At nearly 1 million square feet, massive Reno industrial building goes vertical

The Park at McCarran's anchor building should be ready by May 2022

United Construction crews work to erect the 995,782-square foot industrial building that serves as the anchor facility at The Park at McCarran development in east Reno.

United Construction crews work to erect the 995,782-square foot industrial building that serves as the anchor facility at The Park at McCarran development in east Reno. Courtesy Photo

By Rob Sabo

Published: Monday, November 22, 2021
Updated:Tuesday, November 23, 2021


CORRECTION: This story has been updated to correctly report that Locus Development Group (LDG) of Reno is co-developer of The Park at McCarran project. The original version of this story incorrectly reported that Locus Financial Group of Santa Monica is a project partner. The NNBW apologizes for the error.


The effects of the burgeoning ecommerce industry are being keenly felt in Northern Nevada.

For Dermody Properties, a development plan that started out with five modest-sized speculative industrial buildings turned into one of the single largest industrial buildings in Northern Nevada.

Motorists driving by The Park at McCarran development at the eastern end of Mill Street might be a bit awestruck by the magnitude of the massive 995,782-square foot building being erected for a still-undisclosed national tenant. As of mid-November, all four walls are up and the roof is under construction.

Tilt up contractor United Construction is expected to complete the building for Dermody by May 2022.

John Ramous, Nevada partner for Dermody Properties, has worked in industrial development for more than 30 years. But he’s never worked on a building of such enormity.

“It’s the largest single infill development I can recall in the last decade,” Ramous said last week during an interview at the project site. “There just aren’t too many buildings like this.”

Discussions with the tenant began early last year, Ramous added. After a short pandemic-induced pause, they quickly moved from a typical big box of 350,000 square feet to larger and larger scope as the tenant reconsidered its growing ecommerce and distribution needs.

“It got a little larger, and a couple months later it got larger (still),” Ramous said. “Here we are today at just under 1 million square feet.”

Construction crews work on the nearly 1-million-square-foot industrial building at the Park at McCarran development in October. Courtesy Photo

 

The lease for the current building was inked in the fourth quarter of 2020. Having a tenant changed the risk profile and planning for Dermody and its financial partner at a time when the pandemic was creating uncertainty about the economy — although the future of ecommerce was made abundantly clear during the pandemic as online sales soared.

According to the United Nations Conference on Trade and Development, online sales in the U.S. accounted for $519 billion in 2018 (9.9 percent of all retail sales) and surged to $791 billion in 2020 (14 percent of all retail sales).

Northern Nevada distribution facilities are uniquely positioned to meet increased online consumer demand across the greater Western region — trucks can reach 11 western states in one-day’s drive. In addition to being one of the largest industrial facilities in the region, the new facility is well positioned in the airport submarket, Ramous noted.

“We always refer to projects as far as scalability — are there enough large sites to build projects of 1 to 2 million square feet, and it’s extremely challenging (to find them) in the valley, let alone the airport submarket,” he said. “You can’t replicate this.”

Construction crews work on the nearly 1-million-square-foot industrial building at the Park at McCarran development in October. Courtesy Photo

 

Crews are grubbing land to the south of the building to accommodate additional water runoff, when necessary. The land east of McCarran Boulevard has been prone to flooding when major flood events have occurred in the Truckee Meadows, but there have been many flood mitigation measures enacted to create excess water capacity to flow through the project, Ramous noted.

“We have over a dozen various reserves here onsite and offsite to accommodate (floodwaters),” he said. “We are actually in a better position than before the development.”

Dermody partnered with Locus Development Group (LDG) of Reno to develop the industrial building.

As co-developer of the project, LDG still retains ownership of two smaller commercial buildings at Park at McCarran that are expected to be delivered by summer 2022. Those buildings are planned for 145,000 and 206,000 square feet. While no tenants are currently signed, Ramous said he is navigating a half-dozen proposals for the facilities and could potentially announce signed leases within the next 60 to 90 days.

Rendering of the finished product, expected in May 2022. Courtesy: Dermody Properties

 

There also are two undeveloped parcels on either side of the proposed Mill Street extension fronting McCarran Boulevard that will likely be developed into a combination of retail and flex buildings.

OTHER PROJECTS IN THE PIPELINE

Looking west, Dermody Properties also is gearing up to build more than 400,000 square feet of new industrial product on 26 acres fronting Interstate 80 by Cabela’s at Boomtown.

Last week, Dermody announced the development will be known as LogistiCenter at I-80 West Phase II, located adjacent to the Phase I site that was completed in 2017.

The buildings will be 258,000 and 170,000 square feet with 32-foot clear heights. Construction is expected to begin next summer.

A rendering of the LogistiCenter at I-80W Phase II Building. Courtesy: Dermody Properties

 

The properties will be leased by Dickson Commercial Group’s industrial team of Joel Fountain, Baker Krukow and Nick Knecht, who facilitated the September land purchase.

According to Washoe County records, the transaction was valued at $8,066,100.

“It complements the first phase we developed,” Ramous said last week, “and it gives us an opportunity to cater to those users in the west (part of town).

Dermody also has plans to move forward with additional industrial development in the North Valleys that it will announce in the coming months.

Across the region, industrial vacancy continues to dip despite many new projects underway. Net absorption of 1.2 million square feet in the third quarter pushed the overall vacancy rate down to 2.67 percent, industrial brokerage Kidder Mathews reported.

Although another 2.3 million square feet of Class A industrial space is expected to come online by the end of this year, three-quarters of that space is already leased.

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