The Meadowwood area has become
the center of commerce in Reno, and
doubters need look no further than the
area's vacancy rates, says a Colliers
International report released last week.
Tim Ruffin, managing partner and vice
president of Colliers' office properties
group, said office vacancy rates in the area
have dropped to 9.71 percent.
Strong leasing activity from financial
services companies helped drive down
vacancy rates in the area along McCarran
Boulevard from Plumas to Kietzke Lane.
Traditionally, a vacancy rate below 10
percent indicates a landlord's market, but
Ruffin said weakness in the nearby South
Meadows area keeps Meadowood landlords
from becoming greedy.
In South Meadows, the Colliers study
found vacancy rates are near 20 percent,
and leasing activity has been slow.
"The few deals consummated have
been at significant discounts to asking
rents," Ruffiin wrote.
He said one recent renewal was signed
at $1.20 a square foot down from the
original lease at $1.60 a square foot.
Ruffin added, however, that few property
owners followed suit, and South
Meadows rents remain near their levels
from year-end 2001.
"That said, credit tenants can continue
to get concessions in the form of free rent
or additional tenant improvement dollars,"
Ruffin said.
The vacancy rate in downtown properties,
he said, has held steady.
Government offices continue to absorb
downtown space, and population growth
in northern Nevada brings increased
numbers of attorneys, accountants and
other service firms.
One 42,000 square feet vacant in one
building 300 E. Second St.
accounts for nearly a quarter of the
downtown vacancies, Ruffin said.
Overall, Colliers estimated the vacancy
rate at 11.31 percent in the Reno market,
and Ruffin said the 293,300 square feet
absorbed in the market this year is the
second-highest total in the city's history.
(By comparison, some 75 million square
feet of office space stands vacant in the
San Francisco area.)
A big factor in the high absorption
rate, Ruffin said, has been a near halt to
speculative construction of office buildings.
Little leasing activity is coming from
out-of-town tenants looking for space,
Ruffin said, but some local operations
such as Intuit continue to expand.
Nationally, a study released last week
predicted that commercial real estate activity
will remain soft for at least another year.
Rising vacancies, corporate belt-tightening,
downward rents and rising expenses
will mark the year for most of the nation's
investors in commercial real estate, said
the report by Lend Lease and
PricewaterhouseCoopers.
Over the next five to seven years, the
study said, annualized long-term rents
from commercial real estate will be in the
7-8 percent range.
