Work has begun on the first speculative industrial warehouse at Victory Logistics District in Fernley, and the 815,000-square-foot building could represent the beginning of transformative change for Lyon County’s largest town. Mark IV Capital purchased the land for Victory Logistics District in 2019 for $45 million and quickly began plans to transform the 4,300-acre site into a regional intermodal distribution and storage hub featuring a dual-service rail spur off the main Union Pacific line. Mark IV broke ground April 21 for the massive speculative building located on Duffy Road next to Interstate 80. Based on initial interest, developers are expecting to have the facility fully leased before it’s completed in February 2022. Altson Construction is erecting the building using standard tilt-up construction methods. Sierra Nevada Construction, meanwhile, is currently mass grading for two additional spec buildings of 170,000 or 220,000 square feet. A fourth spec building of about 600,000 square feet will follow the first three. Mark IV plans to develop as much as 10 million square feet of new Class A industrial buildings during the first phase of Victory Logistics District. Half of that is expected to bring 10,000 new jobs to Fernley, said Ross Pfautz, Mark IV Capital’s senior vice president of Northern Nevada. Pfautz envisions a time soon where residents of Fernley and surrounding communities can find a plethora of job opportunities without the need to commute west on I-80 to Tahoe Reno Industrial Center or even farther into Reno-Sparks. “We are talking to some relatively new manufacturing techniques and disruptive technology tenants that will employ a lot more automated manufacturing or automated warehousing techniques, as well as some data center tenants,” Pfautz told the NNBW. “We will have a much broader mix of tenants in the job base than has existed in this rural area. “That’s the part that’s really going to be transformative. We are bringing a diversity of jobs and economic expansion that will last for a couple decades.”
Construction crews work on the 815,000-square-foot building on June 16, 2021. Courtesy: Mark IV Capital
PLENTY OF BIG COMPANY INTEREST The sheer scope of Victory Logistics District is drawing interest from large national tenants that likely would create a “critical mass” once they begin planting their flags in Northern Nevada. It’s a scenario reminiscent of when Amazon constructed its Reno distribution center in 2013, kicking off a new wave of industrial building following the Great Recession, or when Tesla announced its Gigafactory in 2014, which jump-started Northern Nevada’s flourishing tech industry. Mark IV’s phase 2 master plan, meanwhile, is also in development. That part of the project includes an additional 1,400 acres of developable land that could draw large tenants who wish to purchase their own land to construct new western region manufacturing or distribution facilities. Evan Slavik, Mark IV Capital’s president of real estate, says the company is fielding a lot of interest from big companies looking to do major manufacturing facilities at the site. The addition of rail infrastructure served by both BNSF and Union Pacific is another big selling point. “(Tenants) will have the ability to use both companies for competitive pricing,” Slavik said. “It’s a really unusual situation — a lot of other rail-served industrial is served by only one of those major clients. “When we decided to put in rail infrastructure off the dual-service mainline, that makes a difference nationally to site selectors who are looking for rail service,” Slavik added. “Site selectors, even if they don’t need rail today, know that there will be other buildings they can move into if they need to upsize, add a building, or even downsize. It makes it easier for big corporate tenants to make a commitment because no matter what happens over the next 10-20 years, they will have choices.” Both executives told the NNBW advancing the project through the pandemic brought about some unique challenges, particularly with project financing. Mark IV Capital partnered with Comerica Bank for its construction lending. “They are a great partner,” Slavik said. “They are committed to doing future projects with us — they are very bullish on industrial, especially in this area. Pfautz said that since the new industrial building started coming out of the ground, Mark IV Capital has seen accelerated interest from site selectors, as well as additional support from the City of Fernley. The 815,000-square-foot building is ideally suited for e-commerce operations, he noted, but it could also accommodate manufacturing. While the building is divisible to accommodate up to four tenants, Mark IV said it would prefer to lease the facility to a single user.
A WEALTH OF BENEFITS Mark IV Capital’s bullish investment in the Victory Logistics District is expected to provide a wealth of benefits for many years for residents of Lyon County.
Daphne Hooper, Fernley City Manager, says the project puts Fernley in an incredible position for economic development and growth. “Northern Nevada is a key hub for manufacturing, distribution and logistics planning, and Fernley’s strategic location is garnering national recognition,” Hooper said. “The entire Victory site sits within a federally designated Opportunity Zone, which is intended to spur economic development and job creation in eligible communities. In addition to the positive economic impact, our residents have the opportunity to work in the same community where they reside.” Considering more than 60% of Fernley residents commute outside the area daily, Hooper said that negatively impacts quality of life, not to mention significant traffic and economic issues. “Local job creation has numerous positive impacts for residents, business owners and the city, and proximity to the workplace can significantly improve quality of life by allowing for more free time, less wear and tear on vehicles, and less money spent on gas,” Hooper added. “Local job creation can positively impact the Fernley economy as well, allowing residents to spend their dollars on local retailers, restaurants and services during their workday.” Slavik says the company is playing the long game with its real estate holdings in Fernley. “We are long-term real estate holders across our portfolio, and we will be involved in Fernley for many decades,” he said. “We are looking forward to growing the industrial base and really helping the economy as a partner with the city.”