Reno and the nearby region is known for casinos and resorts, but developers are also betting on a wide range of properties in this fast-growing area.
NAIOP’s Northern Nevada chapter is focused on real estate development in Reno and the surrounding areas. In early 2019, it was named NAIOP’s Chapter of the Year in the Small Chapter category. Board President Matt Harris of Avison Young and Education Committee Chair Andrew Tourin of First Centennial Title Company answered a few questions about what is going on in commercial real estate in this bustling region of the country.
|Year Founded: 2006
|Number of Members: 127
|Number of companies represented: 69
Development: How are the market conditions for member companies in your chapter?
Matt Harris and Andrew Tourin: Northern Nevada continues a strong growth cycle initiated in 2012. We’ve added 48,000 new jobs in the past five years, a job growth rate of 3.5% per year. This job growth equates to an increased need for commercial and residential properties. This region is one of the fastest-growing markets in the fastest-growing state in the country. Opportunities are abundant for industrial product, office and retail development.
Development: What are the biggest challenges you’re facing in either the business or regulatory climate in your area?
Harris and Tourin: Our member companies are all struggling to fill the labor pool necessary to meet the demand fueled by the region’s explosive growth. Developers and general contractors are actively searching outside of our traditional labor markets to bring in additional skilled subcontractors to assist in completing projects on time. Similar to the national economy, Northern Nevada is facing higher material costs, increased development fees and other public utility pricing increases. Our speed to market has been our unique selling point for some time now, and it is still one of the fastest in the country comparatively. One- to three-month delays for special-use permits related to site grading and stormwater retention have become the norm as we expand outward into the foothills of our region.
Development: What are the biggest opportunities in commercial real estate in your area right now?
Harris and Tourin: Both industrial and office product are in high demand in the region and are being absorbed quickly. Rents for new product reflect the current cost of construction but have not deterred absorption. Market average rents for industrial are $6.95 per square foot, a 5% increase over 12 months. That’s currently about 20% lower than the national average. Big box industrial asking rents average $4.60 per square foot. Office asking rents average $20.75, and retail asking rents average $18.10. Currently there are more than 3 million square feet of industrial product under development, and some exciting new office and hotel projects are planned for the downtown Reno core and South Reno markets.
Development: What are some of your chapter’s legislative or regulatory priorities?
Harris and Tourin: A rapidly growing region brings with it a rising “anti-growth” sentiment among some residents. Our most important public policy mission is to ensure that our elected officials understand the need to provide well-thought-out developments where residents can work, shop and live. As such, NAIOP Northern Nevada has created good relationships with both local and state elected officials as well as their staff. We pride ourselves on the way we’ve worked with those bodies to craft sensible regulation and identify unintended consequences of proposed legislation or ordinances that weren’t thoroughly vetted. Being a resource for best practices in development for our local municipalities is our No. 1 priority. The Government Affairs (GA) committee’s most recent success was defeating a development moratorium in one of our fastest-growing submarkets, the North Valleys area. City of Reno officials heard testimony from our GA Chair Elizabeth Fielder of Fielder Law, current chapter president Matt Harris with Avison Young and several concerned members on the importance of continued development in the area. The final vote was close, but the Reno City Council made the right decision in the end.
Development: What are some notable projects in Northern Nevada?
Harris and Tourin: Northern Nevada’s economy is being driven by logistics and distribution companies taking advantage of the region’s strategic location, and now advanced manufacturing companies are following suit. Panattoni is currently building more than 2 million square feet of spec industrial product in our North Valleys submarket. Dermody Properties has also completed several other big-box projects in the North Valleys over the past 12 months. Emerging industrial markets include the town of Fernley, 30 minutes east of Reno/Sparks on Interstate 80 and along the Union Pacific rail line. This new park will include an intermodal trans-load facility for logistics and manufacturers. Google’s 1,200-acre project in the Tahoe Reno Industrial Center is under construction and has yet to be officially announced. Speculation says it will be bringing in hundreds of high-paying engineering and tech jobs. All of this activity has led to a flurry of mixed-use developments like the project Reno Land is currently developing at the 38-acre Park Lane site in the center of the city. A former regional mall site is being transformed into luxury apartments, retail and office. Tolles Development Co. acquired land to also construct a retail and office project southwest of the Reno Tahoe Airport in the Meadowood submarket. McKenzie Properties has just announced Skypointe, a 200,000-plus-square-foot spec mixed-use project at the most traveled intersection in Reno. Downtown Reno is also experiencing significant redevelopment with a $1 billion, 20-block project by developer Jacobs Entertainment. Jacobs is expected to deliver more than 2,000 units including multifamily, hotel,
retail and entertainment venues.
Development: Is there anything you’d like to say to other NAIOP members?
Harris and Tourin: NAIOP Northern Nevada invites NAIOP members from across the country to come see what our community has to offer. We are experiencing growth in advanced manufacturing from companies such as Tesla with its game-changing Gigafactory, data centers for Apple, Google and Switch, and state-of-the-art distribution facilities for Polaris, Ebay, Zulily, Amazon, Walmart and many others. There are numerous opportunities for developments of all types to meet these new market demands, and we would like our fellow NAIOP members to experience our unique community.