— By Aiman Noursoultanova, Senior Vice President, CBRE’s Reno Investment Properties Group —
Reno’s multifamily sector has performed exceptionally well over the past decade due, in part, to strong, sustained job growth. Nevada continues to lead the nation in employment growth at 3.8 percent over the past year, according to July data from the Bureau of Labor Statistics. While Reno’s job growth over the past decade has focused more on diversification, recent growth can best be characterized by higher-wage industries like healthcare, technology, manufacturing and aerospace/aviation. As a result, the market has seen an influx of new Class A, well-amenitized construction that appeals to this new tenant demographic.
Notable company relocations and expansions thus far in 2023 include OMEC Medical, a life sciences instrument manufacturer; Edgecore, a wholesale data center developer, owner and operator; Generac, a leading global designer, manufacturer and provider of energy technology solutions; and Stellar Aviation, a fixed-base private airplane operator catering to private planes and jets. Companies investing in Reno most commonly appreciate the region’s attractive regulatory environment, low cost of doing business, access to regional transportation corridors and a high quality of life for its employees.
Regarding rent growth over the past decade, several submarkets have performed impressively well despite new construction deliveries. South Reno has experienced a slew of new construction in the medical sector that is further positioning the area as a regional healthcare hub. Recent projects include a new 170-bed hospital that opened in 2022 and Renown South Meadows Medical Center, a 120,000-square-foot, three-story building currently under construction. Rents in the Southwest Reno submarket have risen 102 percent over the past decade, while the Southeast Reno submarket, known for its top-performing schools, has experienced 93 percent growth and has 1,642 units currently under construction, with another 361 units planned.
The job growth east of the Reno metro area in Storey and Lyon Counties (where major tech giants have large land holdings) has positively impacted East Sparks’ multifamily market. As one of the Northern Nevada submarkets with consistently high rents, East Sparks’ average rental rate is up by 79 percent over the past decade, though it has begun to level out in recent quarters. Companies that have relocated or expanded to this area in 2023 include Arcadia Cold Storage (logistics), CASS (manufacturing) and Trivium Packaging (manufacturing) with the largest recent announcement being Novva Data Center, which shared plans in May to build a 300,000-square-foot, 20-acre data center campus in TRIC. Battery recycler Redwood Materials already has a 300-acre campus at Tahoe Reno Industrial Center that includes about 1 million square feet, with an additional 2 million square feet under construction. At full buildout, Redwood Materials expects to have more than 5 million square feet of building space, as well as an 815,000-square-foot industrial building at Victory Logistics District in Fernley.
Limited construction on the horizon in Sparks is pushing construction east toward Fernley, Nev. With a healthy new supply of single-family housing completed in recent years, Fernley has started to see large-scale apartment projects, with several more in the pipeline. Built-to-rent communities also appeal to growing families looking for housing in the current challenging interest rate environment. Demand for multifamily will persist, despite slowing construction in the near-term due to rising building costs and high-interest rates. Growth east of Reno will continue, given the unprecedented demand from new and relocating companies.