Local developer acquires six buildings in downtown Reno
March 20, 2017
Downtown Reno is a hot spot in the office market.
Tolles Development Company has recently acquired a portfolio of six office buildings in downtown Reno totaling 140,000 square feet.
The portfolio marks the first acquisition for the company started by veteran commercial real estate executive Par Tolles. Tolles previously served as the president of Basin Street Properties and has been very involved with downtown properties such as the transformation of Kings Inn into 3rd Street Flats and the development of the Courtyard by Marriott Reno Downtown/Riverfront. In 2016, he started his own development company.
"I felt like (the portfolio) was a good platform for me to launch Tolles Development Company," he said.
AMH Properties of Reno previously owned the six properties that include:
Three buildings in Reno's downtown financial district, 241 Ridge St., 201 W. Liberty and 275 Hill St.
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100 and 140 Washington St., located near Hub Coffee Roasters
1301 Cordone Ave., which is home to RISE Academy for Adult Achievement and more than 15 nonprofit organizations
Tolles described the office buildings as Class-A locations with Class-B rents. The buildings are at about a 95 percent occupancy rate and totals approximately 70 tenants.
The AMH portfolio was assembled by husband and wife team Alex and Marion Tavenner Hose. Marion died unexpectedly in early 2016 leaving the future of the properties to Alex.
Dan Oster and Chase Houston of NAI Alliance represented both Tolles Development Company and AMH Properties in the transaction. Gaston and Wilkerson Management Group will manage the portfolio; however, Tolles said that he will also be very hands on in the management of the properties.
Tolles plans to renovate the exteriors of the buildings.
"Alex had done a great job renovating the interiors of the buildings," he said. However, "They can use a little bit of a facelift."
Improvements for the buildings include new paint on the exteriors, outdoor art and improved landscaping. He is currently working with a designer and plans to start the improvements this year. Tolles highlighted 201 Liberty as the building in need of the most changes. The building is located across the street from the Nevada Museum of Art. Tolles explained that he wants the building to blend in better with the art district.
"That is the one that I am focused on the most right now," Tolles said.
Tolles said that it was not difficult to raise capital for the downtown investment. He found there were many investors in the Bay Area and Tahoe region who were interested in funding a downtown Reno investment.
"When it comes to office space, particularly downtown Reno office space, I found that you have a lot of excited, high-net-worth individuals interested in investing in downtown Reno," Tolles said.
"I don't know if I could have said that two or three years ago."
With the momentum in the region, Tolles expects to see strong growth in the office market over the next few years.
"You have seen a lot of new industrial and manufacturing companies entering the market but not a lot of new office companies," he said. "I think that will change."
According to Tolles, there will be a need to have more office tenants in the areas of finance, insurance and real estate to support the anticipated growing population.
Tolles moved to northern Nevada from the Bay Area in 1994. He worked for Trammell Crow Company for nearly 15 years where he developed many industrial and office projects in Nevada including Sierra Corporate Center. Tolles also served as president of Dermody Properties for three years before becoming president of Basin Street Properties, a development and commercial property management company in northern California and northern Nevada.
"I really started to see things change in Reno over the last two years and I wanted to spend more of my time focused on northern Nevada," Tolles said.
In mid-2016, he started his own company with the support of Basin Street Properties and its CEO Matt White.
"He really facilitated for me to move out on my own," Tolles said. "I am really grateful to Matt and Basin Street for their assist."
Tolles is continuing to seek opportunities grow his company within the multifamily, industrial and office sectors.