Reno Remains in Demand for Multifamily Investors
By Robert Skinner, Broker-Salesperson, Sierra Nevada Properties Commercial Group
Back in the day, Reno had lots of land, we did not need high density development and there was little reason to build vertically.
Because of the efforts of state and community leaders, as well as economic development agencies like Economic Development Agency of Western Nevada (EDAWN) and the Northern Nevada Development Authority (NNDA), many companies relocated and expanded here.
With the increase in jobs came the need for more housing. The multifamily rental vacancy rate in the Reno/Sparks area is currently below 2 percent, with fewer than 50 listings for townhouses and condominiums on the Northern Nevada Multiple Listing Service (MLS).
The region has absorbed 750 acres per year since 2011, according to a recent study by Woods and Poole that utilized data from the Truckee Meadows Regional Planning Agency. The study further predicts the region will run out of developable residential land by 2038. The supply shortages are increasing the price of parcels, while landowners may not sell as they hold out for higher prices. This will accelerate the shrinkage of developable residential land.
To meet demand, city planners are calling for higher density and vertical multifamily development. This means we need more sewer capacity. The sewer collection and treatment systems are aging, some systems being built 100 years ago. A residential housing development built in the 1970s is 50 years old. Addressing environmental issues like discharge of nitrate-rich effluent water into the Truckee River and other water basins is a top priority.
The region has begun repairing or replacing the sewer infrastructure in existing neighborhoods to support high density multifamily development. In addition to raising the capital, other challenges exist like limited historical records, difficult soil conditions, high ground water, the need for deep construction, railroad crossings, crossing the Truckee River and I-580.
According to Cody Black, president of Shaw Engineering, there is a silver lining associated with the increased development. “Developers are paying for the upgrades and consumers are benefiting,” he says. “Multifamily developers are being asked to do more, and they are.”
This helps keep the cost of maintenance of the aging systems down for consumers.
Maybe our civic leaders deserve a bit of credit because now many of our infrastructure systems are relatively new compared to other states. Reno, Sparks and Fernley are actively monitoring flow, identifying bottlenecks and anticipating the needs of their cities. Construction has begun on a 16-mile pipeline to deliver 4,000 acres of treated effluent water for mechanical use from Truckee Meadows Water Reclamation Facility (TMWRF) in Sparks to the Tahoe Reno Industrial Center (TRI Center).
The best time to develop new multifamily housing may be now.