A few years ago, when Majestic Realty was scouting new markets to add inventory to its more than 83 million-square-foot portfolio, it didn’t take the strategic team long to decide to make a play in Reno.
Majestic Realty, headquartered at City of Industry, Calif., has constructed nearly 1.45 million square feet of Class A industrial space in Northern Nevada since entering the market. John Jo, Majestic’s vice president, told NNBW in an interview last week that the company’s decision to invest in Northern Nevada stemmed in part from the state’s business friendly climate compared to the neighboring Golden State.
“We saw the opportunity probably about three years ago,” Jo said. “The climate of California was becoming less and less business friendly, so we started strategizing internally with our teams to see what submarkets would benefit (from new industrial development).
“We saw opportunities in Texas, Arizona, Las Vegas and Reno, but we had nothing in Reno,” he added. “It is a fantastic submarket, so we decided to make the play.”
Majestic’s first industrial development in the region is on North Virginia Street in North Valleys. Majestic Reno Commercenter I consists of two buildings totaling 515,197 square feet. The project was completed in 2022, and all spaces were fully leased to four tenants before the buildings were completed.
Bobcat Company leased 110,000 square feet for its new West Coast aftermarket parts distribution facility, and rail technology company Wabtec leased the other half of the building. The second 245,354-square-foot building was leased to two confidential tenants, Jo said. One is an international pet food manufacturer, while the other is a transportation and logistics company.
Majestic Reno Commercenter II, meanwhile, will be a 246,392-square-foot facility situated on just under 20 acres. It’s located at 9499 and 9477 N. Virginia St. The building pad has already been poured, Jo said, but the recent heavy snowstorms have delayed construction of the tilt-up walls.
Majestic’s sister company, Commerce Construction, is the general contractor for all the company’s construction projects.
Majestic Realty also is in the final stages of work on Majestic Reno Commercenter III. That project is a 692,720-square-foot building situated on 36.7 acres at 150 Milan Drive at Tahoe Reno Industrial Center. Majestic did some soft market after construction on the facility started, Jo said, and tenant interest in the building proved extremely high. The entire facility was leased by online restaurant equipment supply company Webstaurant.
Work crews are installing dock equipment and overhead doors, and Majestic expects to deliver the facility in early February, pending weather, Jo said.
“We are just wrapping up now,” he said.
At the TRIC facility, Eric Bennett, executive vice president of the industrial services team at CBRE, represented Majestic, while Brian Armon, senior vice president of the industrial properties group at NAI Alliance, represented Webstaurant in lease negotiations. Bennett also represented Majestic in lease negotiations at MRC I, while Brad Elgin, vice president at Stark Accelerators Commercial Real Estate, represented the confidential trucking client.
Majestic was founded in 1948 and is one of the nation’s large national private industrial developers. The company currently doesn’t have any additional land holdings in Northern Nevada, Jo noted, but it's engaged in discussions with local landowners to find its next play.
“We are trying to find the right opportunity,” Jo said. “Land prices were peaking, so we did pull back a little bit, and at one point (construction) costs were quickly doubling. On top of that, in the capital markets the cost of debt went up, and the amount of equity needed for each project increased. We paused for a little bit, but are now reaching back into the market.
“Being a private company, we are creative in our structures,” Jo added. “We can do joint ventures, ground leases and straight acquisitions. Some landowners don’t want to sell because it triggers a (capital gains) tax event, so they will do a joint venture where they partner with us by contributing their land, we build on it, and then we share the profits. That can be more beneficial.”
In other industrial news, developers delivered 4.25 million square feet of new industrial product to the Northern Nevada market, Kidder Mathews said in its fourth quarter market update report. Net absorption outpaced new construction, however. There was 4.75 million square feet of net industrial absorption in 2022, which led to an overall vacancy rate of 1.37 percent.
While there is an additional 8 million square feet of new industrial product under construction across Northern Nevada, 40 percent, or 3.2 million square feet, is already under lease or has a pending lease, Kidder Mathews reports.