Office vacancies in Reno-Sparks estimated at 17.4 percent
The vacancy rate in office buildings in the Reno-Sparks area stood at 17.4 percent at the end of the second quarter, says Colliers International.
Tim Ruffin, a senior vice president with the firm, and Melissa Molyneaux, a vice president, said they are reluctant to make comparisons with previous quarters because the firm changed the methodology of its vacancy analysis.
They said vacancy rates are the highest in the downtown region at 21.1 percent. Meadowood-area vacancies are 13.7 percent.
Ruffin and Molyneaux said net absorption during the quarter totaled 26,000 square feet, bringing net absorption of office space for the year to more than 135,000 square feet.
A couple of pending deals expected to close in the third quarter might make a further dent in the vacancy rate, particularly in the South Meadows area, the brokers said.
They noted that owners of lower-quality buildings continue to battle higher vacancy rates as tenants find they can move to better space at affordable rents.
In other cities, this has led to the demolition and redevelopment of lower-class buildings.
That hasn’t happened in Reno, the Colliers brokers said, and some building owners are leasing space at rates that’s below the cost of operating the building.
“This is unsustainable,” they noted. “Ultimately, many of these buildings will deteriorate to the point of being town down.”
With median home prices topping $500,000 in Reno and nearly $520,000 in Minden/Gardnerville, 2021 is shaping up to be quite the sellers’ market for Northern Nevada. As for housing supply, that’s another story, reports the NNBW’s Kaleb M. Roedel.