Market Reports

Reno Retail Makes a Favorable Comeback After a Devastating 2020

by Jeff Shaw January 4, 2022

By Tad Loran, Vice President, Retail Specialist, Avison Young | Western Alliance Commercial Inc. The Reno retail market was hard hit overall by the pandemic, with the service industry at the top of the list. Some notable businesses that closed in Reno last year include Santa Fe Basque Restaurant, Truckee River Bar & Grill, An — Asian Kitchen & Bar, Little Nugget Diner, True NY Pizza Co., Rounds Bakery Storefront, Jos A. Bank, St. James Infirmary, 24 Hour Fitness and Pier 1 Imports. Big box national retailers picked up virtually no new space in 2020. The good news is retail demand and leasing activity has rebounded this year. Northern Nevada’s retail vacancy rate saw positive absorption. It currently sits at 5.8 percent, while asking rental rates have increased. They are currently at $19.08 per square foot (triple net) on an annual basis for second-generation space and $42 per square foot (triple net) on an annual basis for new construction. Notable business openings this year include Sport Clips, the Human Bean, C-A-L Ranch, In-N-Out Burger, Starbucks, Chipotle, Firehouse Subs, Truckee Bagel, Base Camp Pizza, SUP and Chase Bank. Commercial sales in Northern Nevada were nominal in 2020. This was driven by the pandemic, a lack of …

January 4, 2022

Market Reports Nevada Office Western Western Market Reports

Reno’s Office Market Continues to Outperform Out West

by Jeff Shaw December 14, 2021

By Evan Meyer, Senior Office Specialist, Kidder Mathews The business climate continues to thrive in Reno as the regional economy quickly rebounded from the pandemic-fueled recession of 2020. Reno performed far better than most markets on the West Coast with a low unemployment rate (4.2 percent in August) and expanding job growth (+7.2 percent year over year). The region’s rapid growth persists as new businesses continue to move into the area, a trend that accelerated over the past few years. Most relocations are coming from California, attracted by the strong economic environment and business-friendly policies in Northern Nevada. As one of the fastest-growing regions in the U.S., expansion is occurring across multiple industries, including technology, manufacturing, distribution, financial and healthcare. The diverse and dynamic nature of the regional economy has driven the overall performance of the office market. This has produced continuous years of declining vacancy and a decade of rising rents, even through the peak levels of the pandemic. At the end of the third quarter, the vacancy rate was 7.7 percent, a 130-basis point drop compared to the previous quarter. Vacancy rates continue to decline across all submarkets due to strong demand and tenant expansion. Net absorption also gained momentum …

December 14, 2021

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Industrial Market Reports Nevada Western Western Market Reports

Online Shopping Keeps Vegas’ Industrial Market Humming

by Jeff Shaw February 24, 2021

By Amy Ogden, Logic Commercial Real Estate This was an unprecedented year in a multitude of ways. Though the pandemic brought economic hardships — along with the world’s worst health crisis — it also opened our eyes to how quickly life can change overnight. Businesses reacted to the crisis as best and swiftly as they could to comply with state stay at home orders, capacity reductions, and the fear and panic that ensued. Little did we know that we would be desperately seeking toilet paper, cleaning supplies, and embracing online grocery shopping and food delivery with such intensity by early March. The aforementioned, in turn, created a domino effect as the pandemic became the catalyst for a boom in the industrial real estate sector. Ecommerce has grown more over the past year than it ever has. These occupiers have seen their five-year trajectory of forecasted retail sales occur in just six months. The rise of ecommerce has forever altered consumer buying behavior and expectations. With consumers now anticipating fast shipping and deliveries, there is now a strain on the traditional logistics and supply chain models. This has subsequently resulted in a heightened need for warehouse, fulfillment and distribution properties as …

February 24, 2021

Market Reports Nevada Office Western Western Market Reports

Sublease Space Stagnates, but 2021 Shows Promise for Las Vegas Office Market

by Jeff Shaw February 9, 2021

By Dan Palmeri, Senior Director, Tenant Advisory Group, Cushman & Wakefield As with most of the country, Las Vegas’ office market has been significantly impacted since COVID-19 restrictions started back in March. While many businesses have been allowed to operate at limited capacities, we’ve also seen many larger office users elect to work from home over the past nine months. This increase in work from home scenarios has naturally created a large increase in sublease availabilities in the market. Prior to March 17, 2020, we were tracking 24 subleases consisting of 555,000 square feet, with two of those spaces being 257,000 square feet and 61,000 square feet, or roughly 57 percent of the overall inventory. Since March, we’ve seen the number of availabilities increase to 70 with a total of more than 1.2 million square feet of space. This represents an increase of 118 percent. We’re tracking an additional 313,000 square feet of pending subleases that have yet to hit the market. This will bring the total to 78 options, with six of the availabilities being 50,000 square feet or larger. Large tenant activity was minimal over the past nine months. The most significant transaction was NYU Grossman School of …

February 9, 2021

Hospitality Market Reports Nevada Retail Western Western Market Reports

Las Vegas Gaming: The Ugly, the Bad and the Good

by Jeff Shaw January 26, 2021

By Mike Mixer, Colliers International – Las Vegas At the beginning of 2020, Las Vegas was anything but ugly. Nevada’s economy was one of the fastest growing in the country. Unemployment was the lowest ever at 3.6 percent, while casinos reported three straight months of $1 billion in winnings. Then COVID came along and things got real ugly, real quick. The entire Las Vegas Strip was shut down, closed…on less than a day’s notice. The Las Vegas unemployment rate hit a staggering 34.2 percent. One out of three people in Las Vegas became unemployed in April 2020. Meanwhile, the last time the Strip was shut down was after the JFK assassination in 1963. The bad doesn’t look so bad compared to the ugly. As the year comes to a close, the Las Vegas Strip has reopened, but with fewer visitors. Low visitor demand hits hard in a city with more than 150,000 rooms. Las Vegas hotel occupancy has dropped from 90 percent down to 44 percent. Room rates have seen a milder drop this year, down only 6.77 percent (from $133 a night to $124 a night). The Las Vegas Gaming Market was also unlucky, especially without a robust convention …

January 26, 2021

Market Reports Multifamily Nevada Western Western Market Reports

Reno’s Economic Expansion, Population Surge Keep Multifamily Developers Active

by Jeff Shaw June 8, 2020

By Kenneth Blomsterberg, Senior Managing Director of Investments, Marcus & Millichap Reno recorded robust job creation last year. This was bolstered by corporate growth at the Tahoe-Reno Industrial Center in Sparks, which houses Tesla’s Gigafactory, Apple and Switch data centers, in addition to a collection of fulfillment and distribution centers. The standout pace of employment growth supported the strongest rates of net migration and household formation this cycle, increasing local housing demand. With an average mortgage payment for a single-family home hovering around $2,100 per month throughout last year, leasing was the preferred choice among new residents despite rapidly rising rents across all apartment classes. In response, developers finalized 1,350 units in 2019, building on the 1,400 rentals delivered in 2018. Completions during the two-year span were concentrated in southern Reno neighborhoods and Sparks. These are areas where new supply has been well received, evidenced by the submarkets’ low 4 and mid-4 percent Class A vacancy rates as we entered 2020. Investors were also active during the past 12 months, motivated by solid economic growth and historically tight Class C vacancy. Significant demand was registered from outside value-add investors, with California-based buyers accounting for roughly half of total deal flow. …

June 8, 2020

Market Reports Nevada Office Western Western Market Reports

Reno Office Market Capitalizes on Relocations from Places Like California

by Jeff Shaw May 18, 2020

By Scott Shanks, principal, Dickson Commercial Group The Reno/Sparks office market is in a unique position: caught in the throes of a rapidly expanding commercial marketplace and aided by an ever-increasing population base. The most vibrant commercial real estate sectors in our area are industrial and multifamily, and they have been for decades. The office market is also seeing new companies, new developers and new buildings. For the first time in many years, we will see a true speculative office development begin construction this summer. McKenzie Properties will be going vertical with its Skypointe development. Tolles Development Company is in the middle of completing its Rancharrah project, which contains 64,000 square feet of retail space and 36,000 square feet of office space. Last, but certainly not least, Reno Land Inc. and its partner Lyon Living have started the first phase of their Park Lane development, a 46-acre, master-planned development that will include office, retail and multifamily. This new development shows the Reno/Sparks area is on the move, and fast. The area provides for a quality of life that is difficult to find when combining Lake Tahoe, the Sierra Nevada mountains and the Truckee River, which bifurcates the city. In comparison …

May 18, 2020

Industrial Market Reports Nevada Western Western Market Reports

Reno’s Industrial Market Remains In Demand

by Jeff Shaw May 6, 2020

Reno’s industrial real estate market has kept a jaw-dropping pace over the winter months. The fourth quarter of 2019 saw record-setting gross absorption numbers for any quarter at 3.34 million square feet with 10 transactions above 100,000 square feet. This amount of activity so late in 2019 typically suggests a slow start to the new year. However, activity seems to have picked up steam, as many users are considering new growth in Reno/Sparks. As a whole, 2019 was a fruitful year for industrial real estate. The market continues to draw attention for its West Coast distribution fundamentals and pro-business environment from tenants, developers and investors. Developers constructed 3.5 million square feet of industrial product, split almost equally between speculative and build-to-suit construction. About 17 million square feet of our 90-million-square-foot market changed hands at market-low cap rates to industrial investment groups. This included many groups that were new to the market, as well as several existing groups doubling down in Northern Nevada. Inventory remains the primary concern for tenants and developers as we come into 2020. With some minor caveats, new construction is getting absorbed as quickly as it is brought to the market. Given the strong start to 2020, …

May 6, 2020

Market Reports Multifamily Nevada Western Western Market Reports

The Disappearance of the Shadow Inventory Renter in Las Vegas

by Taylor Williams December 20, 2019

From 2009 through 2015, Las Vegas renters were afforded the luxury of renting many of the high-rise condominiums around the Strip and Downtown Las Vegas. This was due to the massive amount of short sales and foreclosures during that time. There were about 7,876 condo units completed between 2006 and 2009. Shortly after the crash, these developments shifted to luxury rentals. During 2011, we tracked 785 condos that were rented with an average of $1.31 per square foot, or $1,838 per month. During that same time, we tracked sales prices of these high condos at an average of $154 per square foot, or $239,411 per unit. We also tracked 904 sales during 2011 that typically involved investors putting their inventory back into the “shadow inventory.” Fast forward to 2015, and resales of this same inventory were trading at an average of $238 per square foot. Rents of this inventory were at $1.45 per square foot, or $2,000 per month. The higher-end buildings like Mandarin Oriental (now Waldorf Astoria) were at $2.70 per square foot. The trend continues to today as sales prices continue to rise. Rents continue to go up and no new for-sale inventory is being delivered. Most of …

December 20, 2019

Market Reports Nevada Retail Western Western Market Reports

What’s Happening in Las Vegas’ Retail Market?

by Taylor Williams December 14, 2019

There are no guarantees in commercial real estate. For commercial real estate owners, developers and investors, however, betting on the continued strength of the Las Vegas marketplace has been as close to a sure thing as it gets in recent years. The Vegas commercial market is as strong as it’s ever been as we head into 2020. Delivery on new projects is up 800,000 square feet over 2018. About 1.2 million square feet of retail space will have been added to the market by year’s end, while retail rental rates are up 4.6 percent in 2019. What’s really exciting isn’t just the top-line numbers, but the evolving nature of a market that is becoming more diverse. Las Vegas is preserving its gaming and entertainment dynamism while introducing more robust retail and mixed-use elements that expand well beyond the iconic Strip. Consequently, Vegas market performance isn’t just strong, it’s sustainable. A market overview reveals some of those reasons for optimism, as well as a deeper understanding of what’s driving that commercial real estate evolution. It never hurts to be the entertainment capital of the world, and there’s no doubt that gaming, hospitality and entertainment remain the foundation of the city’s appeal. …

December 14, 2019

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