Office vacancies edge up during snowy first quarter

The vacancy rate in Reno-area office buildings at the end of the first quarter edged up to 13.09 percent compared with 12.27 percent three months earlier, says an analysis by Colliers International.

Colliers said last week about 13,000 square feet of office space were absorbed during the quarter, far below the five-year average of about 70,000 square feet.

Part of the problem, the real estate brokerage company said, were winter storms that brought leasing activity to a near standstill for much of January.

The weather also slowed construction, and only about 22,000 square feet of office space was added to the market.

The number, however, will rise sharply during the second quarter, Colliers said.

And the company said several good-sized leases are poised to close during the current quarter.

Recent construction has boosted the vacancy rate in the South Meadows area, the analysis said, while vacancies in the Meadowood area fell as tenants opted for lessexpensive older buildings.

While the vacancy rate rose in the downtown area, Colliers said that's a statistical fluke as the county government's purchase of the 350 S.

Center building reduced the inventory of space in the area.

The company said the price of land for new office construction appears to have stabilized after sharp increases last year.

Developers find they can't necessarily recoup higher land prices through higher rents, Colliers said, and prices of $15 a square foot for office land appear to be a barrier.

And it's unlikely that prices will resume their upward trend this year as construction of new space will outpace demand, cooling upward moves in rents.

Significant leases during the quarter, Colliers said, included:

* VSL Networks, 12,000 square feet at 555 Double Eagle Court.

* Manhard Consulting, 11,000 square feet at Park Center East in South Meadows.

* American Home Mortgage, 6,000 square feet at the Sun West Bank Building near Kietzke Lane and Neil Road.

* GC Wallace, 6,000 square feet at Northern Nevada Corporate Center in South Meadows.

* Littler Mendelson, 5,000 square feet in the Bank of America Plaza downtown.

The size of office leases is steadily increasing, Colliers said.

Last year, the company handled 53 leases that averaged 5,180 square feet.

The average in 1997 was slightly more than 2,000 square feet.