RENO, Nev. — When Panattoni Development Company begins the second phase of its North Valleys Commerce Center project at the end of April, it marks the start of the largest speculative industrial project ever undertaken at one time in the state.
Panattoni plans to construct five buildings totaling 1.36 million square feet in a quick 18-22 month window, a compressed building pace designed to capitalize on the region's low vacancy rate in Class A industrial space.
Doug Roberts, Partner with Panattoni Development Company, says Panattoni broke with its historic – and safe – model of constructing as speculative buildings as they are leased in order to better meet market demand.
“Usually we have benchmarks where we reach a certain leasing threshold and then start the next building, but in this case we will continue building over the next 22 months to make sure we have enough product coming online in this market,” Roberts says.
Panattoni already has completed four new buildings totaling 2.28 million square feet for phase 1 of North Valleys Commerce Center. Those buildings were quickly leased by new tenants, and institutional investors snapped up three of the buildings as well.
Panattoni already has broken ground on the first building in the second phase of NVCC. The 313,000-square-foot building completes the development footprint on the north side of South Virginia Street and should be finished in about six months, says Brett Olson, senior project manager for Alston Construction, Panattoni's construction partner.
Olson says that in addition to meeting market demand, the tight construction schedule also capitalizes on economies of scale.
“In order to get costs down, we basically are attacking one building and starting the next a month and a half after,” he says. “At one point, we will have three to four buildings going on at once. Securing that much manpower and materials is hard, especially here in town since we are kind of isolated. It takes a lot of pre-planning and work with our suppliers.”
Planning is crucial, especially during concrete pours for flatwork and tilt-up walls. The entire project calls for more than 65,000 cubic yards of concrete. By way of comparison, that much mud would more than fill a 50-foot deep football field. It's no small task to get that much concrete on site during pour days, Olson says.
“It can take between 25 to 30 trucks, which pretty much brings to a halt all concrete activity throughout the area,” he says.
Bonanno Concrete will perform all concrete work for the building pads and tilt-up walls. Alston will use Harris Salinas Rebar of Livermore and local suppliers for the required rebar.
Preparing the site for construction is equally challenging. The land on the south side of North Virginia Street slopes 80 feet from front to back, Olson says. Sierra Nevada Construction will move more than 650,000 cubic yards of dirt to cut and fill the site during mass grading. That's enough dirt to fill that same 50-foot deep football field 10 times over.
Additionally, more than 36,000 tons of rip-rap will be used to secure slopes, as well as for storm drain retention and detention ponds. And more than 40,000 linear feet – 7.57 miles worth – of water, sewer and storm drain pipe will be installed.
“This is definitely one of the larger projects in my career and for Alston in Reno,” Olson says. “Due to the quantity of buildings and the overall timeframe that we have to complete it, along with the overall demand of manpower required to finish the project, the scope far exceeds anything in my career for a single project.”
In addition to working closely with its various subcontractors to ensure they can deliver enough manpower, it's crucial that the development team stays in lockstep with city officials to ensure the permitting process goes smoothly, he adds.
“We are working with the local government agencies to streamline everything that there are no holdups with permitting, materials and suppliers,” Olson says. “Our subcontractors are committing almost their entire workforces to this project, so we have to keep things moving with no delays between the buildings.”
Alston is committing four to five on-site superintendents and assistant superintendents to the project, along with three full-time project managers, to ensure consistent and smooth workflow.
Roberts says that while memories of the industrial real estate collapse in the mid 2000s remains fresh in every developer's mind, the market demographics are far different today. For starters, he notes, there's the emergence of Northern Nevada as hub for ecommerce distribution. And there simply aren't as many developers in the market, either, Roberts notes.
“Generally speaking, the development sector has been more disciplined than in the mid-2000s,” he says. “Land for development also is limited. We've analyzed our product against others, and there is a dearth – there are only a few projects coming out. We still have to make sure we are not putting out too much product ourselves, but given current absorption in the marketplace, especially with the transition in the market to ecommerce, and we don't see any degree that gives us concern.
“Our capital partner is very bullish on the market,” Roberts adds. “They love Reno, and we have performed very well here for them.”
The California State Teacher's Retirement System, or CalSTERS, is Panattoni's longtime capital partner on projects in northern Nevada, the U.S. and Europe.