Despite rents, Magnolia Village fills quickly
It’s been close to two years since Tim Ruffin first heard about the rents proposed at the Magnolia Village office building in south Reno, but he still remembers precisely how he responded to the building’s developers: “You’re nuts.” They weren’t, and all three floors of the 54,000-square-foot building at Lakeside and South McCarran are fully leased.
The speed with which the building was leased comes as a surprise even to Ruffin, managing partner and vice president of office properties at the Colliers International office in Reno.
When he first met with Lizanne and Ted Stoever of the Magnolia Companies in early 2002 to discuss leasing the building, Ruffin recalled the other day, he was taken aback by the proposed rents $2.45 a square foot on the first floor, $2.55 on the second floor and $2.65 on the third floor.
Office rents at the time hadn’t broken through the $2 barrier anywhere in Reno.
The rents on Magnolia Village were so far past the $2 barrier that some leasing specialists estimated the project wouldn’t be leased entirely for 30 months if ever.
The skeptics weren’t swayed by a location that The Magnolia Companies considered to be one of a kind close to executive housing areas but with easy access to the South McCarran commercial corridor.
The strategy Ruffin and his team undertook to lease the property was twofold.
First, they targeted two industries securities brokers and law firms.
The securities business had been hammered in 2002, and a deal with a major stockbroker for a big chunk of space at Magnolia Village fell through as the business fell apart.
Instead, Ruffin turned to two other brokerages PaineWebber and Merrill Lynch and sold them on relocating to Magnolia Village even though neither company would have an industry exclusive in the building.
Law firms proved more difficult.
One firm went as far as a letter of intent to lease the entire third floor, but the deal fell apart.
In the end, none of the space was leased to law firms.
That brought in the second piece of the Colliers’ strategy, a piece that Ruffin calls “scouting from the rooftop.” The leasing agents looked through the south Reno neighborhood for companies ready to relocate and sold them on Magnolia Village.
Through those efforts, space was leased by CTX Mortgage and the Nevada operations headquarters of Marsh, an operating company of Marsh & McLennan Companies.
Two new companies to the market Hot Creek Capital, a hedge fund, and resort developer Intrawest completed the mix.
The deal-closer for Intrawest? The fact that a Starbucks location was scheduled to open within walking distance in the Magnolia Village complex, fulfilling one of the conditions executives had set for the company’s new office in Reno.
Rents in the building weren’t much of a hurdle, Ruffin said, perhaps because tenants interested in the building were motivated by other factors such as location or interior finish.
“Some of them have told me, ‘Now our employees feel they have to dress up to come to work,'” Ruffin said.
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.