Vacancy rates rise as Cisco reduces space
April 26, 2004
The office vacancy rate in the Reno- Sparks area rose sharply to 11.1 percent on March 31 from 9.5 percent at the start of the year, says a report by Colliers International.
Driving the vacancy rate upward were decisions by several office tenants notably, Cisco Systems to reduce the amount of space they lease.
Cisco returned some 50,000 square feet to the market, vacating the Park Center West building in the South Meadows area and reducing its lease to 10,000 square feet in Park Center East.
isco executives didn’t return calls asking for further details.
Other downsizing moves left 10,000 square feet vacant in the US Bank building in Meadowood and 15,000 square feet vacant in downtown’s Bank of America building, Colliers said last week.
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Vacancies also were up sharply in garden- style office buildings.
Colliers estimated the vacancy rate in those buildings at more than 18 percent, but noted that the high vacancy hasn’t yet discouraged developers from building more of the small, freestanding office buildings.
Five major office buildings are bringing space to the market in coming months:
* The Hale Lane Building in Mountain View Corporate Centre added 64,000 square feet to the market.
* The Landmark/Paragon Building arising east of U.S.
395 in Damonte Ranch will add 50,000 square feet in the second quarter.
* Northern Nevada Corporate Center, north of Damonte Ranch on the east side of U.S.
395, will add 45,000 square feet.
* The First Independent Bank building near Kietzke Lane and Del Monte will add 30,000 square feet.
* The Magnolia Double R Building in South Meadows will add about 30,000 square feet.
“We don’t think any other new Class A buildings will come up without preleasing until the vacancy rate gets closer to 10 percent,” the Colliers report said.
With rising vacancies, the report said, landlords are offering greater concessions to potential tenants particularly in South Meadows, where they’ll be competing against the space vacated by Cisco.
Raw land for office, projects, meanwhile, continues to rise sharply in price.
Some offers have reached $20 a square foot for land, Colliers said, and the supply is growing tight.