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Why ‘The Biggest Little Logistics City’ will overcome COVID crisis (Voices)

Matthew Harris

Special to the NNBW

A look inside Polaris' 475,000 square-foot distribution center in Fernley, which opened last summer.
Courtesy photo

I hope everyone is healthy and getting along well. Here in Northern Nevada, the resort, hotel and gaming industries, along with restaurant dining, bars, salons and many other businesses that bring the public together for extended periods of time, have been ordered closed and deemed by our governor to be “non-essential businesses,” a label that’s being widely used, but one I would have avoided.

There are many opinions out there on the COVID-19 pandemic and the appropriate medical or community responses, but I’m not here to share mine.

For decades, Northern Nevada has relied heavily on the travel and convention industry for both personal and business purposes. The cancellations of these essential large meetings and conferences have been staggering and will have a ripple effect throughout our economy for months or even longer.

Within a week, we’ve seen unemployment skyrocket, and state departments have been unable to process the many requests for financial support. Retail business closures are looming and for some will be inevitable.

April’s rent and mortgages are now due, and with so many confusing messages from our local, state and federal authorities about ceasing evictions and foreclosures, I wonder how many of these will go unpaid?

Landlords will do their best to work with tenants, but with their lenders and investors looking over their shoulder, how long can that last?

Commercial real estate owners are being forced to backstop a lot of this, and limiting their legal right of eviction has raised eyebrows in the legal community. Both landlords and tenants likely carry business interruption insurance, but the all-seeing insurance industry saw this coming from miles away; most of these policies require physical loss for a claim to be filed, and many have excluded losses from virus related pandemics.

Now there’s talk of government intervention, forcing these insurance companies to cover the losses. And the beat goes on…

Details have emerged about the much-anticipated federal CARES Act stimulus package. Our elected representatives and bureaucrats in DC have made their attempt to ease the ensuing financial suffering by offering low-interest, forgivable loans to small businesses through private SBA lenders. Sole proprietors, independent contractors and self-employed individuals are also eligible.

These funds should be used to maintain payrolls, maintain health benefits, satisfy mortgage obligations, facility rent and pay utilities. Let’s hope that wide access to these funds is made available for businesses of every type. Additional stimulus is currently being considered in congress.

This undoubtedly will be a monumental hurdle for our Northern Nevada communities to overcome, but eventually we will, and here’s why I think we can: Because of our efforts here in the greater Reno-Sparks area over the last 10-plus years, we’ve made huge strides in the diversification of our economy.

It’s been a goal of our area since my family moved here from the Bay Area in 1983 for a manufacturing plant relocation, and it’s a painful lesson we “relearned” during the Great Recession.

Our business communities, in partnership with our local governments, have pulled together to attract and retain the right companies to relocate and continue to operate here. Of these targeted industries for diversification, the supply chain is arguably the most important industry anywhere in the U.S. and even more so in the crisis we’re currently facing.

As we all know from the famous arch that graces our downtown, Reno is known as the “The Biggest Little City in the World,” but I feel it should be “The Biggest Little Logistics City.” We’re close to everything and are the gateway to west. By leveraging our location, Northern Nevada has quickly become a West Coast powerhouse in the logistics and e-commerce industry, and it’s argued we have the largest per capita square footage of industrial building space anywhere in the United States.

The supply chain industry alone has provided our community with much-needed insulation to the unfortunate economic effects of this unforeseen event. E-commerce isn’t just Amazon delivering gadgets — it’s the sum of all online companies and purchases that provide grocery, cold and household good delivery, essential items for businesses like masks and gloves, and even medical supplies for hospitals and clinics.

The whole model is based on “just in time delivery.” This is the same reason some of our stores selves have been empty — goods are now stored in regional warehouses as opposed to store selves and shipped to the retailer or end user, just in time.

This crisis will only fuel e-commerce’s exponential growth and fuel the need for more building locations for companies to operate from. The demand for space will continue to be served by new development here in The Biggest Little Logistics City. 

When you start to layer in the numerous tech companies, food processing and manufacturing industries that have all located here in the last 10 years — plus the nearly 100,000 new jobs that have been created since June 2012 — you’ll soon agree that as our country recovers, we’ll continue to thrive.

All this for a community of 650,000 people is simply impressive and hasn’t been matched any where else in the country.

According to Nevada’s Department of Employment, Training and Rehabilitation, the 10 largest projected job growth occupations are: general freight laborer; sales reps for wholesale and manufacturing; supervisors and production workers; office clerks; metal fabricators and fitters; general and operations managers; mechanical engineers and drafters; stocking clerks; market research analysts; and shipping clerks.

Of course the question remains, have we done enough? Unfortunately, the answer is coming sooner than anyone could have anticipated. My answer is, it’s never enough. I would like to encourage our leaders, local and statewide, to continue to make Northern Nevada a great place to live, work and play. Attraction and retention is key to the long-term stability and strength of our community.

Matthew Harris is a Vice President-Industrial Real Estate Brokerage with Avison Young-Reno and the immediate past president and current board member of the Northern Nevada chapter of NAIOP.