Basin Street looks to replicate Reno success elsewhere in West
Basin Street Properties, whose strategy of turning around troubled assets in good locations is paying off in downtown Reno, now looks to export the strategy to other Western markets.
The Reno-based company owns three of the largest office buildings in downtown Reno the Bank of America Building at 50 W. Liberty St., the Wells Fargo Building at 200 S. Virginia St., and the building at 300 E. Second St. that’s been newly renamed “Jones Vargas Center” to recognize the law firm that’s a key tenant.
Along with those buildings which total more than 500,000 square feet of office space Basin Street owns a 130,000-square-foot flex complex at Mill Street and McCarran Boulevard and the 46,000-square-foot Coliseum Meadows retail center on South Virginia Street.
Basin Street Properties, which moved its corporate headquarters to Reno from Petaluma, Calif., two years ago, has boosted occupancy in its downtown office properties despite the severe recession.
Occupancy in the Bank of America building now stands at 87 percent, compared with 55 percent when it purchased the property at the end of 2005. The Wells Fargo Building, acquired by Basin Street in mid-2006, now is 84 percent occupied, including a substantial number of telecommunications companies.
The 300 E. Second St. building, which overlooks Reno Aces Ballpark, has been a dramatic turnaround 87 percent occupied these days, compared with less than 40 percent shortly after it was acquired in early 2008.
Scott Stranzl, vice president of leasing for Basin Street, says the company has focused on the basics improved heating and air conditioning systems, better lighting, renovated parking rather than higher-profile cosmetics.
And while Stranzl acknowledges that everyone in the property business promises good customer service, he says Basin Street believes that its service makes a difference.
One story: When 3G Studios, a developer of digital games, was looking at space at 300 E. Second St., Basin Street offered to move its own offices downstairs a couple of floors so that 3G could have the space it wanted.
And to accommodate 3G’s fast growth, Basin Street agreed to cut a hole in the floor of the building’s 15th story to allow construction of a stairwell linking the design studio’s operations.
Tenants such as 3G and Jones Vargas show that the downtown office district now firmly includes the ballpark district, says Stranzl. And he expects the downtown resurgence to continue.
“We believe in downtown and the gentrification of downtown,” he says.
But that doesn’t mean that Basin Street is looking exclusively at downtown properties, either in the three regions where it currently does business Reno, Sacramento and California’s North Bay or any of the cities where’s scouting deals.
“We like B-plus assets in A locations,” says Par Tolles, the veteran northern Nevada real estate developer who joined Basin Street in April as its chief operating officer and chief financial officer. “It can be a problem, but if it’s in an A location, we can transform it into an A asset.”
Still, he says the company is wary of the turnaround possibilities on many of the distressed properties in the market these days.
“We’re not in the 20-year game,” says Tolles. “We’re in the five- or 10-year game.”
Markets that hold interest to Basin Street these days include Las Vegas and Portland.
“We like to be within three hours of an asset,” says Tolles.
The company’s staff of 52 about 30 of them in Reno is prepared to move quickly when the right deal comes along. Within five months, for instance, the company bought eight buildings in the Petaluma area.
Basin Street’s financial backers include investors who have worked with the company for the better part of its 30-year history as well as cadre of four lenders who have a long relationship with the company.
“That goes a long ways in tough times,” Tolles says. “The banks have worked with us very well.”
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