Garden offices head north, tracking population growth
As the center of population in the Reno- Sparks area moves north, so does office development.
Nine garden office projects, about a quarter of the total in the area, now are located north of Interstate 80.
That’s strictly a function of population growth, says Tim Ruffin, senior vice president with Colliers International in Reno.
About 60 percent of the area’s population now lives north of I-80, and the garden office projects are extensively owned or leased by medical professionals, financial services firms and others that serve residents of northern neighborhoods.
It’s unlikely, Ruffin said, that large-scale offices the sorts that are built downtown, at Meadowood or in South Meadows will be developed north of I-80.
But garden offices will continue to flourish.
The projects built north of I-80 are part of a trend that saw construction of 187,000 square feet of garden office space throughout the region in 2004, Colliers said in a recent analysis.
Larger office buildings those of 10,000 square feet or more added 273,000 square feet to the market last year.
The vacancy rate in larger buildings stood at 12.27 percent at the start of this year, Colliers reported, while vacancies in garden offices stood at 13.1 percent.
That may creep up, Colliers said, as companies that currently lease garden space continue to build their own buildings.
But garden office construction may cool this year, the company said, as higher construction costs and increased interest rates reduce their appeal to companies who want to own rather than lease.
Lease rates continue to climb with higher land and construction costs.
Colliers said new Class A buildings are leasing for $2 or more a square foot, and high-visibility locations can command a 5 to 10 percent premium.
Second-generation space is leasing for $1.65 to $1.95 a square foot, the company said, and garden-office space ranges from $1.65 in Sparks to $1.95 in south Reno.
Downtown Reno recorded a 12.4 percent vacancy rate at year-end.
Colliers noted the purchase of an office building at 350 S.
Center pulled 84,000 square feet out of a market that already had been reduced by 200,000 square feet with the city’s acquisition of One East First Street.
“This bodes well for the existing buildings as more downtown firms expand into fewer buildings,” the Colliers analysis said.
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