Nearly a million square feet of new
retail space is proposed for construction
in the Reno-Sparks area next year, but
the region's continued growth will keep
pace with the construction, says a new
study.
An overview of the market released
last week by Grubb & Ellis Nevada
Commercial Group also said:
* The office vacancy rate, expected to
be about 12.7 percent at the end of this
year, probably will continue to drop in
2003. Investment-grade properties will
remain in particularly high demand.
* Even though the market for industrial
properties has begun showing signs
of life only in the past few weeks, the
cautious stance of developers means
vacancy rates continue to be manageable.
* Investor demand for northern
Nevada properties will remain strong.
Vacancy rates and interest rates both are
low, meaning investors are looking to real
estate rather than fixed-income investments.
The market for retail space, the Grubb
& Ellis study said, saw the addition of
375,000 square foot of space during
2002, and the vacancy rate rose to 8 percent
at year-end compared with 6 percent
at the start of the year.
Much of that increase, however,
reflects the moves of Target and Mervyn's
to new quarters in south Reno, leaving
their previous buildings dark at Moana
and Kietzke.
Monthly rents in existing neighborhood
and community shopping centers,
the report said, are in the range of $1.25
to $1.50 a square foot, with new developments
commanding up to $2.75 a square
foot.
Looking at the market for office properties,
Grubb & Ellis said capital continues
to come into Reno and other
medium-sized cities from around the
nation.
But most of the bargain-priced properties
have been picked off, the study
said. Those remaining are buildings that
are showing their age.
Because interest rates remain low,
owner-occupied office buildings will continue
to be a bright spot in the market.
Grubb & Ellis said new office buildings
are selling for about $200 a square foot,
and medical space is running $230 to
$250 a square foot.
The market for industrial properties,
where the market absorbed 900,000
square feet this year, has seen growing
interest in larger buildings in recent
weeks, the report said. Because construction
came almost to a halt this year,
Grubb & Ellis said increased demand
may find a moderate shortage of buildings.
In the home-construction arena,
Grubb & Ellis said tight inventories of
raw land will drive up prices. Big developments,
it said, will include Reynen and
Bardis' Double Diamond Ranch,
Lifestyle's Woodland Village in North
Valley and Barker Coleman's Eagle
Canyon in Spanish Springs.
Carrying the momentum into 2004,
the report said, will be new planned communities
such as Damonte Ranch,
Somersett and Pioneer Meadows.
