonderful town that we have. There was a great demand for having some good, clean, safe areas (for families to gather) but also have some good places for adults.” The 20-acre Loop project is what came out of the years of research, consultations and planning.
“This will be a social gathering place of all ages,” June explained. “We are centered around food, entertainment, activity and interaction. We’re driven by service and safety, but our No. 1 priority is to make a difference in our community.” Rounders makes up the bulk of the project. It will feature boutique bowling lanes, a roller-skating rink with cutting-edge audio-video and lighting effects, a ropes obstacle course with a zip line, more than 8,000 square feet of arcade, plus dining options for families. The Cityscape-themed concourse in Rounders has upscale, fairinspired dining, craft beers, wine and signature cocktails. Zeppelin will provide a social space for adults to gather. The highend restaurant, lounge and bar will offer an extensive drink list and finedining menu. The interior design has a vintage vibe combined with stateof-the-art amenities, according to a press release.
The entrance to The Loop, seen in this artist’s rendering, features bright colors for a festive, carnival-like atmosphere leading into the family-friendly features of Rounders and the adult dining experience at Zeppelin. Art courtesy The Loop
Zeppelin “will encapsulate what’s cool and new about Reno,” June said. Award-winning Executive Chef Jakon Tolhurst with Chef de Cuisine Craig Domer will fire up both kitchens, with a signature menu of nutritious and consciously sourced food — even for the family-friendly Rounders with kids’ palates to please. A component to be constructed is a four-story tower with an 8,000-square-foot footprint, nestled between the wings of the original building. On the first floor, it will house the kitchens for The Loop restaurants. The second and third floors will feature a bar concept, Annis said, with the top floor reserved for a meeting space with panoramic views of the city and mountains.
Above: Rounders, seen in this artist’s rendering, will be a family-friendly environment with numerous entertainment options from bowling to arcade fun as well as food to satisfy the younger crowds. Art courtesy The Loop
Left: An artist’s rendering of the Sportsdome XL shows the structure that will be three times larger than the current Sportsdome off Sutro Street with more opportunities for more sports features. Art courtesy The Loop
Northern Nevada Real Estate Journal | Monday, November 6, 2017 | www.nnbw.com | 3 Zeppelin and Rounders are expected to open in early spring and summer 2018, respectively, with positions for 150-plus full-time employees and another 100 for banquets and special events. The Sportsdome XL is expected to open in early fall 2018 and hire a staff of 20-25 people. The Sportsdome XL will be able to accommodate sports such as soccer, lacrosse, arena softball, futsal (a Brazilian sport similar to soccer), flag football, basketball, volleyball, pickle ball, badminton and more. “We have something special here,” June said. “We have a great spot in south Reno, a lot of property and the opportunity to do something great for this community.”
And there’s more to come. Kevin Annis, principal with ArchCrest Commercial Partners, LLC, and the broker for the project, pointed out several more acres with room for additional amenities. ●
Zeppelin will be a gathering place for adults with fine-dining and craft cocktails, beers and select liquor options. The décor, as seen in this artist’s rendering, has a vintage vibe with modern amenities. Art courtesy The Loop
AT A GLANCE The Loop: 20-acre complex $30 million, privately funded investment. 100-plus construction positions. 100-plus full-time positions at Zeppelin and Rounders plus an additional staff of 100 for banquets and special events. Rounders: Fun location for families to gather. 8,000 square feet of arcade and redemption games 70-foot zip line with black lighting as part of a multilevel ropes course To open summer 2018 Zeppelin: Social space and intimate atmosphere for adults High-end restaurant, lounge and bar offering crafted cocktails, craft beers, handpicked whiskey, sake and wine. Patio seating as well as group and private seating areas Walnut-finished private bowling lanes for special occasions. To open early spring 2018 Reno Sportsdome XL: 120,000-square-foot indoor sports facility for youth and adult teams and leagues Space for soccer, lacrosse, arena softball, futsal, flag football, basketball, volleyball, pickle ball, badminton and more. Birthday party and event space Space for tournaments and traveling teams. To open early fall 2018 with 20-25 staff members
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4 | Northern Nevada Real Estate Journal | Monday, November 6, 2017 | www.nnbw.com
Apartment construction heating up with promise to improve availability By Duane Johnson djohnson@nnbw.biz Historically high rents and low vacancy rates continue to dominate the Northern Nevada multifamily housing landscape. Rental rates in Reno-Sparks have continued to climb in the third quarter averaging $1,202 a month compared to $1,194 in the second quarter, according to a report released by the Reno office of CBRE, Inc. This represents a 0.67 percent increase from the previous quarter and a 14 percent increase year-over-year from third quarter of 2016. It’s also the highest it has ever been in Reno-Sparks market to date. “I think that we will continue to see upward pressure on rents given the strong market fundamentals, and vacancy will remain highly compressed,” said Ryan Rife, a senior associate, National Multi Housing Group in the Reno office of Marcus & Millichap. Rates steadily ticked upward as a myriad of new companies relocate to the region, some bringing with them employees looking for new places to live. New residents may be looking to rent as the average price of a new home in the region ranges from $300,000 to $400,000. The Urban Land institute ranked Reno as the No. 5 market for rental
growth outside of the five largest cities in the U.S. The vacancy rate in Reno-Sparks also stood at 2.41 percent, up from 1.17 percent in the second quarter. It was at 2.23 percent in the first quarter. Aimon Noursoultanova, senior vice president in the Reno office of CBRE, Inc., said vacancy rates should inch up and more multifamily units should come on the market. While construction of new multifamily units dipped in the third quarter, a bevy of more multifamily units are on the horizon. An estimated 3,400-3,500 units are on the immediate horizon with 6,000 into 2018 and 2019. “In 2018, vacancy rates will inch up as new delivery of units comes into the market, although we have a long way to go,” Noursoultanova said. “A lot of it depends on the type of winter weather we’re going to have and if construction is delayed all the way into summer.” However, even with new units coming onboard, with all the new residents moving into the area, they probably will be filled up fast. “Even with new deliveries of apartment units, with job and economic growth, they will be absorbed quickly,” Noursoultanova said. Some other factors may hamper construction, including a competitive construction labor market as well as
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the high cost of construction. “With the thought of high construction costs, it’s tougher for developers to build more affordable multifamily projects,” Rife said. CBRE’s Noursoultanova added that construction projects that started a year ago won’t be as affected as those that are in the planning stages now. Many of these projects are sprinkled around south Reno and Sparks, highlighted by the 584-unit The Summit Club, a mix of high market rate and workforce housing apartment units off of Mount Rose Highway, and Phase II at the Village at Arrowcreek, also known as the Village South, developed by Reno-based Ryder Homes. Sparks is also seeing its fair share of developments, including two around the Sparks Marina: the 209unit The Waterfront at Sparks Marina, and the 280-unit Lyfe at the Marina. Added to the mix is the Park Lane Mall development that includes 1,619 apartment units to go along with a mix of retail and office space. Planned projects include the Marina Gateway Apartments, Lumina at Spanish Springs in Sparks, and the 768-unit The Lakes at Sky Vista and the proposed $1.2 billion, 500-unit West 2nd District project in Reno. Moving forward In northwest Reno are the 312-unit Vida Luxury Apartments on the corner of Mae Anne and Sharlands Avenue, site of a once-failed condominium project, is moving along. Carson City and Carson Valley are seeing their first wave of activity in many years. In Carson City, 1,130 more apartment units are either submitted or sent to the planning commission. Some of the major projects in the pipeline are Carson Hills, a 310-unit complex at Curry and Koontz streets, and Villas Silver Oaks, a 150-unit project at Country Club Drive and GS Richards Boulevard. To coincide with the economic growth of the region, enrollment of the University of Nevada, Reno, has grown exponentially, necessitating the need for more student housing. The Identity Reno and Wolf Run East projects have come online, although the latter was slightly behind schedule. Two other projects are in the planning stages, including the Canyon Flats, a 158-unit project proposed across from the Circus Circus Reno. And Capstone Collegiate Communities, a 165-unit to house 625 students, is proposed for southeast of the UNR campus.
BY THE NUMBERS Multifamily units in Q3 2017 3,420 under construction 6,707 planned 2.41% vacancy rate $1,202 average rent Source: CBRE Sales of multifamily properties were relatively quiet in the second quarter of 2017, but a slew of activity was reported in the third quarter for complexes with 80 or more units. “Typically, these deals have been in the works for months, even years,” Noursoultanova said. “The market is so good, some of these deals have been in the market for a while.” TruAmerica/Benedict Canyon Equities, a Los Angeles-based multifamily investment firm, acquired the 570-unit Comstock Hills-Hillview Terrace Apartments in southeast Reno for a combined $90 million, or $154,000 per unit. Boulder Creek IGC LLC purchased the 250-unit Boulder Creek Apartments in Sun Valley for $23.5 million, or $94,000 per unit. Seagate Properties purchased Northtowne Summit in north Reno for $34.2 million and LandCap purchased the new Third Street Flats in downtown Reno for $19 million. Sales of apartment complexes are garnering multiple offers with high price points with local investors often having to compete with those from neighboring California. Rife also indicated it isn’t uncommon to see multiple offers on a single apartment complex. “The overall apartment market is still extremely strong as we are seeing high investor demand, a favorable interest rate environment and Reno/Sparks offers relatively higher yields and market upside when compared to the Cap Rate compressed core markets,” he said. ●
The 209-unit Waterfront at Sparks Marina apartments are among the 3,453 units currently under construction in the Truckee Meadows. Photo by Duane Johnson/NNBW
Northern Nevada Real Estate Journal | Monday, November 6, 2017 | www.nnbw.com | 5
Retail continues growth in region despite national pressure from e-commerce By Whip Villarreal info@nnbw.biz Commercial real estate for the third quarter in the Reno-Sparks area is looking strong across all markets. With new development breaking ground, rising prices across all sectors, low vacancy rates and new businesses opening across the region, the market is healthy. Construction crews have begun to work on the Park Lane Mall site where restaurants, retail shops, a grocery market, bank, hotel and residential units will call the longdeserted space home. The $500 million project is still in the early stages of development and will not be completed anytime soon. However, renderings from Reno Land Inc. show vibrant and modern buildings and architecture that will give a much-needed boost to the area. The Century Theater currently settled on the land will remain in place and additional parking for moviegoers will be moved to the rear of the building. The theater also plans a remodel to better fit in with the new development. Nationally, negative headlines about retail businesses have dominated the news. However, demand continues for retail investment in Washoe County. The largest transaction in September was a 94,213-square-foot Kohls in northwest Reno that sold for $9.35 million. Also in the northwest, a 3,000-square-foot freestanding retail building occupied by payday loan company MoneyTree sold for $1.2 million.
A rendering of the development plans for Park Lane. The plan calls for a mix of retail, office, entertainment, recreation, and apartments. Courtesy Reno Land Inc.
Another large buy that occurred in downtown Reno is the purchase of the Brewers Cabinet building on the corner of California and Arlington and the building next to it. They sold for $1.7 million with a combined building square footage of 11,243. “On a larger scale, people think that the retail market is suffering as a whole,” said Patrick Riggs, commercial real estate agent for Dickson Commercial Group. “And that might be right on big-box stores because a lot of consumers have shifted towards e-commerce. But as far as the Reno market, single retail, general retail buildings, a lot of the freestanding buildings are doing very well. We are seeing low vacancy rates for those (free-standing) properties, around 5 percent, so that market is still very healthy.” In comparison, retail in general, which includes big-box anchor stores, is at about 9 percent vacancy. “A lot of people kind of don’t see it on that level. They just think of the big stores like Kmart and stuff like that going out of business, and everybody thinks that retail is so doomed,” Riggs continued. “But I think on a smaller scale, retail is actually doing well.” In other sectors, Apple acquired a 1.377-acre site in the downtown area last September, where the tech giant plans to build a warehouse to move computer equipment needed for a data center for its facility. The company purchased roughly 1,330 acres for $28 million, which is needed in order to expand its data center to meet its growing iCloud storage demands. The announcement is the latest in a string of technology company expansions in Northern Nevada, which is becoming home to a thriving data storage industry.
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7 Reno Midtown sites acquired in $17M deal By Bill O’Driscoll wodriscoll@nnbw.biz The ongoing evolution of Reno’s Midtown business district has taken a big leap forward. Seven key properties in the area south of the Truckee River have been sold to two prominent area developers, Tolles Development Company and Marmot Properties. The deal with the sellers, Bernie and Tim Carter and Tom Johnson, encompasses more than 72,000 square feet and is estimated at about $17 million, according to a news release.
The historic Saint Lawrence Commons is among seven Midtown properties that recently changed hands. Photo courtesy Tolles Development Company and Marmot Properties
“Midtown has evolved into a unique ecosystem where small business, eateries, street art and nightlife flourish,” Par Tolles of Tolles Development said in a statement. “We’re dedicated to upholding the integrity and heritage of this Reno landmark.” Among the properties acquired: • Six Seven Seven South, at 677 S. Virginia St. Built in 1915 and recently renovated, its tenants include Finbomb Sushi Burritos, Never Ender Clothing and Culture Clothing. • Saint Lawrence Commons, built in 1918 and site of the start of Midtown’s renaissance. Tenants include Dreamer’s Coffee, Crème Café, and Dress Like That. • Cheney Place, a former residential property built in 1908, whose tenants include Angels Among Us, Awake and Aging and Crystal Cove.
• Martin Crossing, built in 1979 with retail and office space and current tenants including Sippee’s Kid’s Clothing and Happy Happy Joy Joy Gifts. • Sticks, built within the last three years as a modern architectural showpiece with tenants including Two Chicks restaurant, Chuy’s Mexican restaurant and MidTown Diamonds. • Triple Seven Center, at 777 S. Center St., adapted for reuse and the former home of Maytan Music Center. Tenants include Pinon Bottling Company, Noble Pie Pizza, and Arario Korean Fusion. • A vacant lot at 800 S. Virginia St., that currently serves as parking for Triple Seven Center and one of the last undeveloped parcels with the Midtown area. According to the news release, Tolles and Marmot began working together last year and were approached by Bernie and Tim Carter, co-owners of the seven properties.
“Our projects in Midtown have always been for locals by locals,” Bernie Carter said. “We believe Tolles Development Company and Marmot Properties, both local firms, will continue this ideal and we are very pleased they are the purchasers of our Midtown properties.” Eric Raydon, cofounder and managing member of Marmot, said the intent will be more of the same with the new properties’ futures. “We will bring the same hightouch, high-quality, neighborhoodscale approach to this portfolio as we have with all of our Midtown properties,” he said in a statement. Added Tom Johnson, “Tolles and Marmot are a vital part of the downtown and Midtown vision that the Johnson Family Trust contributed several years ago with our trust’s repurposing of the old Maytan Music Center into the vibrant, mixed-use building now known as 777-Heart of Midtown.” ●
Carson City looks to swap land for armory development By Anne Knowles aknowles@nevadaappeal.com Carson City is once again trying to spur redevelopment of the former armory site on South Carson Street. The city is talking to Nevada Division of State Lands, which owns the property, about putting the roughly 14 acres on the market so it can be commercially developed. “We believe that it’s a blighted property on a major commercial corridor and we believe the commercial real estate market is strong right now, so if the state was contemplating divesting, this would be the most beneficial time to do it,” Carson City Manager Nick Marano said. “They would get very good value.”
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One option being discussed is a kind of land swap in which the city would give to the state city-owned land that suits the state’s needs. In exchange, State Lands would sell the armory site for commercial use. While the city would be giving up property, it would be to Carson City’s advantage, said Marano. “We want to see beneficial use of that property,” said Marano. “It would add to the city tax rolls and create jobs.” The Nevada Department of Public Safety has been hoping to use the former armory site for its offices, according to Charles Donohue, administrator, State Lands. “We don’t have a ton of land. Having the ground to build on is critical for us,” Donohue said. “But we’re always open to exploring opportunities.” The city is looking for several suitable sites to propose. “At this point we’re in preliminary discussions,” Donohue said. “We’re waiting to find out.” Donohue said access would be the main issue for an alternative site as the armory is ideally located for DPS’s purposes. The discussions between the city and State Lands started with the frontage road there, which the city needs to build a multiuse path as part of its project to redo South Carson Street. The city has acquired all of the frontage road now through the Nevada Department of Transportation. This is not the first time Carson City has pursued developing the old armory site. The Nevada National Guard first started work on the property in 1959 and in 1975 built the main building, one of 26 structures eventually put there. In 2002, the Guard moved out and in 2005 the city asked State Lands about acquiring the property, but was told it was not for sale. In 2008, demolition of the site began and it has been vacant since. ●
Northern Nevada Real Estate Journal | Monday, November 6, 2017 | www.nnbw.com | 7
Industrial
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Pricing options also could lure potential tenants away from red-hot submarkets such as North Valleys or Tahoe Reno Industrial Center. “We are well below market Class A (rates), Fairchild said. Due to the renovation work, the majority of the old Kmart building does not factor into third-quarter vacancy rates. Colliers International pegs current market-wide vacancy among all industrial properties and submarkets at 6.46 percent, with some submarkets at sub-2.5 percent. Industrial market demographics in Greater Reno-Sparks heavily favor landlords. Collier’s Shutt said many landlords are looking very closely at asking rental rates and reevaluating leases. “It’s definitely a landlord’s market until we bring new product online,” he said. “Landlords are working on a number of different projects, but they all will be larger box distribution facilities of 400,000-plus square feet.” Much of that space is being preleased before buildings are even completed, said Eric Bennett, first vice president of the industrial and logistics team at CBRE.
Office
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South Meadows and Meadowood submarkets, traditionally the RenoSparks area’s strongest performers, dipping into single digits. “The market has steadily been positive for three years with no new construction, “ Brunetti said. But on the long-dormant construction front, things are changing. McKenzie Properties is building a 40,000-square-foot office building in the Mountain View Corporate Centre south of the Kietzke Lane-Neil Road roundabout. Its crane and another on an adjoining construction site are visible from the nearby Interstate 580 freeway. Come spring 2018, the McKenzie building will become home to Colliers International Reno’s operations as the agency will move from its current 100 W. Liberty St. offices in downtown Reno back into the Meadowood office submarket. Molyneaux said Colliers plans to consolidate all of its operations into an estimated 6,000 square feet in the McKenzie building. “For the first time in a long time, one of the challenges to specific pockets of Reno, Meadowood,
Retail
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For office real estate in Reno, September showed another strong month for investment sales. In the Meadowood Submarket, the 27,676-square-foot former Kafoury Armstrong building at 6140 Plumas Street sold for $2,906,000. In the Downtown submarket, the 14,017-square-foot building at 333 Holcomb sold for $3,550,000. The vacancy rate for office real estate is between 10-11 percent with the lowest vacancy rate for office space in the Meadowood submarket at about 8.5 percent. According to the Third Quarter Real Estate Market statistics for the area from Chase International, the median price of a home in the area climbed 10 percent to $333,000
“It’s a trend we have seen really in the last 12 months that we haven’t typically seen,” Bennett said. “We will have a couple of transactions in the fourth quarter where buildings will be 100-percent leased. That in turn will keep our vacancy down. We have a very healthy balance of construction and demand in our market right now.” Rental rates also continue to inch upward. Bennett says year-
over-year bulk lease rates in 2017 are up 5 percent, and he expects them to climb another 3 percent in 2018. The Reno-Sparks industrial market is expected to remain as strong in the fourth quarter and following 12 months as it has in 2017 and the trailing 12 months due to diversification in the market. “We are no longer just an 11-state western distribution hub; we are an
SHRINKING AVAILABLE OFFICE SPACE The vacancy rates for the South Meadows and Meadowood office submarkets dipped into single digits in the third quarter, leading the way for what are record low rates, according to Dickson Commercial Group. The third-quarter rates for the major submarkets in Reno-Sparks: available space is becoming hard to come by,” she said. Molyneaux said the third quarter’s biggest office market sale was Ormat Technology’s purchase of the 27,676-square-foot former Kafoury Armstrong building at 6140 Plumas St. The building, which sold for $2.9 million, also sits within the upperscale Meadowood office submarket. Other smaller office market sales during the quarter were the 14,017-square-foot building at 333 Holcomb St. for $3.55 million, a 3,720-square-foot building at 130 Vine St. for $595,000, and a 2,612-squarefoot building at 16640 Wedge Parkway for $620,000. “People are buying buildings and putting money into renovations,”
and overall sales volume went up 17 percent. The Carson Valley experienced a 16 percent jump in sales and an 83 percent rise in homes that are selling for more than $1 million. The median price for a home in the Carson Valley also rose 12 percent to $365,000. With more people moving into the region for job opportunities, low taxes and quality of living, there has been a continual growth in rents across all sectors. Riggs said to expect to see rents rising through the end of the year for all sectors with multifamily spaces rising at a much faster pace when compared to other sectors. He said that the area is seeing 20 percent increases in rent from the end of last year. ●
Molyneaux said. Brunetti said the opening of the McKenzie building in 2018 could have at least a short-term impact on net absorption after the string of positive quarterly figures. “I believe we’ll see (absorption) go the other way with new construction putting new square footage on the market,” he said. “Once (McKenzie) is completed, we will see the submarkets of Meadowood and Downtown adjust for those tenants moving into that building. We are not aware of any new (to the area) tenants absorbing space in that building. Thus, unfortunately, that new construction will have a negative effect on absorption.”
ecommerce hub, and manufacturing demand, to the degree that we are seeing it, we’ve never seen before,” Bennett noted. ●
Only a small section of the former Kmart Distribution Center is visible along South McCarran in Sparks. Photo courtesy Colliers International
South Meadows: 8.59% Meadowood: 8.72% Downtown: 10.73% Airport: 10.78% Central: 19.85% Total: 10.76% Source: Dickson Commercial Group
But in the bigger picture, Brunetti and Molyneaux said, the new construction reflects renewed confidence in the Reno-Sparks office market. “The reason people are building is good. It’s a positive reflection of a growing economy and growing rents,” Brunetti said. “That’s escalated to the extent that developers believe it’s worth it to build. So overall, things are pretty healthy.” Added Molyneaux, “We see a lot of interest from the Bay Area, Colorado, coming in and looking at the market. That interest is great news.” ●
Heavy equipment seen in the background begins the process of transforming cracked concrete and weeds into the new Park Lane multi-use development, which is promoted with large signs positioned around the site at South Virginia Street and Plumb Lane in Reno. Photo by Whip Villarreal
Commercial Real Estate BY THE NUMBERS Industrial
Retail
Source: DCG
Source: DCG
Office
Multifamily
Source: CBRE Source: DCG