Spec building stirring a bit
Moribund for more than a year, speculative building of big manufacturing and distribution facilities in northern Nevada may be stirring ever so slightly.
But the stirrings are so small that industry figures aren’t entirely convinced that a real trend is developing, and not everyone is willing to take a leap of faith.
They have reason for caution.
The national economy remains slow, and the big companies that look to Reno for West Coast distribution remain cautious.
A couple of big industrial vacancies overhang the market.
And other small flurries of activity in the past 18 month have been as fleeting as springtime weather in Reno.
Nevertheless, a couple of big developers are ready to move back into the market.
“We’re going to build something by the end of the year, both industrial and office,” said Par Tolles, area director for Trammel Crow.
While Trammel Crow doesn’t see immediate demand for speculative space, the company is betting that potential tenants will be looking for big spaces in late 2003 or early 2004.
“We don’t want to be caught behind the curve,”Tolles said.
The phone is beginning to ring at DP Partners, and the company feels somewhat more secure in its plan to build a 408,000-square-foot speculative building in South Meadows this year.
“There will be spec building, and we will do some this year,” said Aaron Paris, executive vice president and chief operating officer of DP Partners.
Not everyone is convinced.
Panattoni Investments, for one, is prepared to wait for another quarter or two.
“Until I see the activity level go up, I’m holding back,” said Doug Roberts, the company’s regional partner in Reno.
Part of developers’ caution results from the lessons they learned in early 2002, when a flurry of interest from potential tenants didn’t result in anything and speculative construction ground to a dead halt.
Then, too, brokers note that some large spaces overhang the market.
Commercial Properties of Nevada continues to market the 490,000-square-foot building in Sparks that will be available for lease when General Motors moves its distribution operations to a new facility in Stead later this year.
The much-heralded opening of Starbuck’s facilities in Douglas County, meanwhile, leaves a 273,000-square-foot vacancy just up the street from the GM building, said Dave Simonsen, a vice president in the industrial properties group at Colliers International.
Simonsen said the Colliers office in Reno is fielding large number of calls from potential tenants, but those calls haven’t yet translated into leasing decisions.
While the speculative building of big buildings has slumbered this year, numerous medium-sized projects are on the docket.
Hawco,Tanamera, and Ribeiro are among the development firms building mid-sized industrial projects.
“It’s been the very large side of the market that’s been weak,” Paris said.
The introductory 80-hour program — announced in May as one solution to Nevada’s oft-lamented skilled labor shortages — is designed to train people in construction, building maintenance and related trades.