Construction costs, labor woes limiting some business space in Carson City

Space for industrial business and medical offices is tight in Carson City.

Space for industrial business and medical offices is tight in Carson City.

CARSON CITY, Nev. — Vacancy rates in Carson City's office and retail real estate sectors are in the healthy range while space for industrial businesses and medical offices is tight, according to a new study by NAI Alliance Carson City.

Despite demand, there's little relief in sight for the latter two sectors.

“The major challenges continue to be the high costs of construction and an over-pressured labor force, which makes building any project very difficult,” said Andie Wilson, broker, owner.

In its first study since 2015, NAI Alliance found an 8.1 percent vacancy rate in the market for office space and a 16.9 percent rate in retail, adjusted down to 9.9 percent when the long-vacant Kmart big box store in north Carson City is excluded.

The office vacancy rate has improved since 2015 when it was 14.7 percent and from its worst of 17.8 percent in 2011. The retail vacancy rate remains unchanged in the last five years.

Using the adjusted rate for retail, both rates are below 10 percent, the local average, and somewhat in balance so neither landlord nor tenant, or seller or buyer, has a distinct advantage.

The vacancy rate for industrial space is 5.2 percent, significantly lower than its high of 21.5 percent in 2009, and lower than the national and local average of 7 percent.

In recent years, Carson City rezoned some land around the Carson City Airport in an effort to make more industrial land available. And Northern Nevada Development Authority launched programs to rehabilitate brownfield sites as well as do preliminary permitting and other work on specific industrial sites to be more easily sold. But construction costs as well as unavailability of contractors remains a problem.

Medical office space, which accounts for about 11 percent of the overall office market, is at 4.1 percent.

“Any construction you're seeing at this time is done for a specific user,” said Wilson. “The costs of construction are way too high for spec building. So even though there's a need, it's difficult to fill.”


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