BY JOHN SEELMEYER
Nearly 3.5 million square feet of new industrial space was constructed in the Reno-Sparks region last year, and all indicators point to another banner year of industrial development during 2020.
Just to put things into perspective, last year’s new industrial development created space roughly equivalent to four Meadowood Malls.
Colliers International, a commercial real estate brokerage, says in a new study that the industrial space constructed in the Reno area last year was occupied almost as quickly as it was built. That’s particularly remarkable because developers hadn’t yet inked leases for about half the new space before they started construction, betting a tenant would arrive before the building was done.
About 6 percent of the industrial space in the region is currently vacant.
The low level of vacancies signals to developers that they need to keep building manufacturing and warehouse space, says Doug Roberts, a partner in Panattoni Development Co., a major industrial developer.
“The only reasons there would be a slowdown in industrial development would be lack of available sites to develop, the increasing costs of both land and construction, and macro factors such as a domestic or global economic slowdown,” says Roberts.
His company doesn’t think a recession is likely, so about the only factors that could dampen development, he says, would be a lack of available land or construction costs that rise faster than rents.
That’s somewhat worrisome, Roberts says, because landlords and developers recently have faced difficulties convincing tenants to pay higher rents for industrial spaces in Reno despite increasing construction costs.
Colliers International says landlords these days seek rents that average 55 cents a square foot for industrial spaces — the rate is higher for small spaces, lower for big ones. The average is up by 1 cent a square foot since last fall.
John Seelmeyer is a business writer and editor in Reno. In his 40-year career, he has edited publications in Nevada, Colorado and California and written several thousand published articles about business and finance.