Customer service centers fuel office-space demand

The return of call-center jobs from offshore locations to the United States is beginning to be felt in northern Nevada.

Recent months have seen a rise in the number of companies looking to lease large office spaces in the Reno area particularly in south Reno and an executive of the Economic Development Authority of Western Nevada says some of the demand is coming from customer service centers.

Ken Pierson, director of business development for EDAWN, says Nevada historically has been an attractive location for those centers that handle in-bound calls.

Tim Ruffin, an office broker with Colliers International in Reno, says at least nine office tenants are scouting big locations 10,000 square feet or more in south Reno.

As recently as 90 days ago, Ruffin says, not a single big tenant was in the market, and the office market has been quiet since mid-2006 when the deflation of the housing market caused many companies to slow their expansion plans.

About half the companies scouting big office locations in the Reno-Sparks area are newcomers to northern Nevada, with the remainder of the demand arising as existing companies grow, says Dominic Brunetti, an office broker with Alliance Commercial Real Estate Services in Reno.

The rising demand comes at a time that Colliers International estimates the vacancy rate at nearly 11 percent in large office buildings in Reno and Sparks.

Add in the space that's being offered for sublease much of it coming from companies in the residential realty sector that are pulling back their operations and the vacancy rate rises to 12.4 percent, Ruffin says.

Sparks, which has seen a flurry of new office construction, has the highest vacancy rate in the region at 17.8 percent.

The region's vacancy rate could begin dropping quickly if some big tenants decide to locate here or expand their existing operations. Ruffin says that could signal developers that it's time to begin building again.

No buildings larger than 25,000 square feet are currently under construction, Colliers reported last week, although developers are positioned to move quickly in Sierra Corporate Center, Reno Tahoe Tech Center, Northern Nevada Corporate Center and the airport area.

In the meantime, Brunetti says, the amount of space that's available for sublease fuels competition that keeps a cap on rates and prods landlords to provide higher tenant-improvement allowances to keep their buildings full.

Colliers reported that rents in South Meadows buildings run about $2 a square foot while rents in the Meadowood area run about $1.80.