How expensive is raw land getting in the Truckee Meadows? Expensive enough that an industrial developer the kind of outfit that typically builds from the ground up thinks it was better off to buy an existing building in Reno.
Panattoni Development paid about $8.1 million this month for a 180,000-square-foot building at 650 Innovation Drive.
That's just off Longley near its intersection with Double R Boulevard in south Reno.
Slakey Brothers, a wholesaler of heating, air conditioning and plumbing supplies,will lease about 100,000 square feet of long-vacant space.
BMC Millwork, a door supplier, continues to lease about 32,000 square feet in the building and 38,000 square feet remain to be leased.
Doug Roberts, the Panattoni partner based in Reno, acknowledged that it's unusual for the Sacramento-based development company to buy buildings rather than develop new properties for client companies.
But the combination of high prices for industrial land in the Truckee Meadows and inflated construction costs made Panattoni take a second look at the Reno building.
"We can't reproduce it at the cost we paid for it,"Roberts said.
The building is on seven acres of land, and industrial land in the Truckee Meadows recently has been selling for $10 or more a square foot.
The purchase of the property relieves a major headache for Lainer One LP, a major owner of industrial property in the Reno area.
It built the building in 2001 for Techniques International Inc., a maker of computer racks and enclosures.
The company was a casualty of the tech slowdown, closing in 2002 after it lost a major contract.
The Techniques International space has sat vacant ever since.
"We tried everything.We went on the Internet.We got all the local brokers involved," said Gary Baker, president of Lee & Associates - Reno, the broker who marketed the space.
The space is unusual, he says, in its combination of first-class executive offices with wide-open manufacturing and distribution space.
Finally, in a move that Baker calls "a gamble on my part, almost desperation," he sent packets about the properties to industrial developers in the region.
Panattoni responded.
The cost of raw land in the Truckee Meadows wasn't the only factor that drew the attention of potential buyers.
"Avoiding the 'mine field' of the traditional development process can be appealing to those who regularly engage in that battle," Baker said.
The combination of higher land prices, higher construction costs and developers' desire to reduce their hassles are likely to push the prices of existing industrial buildings up, Baker predicted.
At the same time, he said, higher land costs will continue to push industrial development into outlying areas such as Stead and Storey
County.
