There is dust in the air and it’s about time, according to the 2017 second quarter office report released today by Dickson Commercial Group. It’s been a long two years since dozers have been pushing and ripping dirt as they currently are at the highly anticipated new, Class A office developments along Kietzke Lane.
Reno Land & Development (RLD) and McKenzie Properties are leading the charge with their respective projects. RLD has planned over 80,000 SF in a 3-5 building, Class A office campus at the esteemed Rancharrah. The development will overlook Lake Rancharrah and provide a reimagined lifestyle office environment plush with amenities for today’s employee.
McKenzie is adding to its Mountain View Corporate Center portfolio with a 41,000 SF, Class A office building that backs up to Interstate 580. 20,000 square feet of this project is already pre-leased.
This new construction has not been caused by an earth-quaking announcement from Google stating they will be relocating their headquarters to Reno. Rather, it is precipitated by two items: 1) The realization of small business owners in neighboring states that Northern Nevada provides the ultimate business and family friendly environment, and 2) Locals have succeeded in their goal for economic diversification. Although the gaming/entertainment market is a benefit to the community, job growth and professional development is being seen in the high-tech manufacturing and services sectors. These two items attract people and encourage growth.
As this is a gradual process, the performance of the office market reflects the same. DCG’s analytics team reports 22,098 square feet of net absorption Q2 2017, compared to 26,687 square feet in Q1 2017 and 21,207 square feet in Q4 2016. The gradual pattern continues to show slow growth to the extent that vacancy rates have dropped to 11% overall. Per submarket, 10.87% Downtown, 9.83% in South Reno and 8.84% in Meadowood; hence, the new construction in the Meadowood submarket on Kietzke Lane.
Market growth was led by new leases and expansions by those such as Allrise Direct Lending at 200 S. Virginia, Eldorado Resorts at 100 W. Liberty, Skin Cancer & Dermatology Institute at 3640 Warren Way, Clear Capital at 300 E. 2nd Street, Well Care at 850 Mill Street and R&R Partners at 6160 Plumas.
IGT’s decision to list its 1.2 million sq. ft. campus for lease this month and the recent $3.8 million sale of Harley Davidson’s 3-story financial services building in Carson City are the latest examples of companies no longer needing larger-scale office properties to maintain productivity levels and meet customer needs.