Experts puzzled by high demand of industrial space
Northern Nevada suddenly is hosting lots of executives searching for sites for new offices, distribution centers and manufacturing operations.
But no one has a clue about the reasons for the sudden upsurge.
“Right now, it’s hot,” says Ron Weisinger, executive director of the Northern Nevada Development Authority in Carson City. “And we’re not talking about tire-kickers.”
He says the surge of inquiries began in earnest in late March.
At the Economic Development Authority of Western Nevada, Ken Pierson, EDAWN’s director of business development, says the number of inquiries is running more than 20 percent higher than a year earlier.
“We’re absolutely swamped,” Pierson says.
Some of the companies looking for sites in northern Nevada, Pierson says, had shopped the area a couple of years ago and now are returning with much more specific plans.
And Weisinger says the prospects include a wide range of potential developments headquarters offices, manufacturing, distribution, technology.
“The economic impact could be phenomenal,” he says.
While the inquiries pouring into development agencies in the region can take months if not years to come to reality, real estate brokers who handle industrial property say they’re seeing some immediate activity as well.
“We’ve seen some robust leasing activity with larger tenants in the last couple of months,” says Mike McCabe, vice president of leasing for DP Partners in Reno.
His company is the largest industrial landlord in the region.
Matt Riecken, a senior vice president with Trammell Crow Co. in Reno, says his company in recent weeks has fielded inquiries for space ranging from 10,000 square feet to 300,000 square feet.
“It’s going to be a busy second quarter,” he says.
Alliance Commercial Real Estate Services in Reno estimates that that some 2.4 million square feet of industrial space was leased in the market during the first quarter.
Even after an 880,000-square-foot Wal-Mart distribution facility is subtracted from that total, the area is on a record-setting pace, says Paul Perkins, senior vice president with the firm.
The most industrial space occupied in a market in a full year was about 3 million square feet, he says.
“The market is as tight as we’ve been in years,” Perkins says, but he’s at a loss to explain the upsurge of activity. “I’ve given up trying to forecast these things.”
Gordon Zack, a first vice president with CB Richard Ellis in Reno, estimates the vacancy rate in industrial properties at about 7 percent.
“The market is very healthy,” he says. “It’s very active. Some space is going to go away.”
New speculative space under development will keep the market from growing much tighter even as new tenants come into the market.
DP Partners has a 255,000-square-foot speculative industrial building under construction in the Stead area, and McCabe says it’s likely to have tenants in place by the time it’s completed in mid-August.
“We’ve had a lot of interest in that building,” McCabe says.
Trammell Crow projects mid-summer completion on a 380,000-square-foot speculative building at Stead.
It’s also in the early stages of planning a 550,000-square-foot building at Tahoe Reno Industrial Center east of Sparks. That would be the largest speculative industrial building ever in northern Nevada.
Panattoni Development, meanwhile, is building about 147,000 square feet of speculative distribution space in Stead, with completion scheduled for June.
The developer also plans its first speculative project in Carson City, the Eagle Valley Commerce Center. The 87,000-square-foot flex industrial condo project is scheduled for completion in November.
“We still have a lot of people who are desperate, who are waiting, and our commitment to them remains strong,” Barbara Buckley told The Nevada Independent.