Reno-Sparks office absorption in Q3 highest since pre-pandemic

The 40,000-square-foot building at 550 Maestro Lane will be the first new speculative office building constructed in Reno-Sparks in well over a decade, according to Avison Young.

The 40,000-square-foot building at 550 Maestro Lane will be the first new speculative office building constructed in Reno-Sparks in well over a decade, according to Avison Young. Photo: Avison Young


There’s a new speculative medical building coming to the Reno office market.

The 40,000-square-foot Maestro Medical Plaza building will be located a stone’s throw from Northern Nevada Medical Center’s new South Reno campus (Sierra Medical Center) on Longley Lane.


The three-story building at 550 Maestro Lane will be built by commercial developer Woodmont of Fort Worth and is scheduled to break ground this spring.


It’s the first new speculative office building constructed in Reno-Sparks in well over a decade, says Bram Buckley, vice president with the office team at Avison Young.


“We will be breaking ground no matter what by next spring,” he said. “This is a true speculative building — we are not waiting for the market to come to us.”


Buckley told the NNBW that Woodmont had purchased a parcel of land on Maestro to erect a new Kids ‘R’ Kids learning facility, but the parcel was large enough to contain another building. The Texas-based developer settled on a product type that meets pressing demand in the Reno-Sparks market, Buckley added.


General office market vacancy stands at around 8%, but medical office vacancy is below 3%. While Greater Reno-Sparks continues to grow in population, regional doctors have little options when it comes to expanding their medical practices to better serve the needs of new and existing residents, Buckley said.


“There’s no place for doctors to grow,” he said. “As our community grows, doctors can take on more business, but they are hamstrung by the physical size of their buildings. I control over 350,000 square feet of medical office space, and almost every doctor says they have enough business to expand but they can’t because they can’t find the space and the employees … this will allow a medical group to plan into the future and take on that growth they need as a practice and we need as a community.”


Office space at Maestro Medical Plaza will be offered for sale at $480 a square foot, with $80 a square foot in tenant improvements factored in, or at $3 per square foot triple net lease with the same allowance for tenant improvements.


The building will be divisible to spaces as small as 5,000 square feet, though most tenants likely seek to buy larger spaces, Buckley said.


“Most doctors are looking for something to buy, but there isn’t anything. We expect most of this product to be sold,” he added. “Doctors hate moving; it’s wildly expensive. But that also means they can’t grow their practices, which is a problem because our population is getting bigger.”


The facility likely will be a welcome addition to the regional office market, which has seen little new construction during this extended building boom. Reno has never been much of an office town, Buckley noted — its entire inventory of Class A office space could fit inside two Downtown Chicago high-rise office towers, he said.


“Our office market has always been an ancillary or a support market for the industrial market,” he said. “We are an industrial town at heart, and the office market just barely keeps up with our population.”


THIRD QUARTER RESILIENCE


And while the lingering pandemic continues to disrupt office vacancies in larger markets, Reno-Sparks remains buffered from the work-from-home trend mainly because its average office rents are so much lower than in primary markets.


In fact, the nearly 40,000 square feet of net office absorption in the third quarter was the highest since before pandemic-related shutdowns hit in the second quarter of 2020, reports the Reno office of Colliers International. Year-to-date net absorption is just over 56,500 sq. ft., Colliers added.


Jennifer Jack, associate with the Reno office team at Colliers International, said the third quarter showed the resilience of Reno-Sparks, with the most activity coming in the sought-after Meadowood and Downtown office markets.


“It’s where people want to be. We are seeing people go back to the office and signing leases in a variety of size ranges,” she said. “Going forward, amenities will be really important to office developers because that’s what’s attracting the next generation.


“Companies have to provide incentives (for workers) to be in the workplace by making it more of a community feeling.”


KEY Q3 TRANSACTIONS

Below are a few of key transactions recorded across the Reno-Sparks office market in the third quarter:


  • Lithium Nevada outgrew its 3,600-square-foot office and moved into 9,100 square feet at NevDex Office Park on Kietzke Lane.
  • Door Dash is testing a new concept in the region and leased space at 961 Matley Lane.
  • Aqua Metals took down 4,183 square feet at NevDex.
  • Stantec downsized from its 20,000-square-foot office space at 6995 Sierra Center Parkway. The engineering firm took 7,600 square feet at NevDex due to its work-from-home transition.
  • Planning and design firm Kimley Horn leased 8,600 square feet at Rancharrah Parkway.
  • Cooper Commercial purchased a three-story redeveloped 5,300-square foot office property at 560 Mill St. for $9 million.

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment