Industrial realty outlook clouded

Wal-Mart is likely to attract some suppliers around its giant new distribution center in Tahoe Reno Industrial Center.

Big industrial developers continue to test the waters with some speculative construction.

And nobody feels very confident in predicting the direction of industrial development in northern Nevada during the next year.

"I've never been so baffled," acknowledges Paul Perkins, a veteran industrial broker who works with Alliance Commercial Real Estate.

The vacancy rate among industrial properties will end the year somewhere around 7 percent, Perkins estimates.

A developers' rule of thumb is that a vacancy rate below 10 percent is a signal to start building, and nearly 2 million square feet of speculative industrial space is on the drawing boards in the region for 2006.

Trammell Crow alone has plans for more than 1 million in projects, including a 500,000- square-foot building at Tahoe Reno Industrial Center.

Par Tolles, Trammell Crow's area director in northern Nevada, says a couple of potential users, each looking for about 1 million square feet, have been poking around the area in recent weeks.

"We've been encouraged by the size of the inquiries we're seeing in the market,"Tolles says.

But, Perkins says, it's hard to tell how many if any major industrial users the region will land in 2006.

No matter how many, it's likely that much of the industrial construction will occur in places such as Fernley and Tahoe Reno Industrial Center, says Barry Brown of Colliers International.

Those areas, he says, provide affordable land that's almost impossible

to find in the Truckee Meadows.