One city, two financial districts

In 1989, the Reno branch of Shearson Lehman Hutton moved out of a downtown building at 401 S.

Virginia St.

anchored by Valley Bank (now home to Bank of America), and five miles south into the new McCarran Quail Park on South McCarran Boulevard an area largely characterized by ranch pastures, Meadowood Mall and little else.

It was the period when the "McCarran Cut" in the hills to the west was being completed: the last section of the ring road circling Reno and Sparks.When it came to businesses, south Reno still was something of a frontier.

But investment companies strive to be in the forefront of securities trends.

And Shearson Lehman proved to be in the vanguard of a Reno real estate trend the migration of financial firms out of the city's traditional downtown commercial core to what has become the burgeoning south Truckee Meadows, an area whose graze and sage is being replaced by a decade-plus onslaught of retail and office centers and residential subdivisions.

Shearson Lehman made its move "before any other financial institution thought about it," says Karen Bukowski, Reno branch manager and first vice president with the firm that later merged with Shearson Lehman: Smith Barney.

"It was before ArrowCreek and Double Diamond (residential areas), but it was clear the expansion was going south in terms of new developments.

And the people coming into the area from Incline Village, Lake Tahoe or the Bay area seemed to migrating toward the south." Today, Smith Barney occupies 11,000 square feet of office space in the upscale, three-year-old Lakeridge Center on the southwest corner of South McCarran and Plumas Street, a mile from the firm's previous McCarran home.

Scarcely a block away, on the southeast corner of McCarran and Lakeside Drive, Merrill Lynch has moved into another new Class A office building: Magnolia Village.

Among these firms' south meadows neighbors are branches of the Charles Schwab, Dain Rauscher,Morgan Stanley Dean Witter, and Paine Webber investment firms, and branches of Bank of America, First Independent Bank of Nevada, First National Bank of Nevada, Heritage Bank, Nevada Security Bank, Sun West Bank and Wells Fargo.

What has transpired since Shearson Lehman Hutton's 1989 move south is the reality of two separate financial districts in the Biggest Little City: one downtown in the area roughly defined from Liberty Street north to Second Street, and from Center Street west to Arlington Avenue; the other generally stretching along McCarran Boulevard from Neil Road west to Plumas Street and south to Del Monte Lane.

"The center of commerce has clearly moved to South McCarran," says Tim Ruffin, managing partner of the Reno office of Colliers International, a commercial real estate service provider.

"You have virtually every bank in the city there, and almost every stockbroker firm.

I still think that the economic center is the casinos downtown.

The economic center is what brings the dollars into Reno.

But as far as people doing commerce in and about Reno, it's the Meadowood-McCarran area." The Reno greater metropolitan area's population has increased since 1990 by roughly 100,000 to approximately 350,000.

And the emergence of a second financial district is a natural result of the city's growth, says John Pinjuv, president of office investment properties for Grubb & Ellis/Nevada Commercial Group.

"Reno is not the small city it was 10 years ago," Pinjuv says.

"In other cities our size, there isn't one main financial hub.

I do think downtown will continue to thrive.

It's a big enough city now to support more than one financial district." Four banks continue to maintain large branches downtown Bank of America, Nevada State Bank, U.S.

Bank and Wells Fargo.

Their deposits are higher than that of their other branches in the market except for Wells Fargo, whose downtown branch at 200 S.

Virginia St.

trails two branches in the South Meadows (5340 Kietzke Lane and 5100 Neil Road) and one in Sparks.

Downtown will continue to be an important business zone, local brokers say.

"There's always going to be a strong tourist attraction downtown," Ruffin says.

"City of Reno (offices), courthouses and law firms are down there, and most of the CPA firms are down there." "Downtown, the market's still fairly healthy," Pinjuv says.

Among other downtown construction, the Nevada Museum of Art's new building on Liberty Street is set to open this spring.

"Downtown is close to restaurants and hotel rooms," Pinjuv says.

"There's an existing tenant base historically, downtown districts have a presence.

It has history on its side, and proximity to courthouses, which are very important for law firms.

It's fairly compact, so it's easy for tenants to get around as far as walking distance to restaurants, cultural events, other financial institutions.

Almost every bank is represented downtown." Downtown office buildings continue to enjoy high occupancy, such as the former Porsche Building at 100 W.

Liberty St., a 12-story tower with five stories of covered parking, whose Class A office space is 90 percent filled, although the headquarters of Porsche Cars North America relocated to Atlanta.

But that building, which opened in 1987, "was the last major commercial office building built downtown," Pinjuv says.

The migration of financial firms south can be traced to several factors, Pinjuv says.

One is downtown's lack of new commercial land for new buildings.

Another is vehicular access.

Reno's downtown traffic "is minimal compared to most downtowns," he says.

"But parking is an issue.

It's typically not abundant, and not free.

Our downtown is not located immediately off an off-ramp to a freeway.

It is a little time-consuming to get downtown along Mill Street or Plumas Street or Virginia Street." The McCarran-Meadowood area has access from three U.S.

395 off-ramps, abundant free parking in large lots, a great deal of new construction, and "a lot of new retail and major restaurants," Pinjuv says.

Although traffic congestion is a drawback, the south meadows' construction boom has created a concentration of subdivisions near the McCarran corridor which translates to easy commutes for employees, and a customer base in close proximity, he says.

The median household income within a mile radius of South McCarran and Lakeside Drive is $142,287, according to Colliers International.

Smith Barney's predecessor, Shearson Lehman, deliberately positioned itself amid the people who would be its Reno clientele, Bukowski says.

And Smith Barney by moving into Lakeridge Center in 1999 continues to cater strongly to those customers, she says.

"The clientele of investment firms want a high-profile image, and I think that's difficult to get downtown because of the casinos, and because the neighborhoods in the downtown area don't lend themselves to a high-profile clientele.

People in general also like the convenience of living near the firm they're dealing with.

It all boils down to access.

Most private investors don't live downtown.

They live in the south Truckee Meadows or the northwest." The Reno area eventually may have a third financial hub the Double Diamond area, already home to the South Meadows Business Park, says Gary Baker, managing partner of the Reno office of Lee & Associates, a provider of commercial real estate services.

A fourth financial district could emerge in Spanish Springs, the fast-growing sector northeast of Sparks, he says.

"It has available land and a maturing infrastructure." But no other areas of the Truckee Meadows seem prime spots for a financial zone, Baker says.

"You look to Sparks and the northwest, and they are not just going to attract that kind of industry.

The median incomes of the areas haven't, and probably won't, attract financial firms in density to be a financial hub."