Industrial-space vacancy rate falls fast
April 26, 2004
Vacant industrial space in northern Nevada was snapped up quickly in the last three months, reflecting both the growth of local companies as well as the arrival of newcomers.
Specialists in industrial space say the trend could accelerate quickly in the next few weeks, and developers are wondering if they should move up the timetable on projects they have planned.
More than 2 million square feet of industrial space were absorbed in the Reno-Sparks market during the first quarter, says Par Tolles, area director for Trammell Crow Co.
The vacancy rate now stands at about 10 percent in the 56 million square feet of industrial space in the area,Tolles said.
The recovering U.S.
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economy has led national companies to move ahead with plans for new facilities in northern Nevada.
“There’s been a lot of pent-up demand,”Tolles said.
“As the nation goes, so goes Reno.
If the national economy does better, Reno sees the benefits of that.”
Gary Baker, president of Lee & Associates in Reno, says some of his national clients first looked seriously at Reno before the economy tanked in late 2001.
Now that things are perking up, they’re ready to move in a hurry.
But not all the vacant industrial space is filled by newcomers.
“The strength of the market has been our current tenants growing,” said Aaron Paris, chief operating officer of DP Partners.
“That’s a very, very good sign.”
Big users returned to the market in a big way this year.
In the first quarter, six industrial deals involved 100,000 square feet or more, said Dave Simonsen, senior vice president for industrial properties with Colliers International.
In all of 2003, only three deals involved spaces that large.
“It’s as active as I’ve ever seen it,” said Simonsen, who has nearly two decades experience in the market.
In Carson City, meanwhile, the vacancy rate stands at 12 percent in the city’s 5.5 million square feet of industrial space, said Kris Holt of Grubb & Ellis NCG.
“Activity is very brisk,” Holt said.
“We getting a lot of calls from California.”
Also brisk, he said, is investor interest in buying industrial properties.
“There must be 20, if not 25, guys in line to purchase every 10,000-square-foot building that comes on the market,” Holt said.
The vacancy rate may drop quickly in coming weeks, Simonsen said, as nearly every vacant industrial property in the market has drawn serious attention from at least one potential tenant.
The tightening market isn’t yet causing problems for the organizations that recruit new industries to the region.
Chuck Alvey, president and chief executive officer of the Economic Development Authority of Western Nevada, says EDAWN’s only headaches arise when companies are looking for highly specialized facilities a fully equipped pharmaceutical manufacturing plant, for instance or big buildings of 500,000 square feet or more.
“We have a lot of confidence in our developers,” Alvey said.
“They see what is coming.”
Those developers think they may need to speed some projects to the market.
Panattoni Development Co., which next month begins construction of a 147,000-square-foot industrial building at Stead, might accelerate plans for another 400,000 square feet of construction, says Doug Roberts, who heads the company’s operations in Reno.
DP Partners, meanwhile, is bringing 400,000 square feet of industrial space in South Meadows to the market it’s half leased already along with 186,000 of new space in the Dermody Business Park.
The two buildings in the business park are 40 percent leased.
“It’s been a very quick turnaround,” said Paris.
“We have to start thinking about what’s next.”