The key indicator in the retail market in Reno/Sparks is that vacancy rates have increased and are expected to continue increasing for the remainder of 2009. Vacancy rates have reached nearly 15 percent at the mid-point of 2009 and net absorption continues to be negative. The amount of space available continues to increase due to unemployment, bankruptcies, relocations and acquisitions. Area home prices continue a downtrend with the majority of sales coming from distressed properties. The good news is that unit sales are up year over year, and home affordability has never been better. Retail lease rates continue to decrease as an estimated 2.4 million square feet of space is currently available in Reno/Sparks. Cap rates have increased steadily since a low in 2007, but the increase appears to have slowed down.
The Legends at Sparks Marina held a grand opening in June 2009 and will be one of the major retail locations in the Reno/Sparks metropolitan area when it is completed. Developed by RED Development, the 2 million-square-foot shopping and entertainment destination is located on 147 acres in Sparks fronting Interstate 80 and will be highly visible to out-of-state travelers passing through the area. Because the project is estimated to draw an additional 800,000 visitors to this market, the developer has been able to use Sales Tax Anticipated Revenue Bonds for funding. Opened in September 2008, the 295,000-square-foot mega-sports store Scheels All Sports was constructed first to anchor this complex. Forty-seven new stores are open at Legends, most of them new to the Reno/Sparks market.
The Reno/Sparks area continues to grow, although this growth is significantly slower than in the past. The area’s climate is very appealing all year; winters are mild and the summers are temperate. This area is home to some of the most spectacular scenery in the country. You can find anything from small, historic mining towns to mega-casinos to the natural beauty of Lake Tahoe and the Sierra Nevada Mountains. Outdoor recreation flourishes here in all seasons, and both Reno and Sparks have a major focus on driving tourism to this area. Boosted by the gaming industry, the area tax structure makes it attractive for both individuals and businesses to locate here, and that incentive, coupled with Reno/Sparks’ location at a major intersection of truck and rail transportation, has brought major warehousing to the area. Under construction just east of Reno/Sparks, the 30,000-acre Tahoe Reno Industrial Center, together with new major artery USA Parkway, will drive growth in all sectors.
— Dave Hansen is broker and
manager at Prudential Nevada Realty in Reno.