Despite optimism in Reno-Sparks’ long-term economic health, large-scale development delays possible
Special to the NNBW
RENO, Nev. — Many Northern Nevadans probably figured that working through the Great Recession would be the most challenging time of their careers.
Then COVID-19 hit. In a few short weeks, the engine that’s powered Northern Nevada’s economic resurgence to new heights came to an abrupt halt. Downtown casinos are shuttered for the first time since the flood of 1997, and thousands of other businesses throughout the region are dark as well.
Industries that can are soldiering on, but the months ahead are fraught with great uncertainty as the endgame of the coronavirus remains to be seen.
MIke Kazmierski, president and chief executive officer of the Economic Development Authority of Western Nevada, says the economic shutdown hasn’t impacted EDAWN’s ability to bring new companies into Northern Nevada, even though site selectors aren’t flying into the Silver State to put boots on the ground.
Scheduled visits to tour the area have been postponed, but to date no company has canceled its relocation plans, Kazmierski says.
“We expected that given the nationwide shutdown,” he says. “But we still are getting people information and planning for visits. In most cases it’s just bumping things out a month or two.”
Prior to the shutdown, EDAWN had been working with eight companies in the final stages of completing corporate relocations to this region. That work continues remotely.
“We have seen no real loss of prospect activity, just a slowing down of the process,” Kazmierski says.”
Perhaps the biggest concern, he adds, is the massive surge in unemployment. The statewide closure of casinos and restaurants forced hundreds of thousands of Nevadans out of work.
The question, Kazmierski says, is how many of those jobs will still be there when normalcy returns. EDAWN is looking at ways it can help reduce unemployment when the region rolls out of the slowdown, he adds.
“Retail, gaming and tourism are basically non-existent through this crisis, and if it was 10 years ago that would be almost all of our economy,” Kazmierski said. “We have been able to bring in over 200 manufacturers in the last eight years, as well as grow our e-commerce, logistics, distribution and technology sectors, and all of those jobs are still up and running.
“We aren’t feeling the brunt of the slowdown like we would have.”
Large-scale project delays possible
Some industries remain largely unaffected by the coronavirus business shutdown. Mining is still active in northeastern Nevada, and construction companies continue to build. But that’s not to say COVID-19 isn’t impacting local builders or the construction industry as a whole.
Matt Clafton, vice president and general manager of Alston Construction, says it’s such a fluid and fast-moving situation that he is constantly evolving and developing new policies to deal with the coronavirus.
“First and foremost, we are concerned about the wellbeing of our internal teams, our subcontractors, vendors and suppliers,” Clafton says. “We are trying to keep those folks working to help them take care of their families. People in the construction industry rely on coming to work — that’s how they support their families.
“We are making every effort to keep those folks safe and keep them working for the betterment of the construction community. I just want to make sure we can help people take care of their families in a safe manner.”
To that end, Alston has published COVID-19 guidelines and created documentation similar to OSHA workplace safety rules, Clafton says.
The construction company currently is building the second phase of the North Valleys Commerce Center for Panattoni Development — in fact, on March 31, according to a press release provided by MN|G Partners, Alston Construction announced the completion of Building E, which adds added 313,220 square feet of industrial space to the development located at 9560 N. Virginia St.
All told, Alston Construction was scheduled to deliver five buildings totaling 1.36 million square feet at the North Valleys Commerce Center by the fourth quarter, but Clafton says that timeline could be pushed out until early 2021.
Turmoil in the wider financial sector and tremendous market devaluations could impact development moving forward, meanwhile, as institutional capital partners tap the brakes on new development to preserve capital.
Clafton says investment dollars are still out there, but projects just getting ready to start may be postponed until the waters clear. Contractors also could face widescale supply chain or essential materials delays if key factories are shut down to halt the spread of the virus among workers.
“I thought that going through the Great Recession would be the most challenging thing, and this might end up being it,” Clafton says.
Other potential pandemic problems
Doug Roberts, Nevada/Arizona partner for Panattoni Development, says the COVID-19 slowdown is more reminiscent of post-9/11 than the Great Recession in its suddenness and voracity.
Panattoni has jobs throughout the U.S. and has been following low-interaction and social distancing guidelines from cities and municipalities, Roberts says.
Changes include additional sanitation stations and restroom facilities at job sites; quadranting job sites to reduce cross-contact among workers; and conducting individual meetings between site inspectors and supervisors so both parties can adhere to social distancing guidelines.
Construction personnel also are using FaceTime, Zoom and Skype when applicable for meetings and inspections. The inspection process is crucial, Roberts notes, because if the pandemic worsens and building inspectors are forced to stay home, the construction industry by and large will grind to a halt.
These types of guidelines are more important than ever to follow, considering the Nevada Occupational Safety and Health Administration (NVOSHA) on March 26 issued a letter to the state’s construction industry stating that regulator have noted “visibly obvious” situations in which employees are working together in close proximity.
Looking ahead, while the construction industry may be powering through the slowdown, there could be some far-reaching impacts in education and workforce development, EDAWN’s Kazmierski says.
Although schools are finishing the semester with online instruction, the slowdown may affect workforce development in technical and trade programs that require hands-on instruction.
“We will still be successful in bringing in those next-generation jobs, but the slowdown in education could impact our available workforce going forward, and certainly affect some of those programs’ ability to generate the talent these companies will need,” Kazmierski says. “Those programs generate a certain level of skilled (worker) that companies can put to work right away, and those companies are still functioning even though we have shut the pipeline down for now.”
Ernest Packaging Solutions has leased 133,108 square feet at Dermody Properties’ LogistiCenter at 395 Phase II, Building 1, leaving 47,952 square feet still available.