Office vacancies dip; building ahead

Even though the office vacancy rate in the Truckee Meadows fell as 2003 came to a close, new construction will add inventory to the market early this year.

And Tim Ruffin, senior vice president for office properties at Colliers International, said last week that 78,000 square feet perhaps more could become vacant as existing office tenants downsize, move to new space or leave town.

As 2003 came to a close, Ruffin estimated the office vacancy rate at 9.53 percent, compared with 10.86 percent a year earlier.

Net absorption in the market totaled 365,000 square feet for the year, second only to 2000 when the region saw absorption of 443,000 square feet of office space.

"I think net absorption is indicative of the overall growth of Reno," Ruffin wrote in an analysis of the market.

"With a growth rate of 4.5 percent in the general population, it is not out of reason for the office occupancy to grow at a little over 5 percent."

Five top-tier office buildings, he said, will add more than 220,000 square feet to the market in the first half of this year.

Those projects include Northern Nevada Corporate Center, Magnolia Double R, the Landmark/Paragon Building, the First Independent Bank Building and The Platinum Building.

That spate of construction activity, Ruffin said, will eclipse development of garden office space this year.

At the end of last year, 14 garden office projects were under construction.

Colliers International said rents in new Class A buildings this year will be at $2 square foot or higher $2.35 in the Meadowood area while rents in Class B buildings will be in the $1.50 range and Class C space will be $1 or less.

Part of the pressure on rents in new projects comes from land prices.

Ruffin said land in Mountain View Corporate Centre at Kietzke and Del Monte lanes is selling for $17 a square foot, and land in South Meadow is selling for $13 and some owners are seeking $14 a square foot.