Panattoni Development Co., is getting ready for its next big industrial project in north Reno.
Panattoni plans to construct about 1.6 million square feet of new industrial space across four or five buildings for its 395 North project near Bordertown. Panattoni earlier this year purchased 135 acres of land from KP Investors, which had been preparing the site for industrial development prior to divesting the land.
Doug Roberts, partner for Nevada and Arizona for Panattoni Development, said that the 395 North project was attractive on several fronts. Warehousing already was in short supply, he said, and the pandemic further exacerbated supply chain issues. Industrial remains the hottest sector of commercial real estate, and 395 North was in close proximity to a ready workforce.
“Over the last five or six years, and really since the pandemic hit, industrial has been a very active product type,” Roberts said. “The main thing tenants are looking for in addition to easy freeway access to serve their markets is labor – it’s a huge issue for a lot of tenants. If we are able to get land and build where we have housing and close proximity to the labor force, that’s a pretty attractive project for us to pursue.”
Panattoni has a long history in the North Valleys. It recently wrapped up construction of North Valleys Commerce Center, a 4 million-square-foot project spread over 10 buildings. Not only is that project 100 percent occupied, but every building was leased prior to completion.
Panattoni also built the Red Rock Business Center at Moya Boulevard and Red Rock Road. It built Petco’s distribution facility on Red Rock Road, and the company is preparing a new 136,000-square-foot industrial project on Moya Boulevard. Panattoni also built the 1.4 million square-foot Lear Industrial Center at Moya and Echo Avenue back in the mid 2000s. Panattoni sold that project in 2020 to Clarion Partners of New York City for $117.3 million.
North Valleys remains an attractive submarket for industrial development, Roberts said – and it’s rare for a land parcel of this size to come available anywhere in Greater Reno-Sparks. The land that is available for industrial development typically has numerous topography issues – Panattoni cut down 80 feet of dirt to create level lots for the second phase of North Valley Commerce Center, for instance.
Truck traffic will access 395 North through the Village Parkway exit just before the California border. The west side of the project actually abuts the California state line, Roberts said. This particular development is located within the boundaries of Washoe County rather than the City of Reno and is already zoned for industrial use, he noted.
Roberts expects to break ground at the site this fall with a two or two-and-a-half year construction timeline. The first building to come out of the ground likely will be around 400,000 to 450,000 square feet.
“It depends on what we think the most attractive building will be to get the park going,” Roberts said. “Tenants beget tenants — when one tenant goes in up there it is easier to entice other tenants, so we want to make sure that the first building is the best for the market.”
Panattoni does not have any tenants in tow at this time, making it a purely speculative project. However, that could change due to the incredibly low vacancy rate for premier industrial product in Northern Nevada.
“We certainly would consider a user or tenant for the building just because it mitigates risk,” Roberts said.
Leasing will be done by Mike Nevis and Shawn Jaenson of Kidder Matthews.
Nevis, executive vice president of the industrial team and managing director for the Reno office of Kidder Matthews, told NNBW that the growth of the North Valleys industrial market has been incredibly robust over the past few years, with absorption far exceeding any other submarket of Reno.
“Post pandemic, we have seen a huge need and demand for industrial space,” he said. “North Valleys is a highly desirable submarket of Reno given the amount of local amenities and localized labor force. The challenge is available land is at a premium. This opportunity came along, and Panattoni saw an opportunity with this project.
“We certainly are a land-constrained market,” Nevis added. “Finding 135 acres anywhere – even in Storey County – is a challenge at this point. But we are optimistic that this project will be highly successful given the amount of demand that exists in the market coupled with record low vacancy.”
One unique aspect of 395 North, Nevis added, is that one of the buildings could be served by rail – a rarity for new industrial development in the region. Prospective tenants, he noted, likely will be the standard mix of third-party logistics providers, e-fulfillment and manufacturing companies that have come to call Northern Nevada home.
Panattoni is banking on continued interest from prospective tenants and lack of new Class A industrial space, Roberts added.
“The vacancy rate is so low that anytime you can get product up that is attractive and meets the needs of a tenant, you likely will do well,” he said. “Finding land this close to town is the thing that makes this project the most attractive to us.”
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