Progressive and Steady Growth Define the Industrial Market
The Reno industrial market continues to grow at a steady pace. Numerous developers are building new speculative warehouse/distribution facilities in many of the submarkets in Reno, Sparks and nearby outlying areas. With an industrial base of more than 80 million square feet and a vacancy rate of 8.2 percent (which continues to recede), the region is experiencing a healthy demand for space ranging from 50,000 square feet (divisibility) up to 150,000 square feet. Demand exceeds supply for product of this size. Current rental rates have steadily pushed upward over the past 18 months. Depending on the location of the business parks and its proximity to Interstate 80, the major east-west trucking artery, or I-580, the quoted asking rental rates range from about $4.20 per square foot, per year, up to $5.04 for the aforementioned divisibility ranges. New speculative Class A industrial product in the Reno market offers 32’ to 36’ clear height, as well as ESFR fire sprinkler technology, state-of-the-art LED high bay lighting, fiber optics communications, cross-dock configurations, ultra-wide column bay spacing and ample trailer parking onsite.
Panattoni Development built Red Rock 200, which includes a 750,000-square-foot, built-to-suit fulfillment center for Petco, as well as a 200,000-square-foot speculative distribution building in 2015. Panattoni is currently under construction on Amber Meadows Distribution Center, a 1.4-million-square-foot, Class A industrial park in the north valley area of Reno that should be completed in late 2016. Mary’s Gone Crackers has already leased a 423,001-square-foot building at the center, while Exxel Outdoor leased 217,863 square feet. Down in south Reno, Panattoni Development is also tilting walls on the South Valley Commerce Center, which consists of two buildings totaling 390,000 square feet.
Dermody Properties has finished the 1.2 million-square-foot LogistiCenter at I-395 Phase I, home of Amazon’s 624,000-square-foot fulfillment center. The 1.6 million-square-foot LogistiCenter at I-395 Phase II is also currently under construction. Dermody Properties has additionally started the 803,322-square-foot, four-building LogistiCenter at I-80 in West Reno, which sits adjacent to Interstate 80.
The Reno industrial market has become a mecca for e-commerce, which brings us to the Tahoe Reno Industrial Center. This is a massive 107,000-acre park located just nine miles from Metro Reno. Owned by Roger Norman, Tahoe Reno Industrial Center is touted by the developer as “the largest industrial park in the world.” The park offers a business-friendly environment in Storey County. Perks include no corporate, personal, inventory or unitary tax, no impact fees and 30,000 developable acres slated to accommodate more than 300 million square feet. The park is adjacent to Interstate 80. It supplies a fiber optic sonic ring system and a wide selection of national rail, intermodal and motor carriers. The park is home to more than 100 companies composed of manufacturers, e-commerce fulfillment, distribution facilities and data centers. Some of the more prominent companies include Tesla’s 6 million-square-foot Gigafactory, Switch, eBay, Zulilly, Diapers.com, Petsmart and Walmart, to name a few.
The Western Nevada area continues to offer industrial users a central location in the Western region that is pro-business, with excellent transportation infrastructure, and a skilled and primarily union-free workforce. With a history of steady and reliable growth, Reno’s future looks bright, providing attractive options for investment.
— By Kyle Eigenman, Vice President Industrial Division, Coldwell Banker Commercial Business Properties. This article first appeared in the November 2016 issue of Western Real Estate Business magazine.