— Jason Hallahan, associate of Colliers Reno —
Northern Nevada’s office market has shown continued resilience in 2024 as the region has seen robust tenant demand, fewer sublease availabilities and evolving market trends. Though Northern Nevada experienced an influx of vacant space that hit the market in the middle of the year, year-to-date tenant demand has been largely positive. Robust absorption in the first and third quarters of 2024 has driven annual net absorption to more than 77,500 square feet.
While many larger office markets felt an immediate impact at the onset of the pandemic, Reno’s office market began to see the wave of sublease space hit the market at the start of 2022 — nearly two years later. At its peak in the first quarter of 2023, available sublease space accounted for 28.2 percent of all available space on the market. Northern Nevada’s sublease market has continued to shrink over the past two years as the total square footage recently dropped below 90,000 square feet. This is less than one-third of the 2023 peak, which was 303,000 square feet of available sublease space. This loss of sublease space is due to large sublease suites being occupied by new subtenants, master leases expiring and being marketed as direct vacant space and some tenants opting to re-occupy spaces they had previously vacated and offered for sublease.
Under Gov. Lombardo’s administration, the State of Nevada has functionally ended more lenient remote work guidelines for state employees. The State of Nevada continued its leasing spree as it occupied 28,856 square feet in South Meadows this quarter and moved into nearly 80,000 square feet last quarter. It is also rumored that the state remains active in the market, searching for additional office space to satisfy its recent return-to-office policy for state employees.
Following Nevada’s example, some Reno companies have opted to shift from fully remote to a hybrid work schedule. This shift has prompted office users to rethink their space utilization, with many seeking to balance remote work with essential in-office collaboration. In response to competitive pressures, landlords are increasingly offering concessions and tenant improvement allowances to attract tenants. These concessions often include reduced rental rates for initial lease periods, abated rent and budgets for custom buildouts.
The office market in Northern Nevada has shown resilience and adaptability in response to changing dynamics and tenant needs. As the market continues to adjust, it will be interesting to observe how these trends shape the future of office spaces in the region.
This article was originally published in the October issue of Western Real Estate Business.