Office rents in Reno's downtown are beginning to catch up with those in other parts of the region, reversing a trend of recent years.
Brian Armon, an office specialist with the commercial real estate brokerage Trinity in Reno, says rents for downtown space have risen steadily over the last couple years while suburban rents have slipped slightly after peaking in 2006.
The reason for slippage in South Meadows rents, Armon told members of the commercial real estate group CCIM, isn't hard to find.
The neighborhood was home to numerous homebuilders, engineering firms, title companies and others involved with the residential real estate business. When those companies scaled back their operations, they put substantial amounts of space on the market for sublease.
Trinity estimates that more than 30 percent of the office space in South Meadows may be available, either through subleases or through offers directly from landlords.
About the only way for landlords to win tenants in those sorts of market conditions, Armon says, is through price concessions.
At the same time, vacancy rates in the downtown area fell by about 4 percent in the past couple of years,
says Annemarie Huisman, an office specialist with CB Richard Ellis.
Trinity estimates the vacancy in top-tier downtown buildings at about 12 percent, compared with 18.5 across the region.
That tightening puts upward pressure on rents, particularly as new owners of key downtown properties
complete renovation programs.
"There's a lot of buzz about downtown," Huisman says, noting that new office tenants include law firms and engineering firms that want to present themselves as fresh and hip.
"Tenants don't cringe anymore when you say 'downtown,'" Huisman says. "There has been a striking velocity of deals.
The convergence rising rents downtown, falling rents in suburban areas presents some irony, says Armon. A couple of years ago, he notes, downtown properties began to fill because they offered lower rents.
