RENO, Nev. — Two new projects are underway that will add more than 100,000-square-feet of retail space — and some serious cachet — to Northern Nevada's retail scene.
Tolles Development Company is erecting 60,000-square-feet of upscale retail product at the Village at Rancharrah. The space is already about 70 percent pre-leased, says Shawn Smith, first vice president of the retail properties group at CBRE.
The Village includes a host of well-known regional retailers who are expanding into additional locations, including Süp, Dorinda's Chocolates, Coffeebar, Chez Vous, Centro, Hinoki Sushi and Dolce Vita Wellness Spa.
Other retailers include Base Camp Pizza, which operates an additional location at Heavenly Village in South Lake Tahoe; and Sierra Standard, a new concept from Tom Turner, owner of the popular Gar Woods Grill & Pier at Carnelian Bay in North Lake Tahoe.
Sierra Standard will operate from a 9,000-square-foot, two-story space featuring an expansive upper deck and ground-level patio facing the Sierra.
“(TDC) really wanted to do a regional project with a focus on best-in-class,” Smith says.
The first tenants at The Village at Rancharrah are expected to begin moving in in late summer, Smith says.
The retail center mirrors newer upscale retail locations that feature large central common areas designed to draw in consumers rather than typical power/strip centers with standard storefront parking.
Parking at The Village will be located around the back of the stores. Additional common-area amenities include bocce ball courts, oversized checkers and chess boards, firepits and a stage for summertime concerts.
“We wanted people to get out of their cars, walk and patronize multiple stores,” Smith says. “We can do that by parking on the perimeter and having the interior as The Village. We really wanted to make it a one-stop destination.”
“This is a totally different trade area,” Smith adds. “It's a different demographic that's pulling from (nearby) office buildings and residences around town. But at the same time, it's the same demographic that shops at Midtown, or in Truckee or Lake Tahoe where these concepts are from. We have a great mix of daytime and nighttime population in the Meadowood trade area.”
The second large retail development in the works is S3 Development and Ensemble's partnership at Keystone Avenue and Fifth Street.
Work crews have begun burying the small irrigation ditch that currently divides the parcel in order to make it a contiguous footprint that will feature 43,000 square feet of retail space along with a large multifamily project.
The new center will feature many large national retail concepts, CBRE's Smith says. Groundbreaking on the project is expected for the second quarter of this year.
Overall, Northern Nevada's retail market continues to improve. Vacancy across Reno-Sparks fell to 5.8 percent in the third quarter of 2019 (the latest quarter for which data was available at the time of this writing), CBRE reports. A sub-6 percent vacancy rate is the healthiest vacancy rate for the region since the Great Recession.
The national “retail apocalypse” that's seen a host of large national retails file for bankruptcy or fold up shop completely hasn't left our market unscathed. However, much of the dark big box space they left behind is being repurposed.
For instance, Renown Health took the old Lowe's location on Oddie Boulevard to use as data management center, while Sprouts Farmer's Market took the old Sports Authority location at Sparks Galleria on Disc Drive.
Safeway, meanwhile, is building a new 63,000-square-foot grocery store in Damonte Ranch near RC Willey. Additionally, Goodwill Industries is moving into the old Toys ‘R' Us location at Smithridge Center, while Lee's Discount Liquor took space in the renovated building that formerly housed Scolari's at Southwest Pavilion on South Virginia Street.
Other existing big box space that's been dark for many years — such as the Reno Mervyns — could eventually become fulfillment or distribution centers for last-mile distribution, Smith says.
Kelly Bland, senior vice president and principal with the retail properties group at NAI Alliance, says regional vacancies are split equally between line shops and anchor tenants.
Line shops (spaces under 10,000 square feet) hit a high of 24 percent vacancy during the recession, but have since declined to less than half that.
Line space in the region's most desirable locations is almost instantly backfilled once it become available, Bland adds.
Newer spaces being developed are leasing at market-rate highs of $2.50 to $3 a square foot triple net, compared to about $1.50 to $2 for existing general line shop space. The average lease rate throughout Reno-Sparks was $1.47 per square foot, NAI Alliance reports.
Regional retail is expected to continue its positive gains despite the financial pain of many national retailers.
“The economy is poised for a good year,” Bland says. “Most economists think we will continue through this year without a recession, and as long as that holds retail will do well — retail is very consumer driven.”
Small retailers also have benefited from the run-up in home prices to leverage additional equity in their homes into business capital, Bland adds. That avenue of funding has helped many Northern Nevada retailers expand or open new businesses.
“That, combined with small business loans, are the two primary sources of funding for retailers,” he says.
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