Retail development in the Reno-Sparks area, although extremely slow, still has a faint pulse as a handful of small projects move toward completion.
The activity comes despite a retail vacancy rate of 14 percent and lease rates that are 25 to 30 percent below their high-water marks, says Ken Mattison, senior vice president of the retail division of Grubb and Ellis|NCG.
Nevertheless, several developers have brought online or announced plans for small retail centers during the past year and most are paying homage to the well-worn adage about location. Construction costs have softened drastically, they say, making it good time to build for those with resources.
Giroux Plaza, developed by a private Prupas Family Trust, is set to open in early November at the east edge of downtown Reno. The plaza comprises two buildings totaling 9,061 square feet, and Mattison says the buildings already are about 40 percent leased. The Arthritis Center of Reno is moving into 2,900 square feet, and Grubb and Ellis is in lease negotiations for a restaurant at the site.
Giroux Plaza is located at 1605 E. Second St., just a stone's throw from Renown Regional Medical Center. "It is designed specifically to attract users that will associate with and benefit from the high people volume generated by Renown, no question," Mattison says.
Giroux Plaza was built by Bjorkman Construction and designed by Robert Hoffmann Architect. The plaza includes a courtyard and private outdoor eating area for the two restaurants planned for the site. Mattison says the remaining spaces can be divided from 900 to 2,700 square feet of retail or medical office space.
Gary Sabatini, partner with Sierra Management Group, expects construction to begin this week on 30,000 square feet of retail and office space at the southwest corner of Longley Lane and McCarran Boulevard despite a large number of vacancies at a Tanamera Development retail project directly across Longley Lane.
Sierra Management Group and its commercial broker, Johnson Group, will vacate their current office spaces and take space on the second floor of the building, Sabatini says, leaving 18,000 square feet of ground-floor retail and office space. A restaurant is expected to take 2,800 square feet and a do-it-yourself winery an additional 1,800 square feet, but Sierra Management Group doesn't expect to quickly lease out or sell the remaining retail space.
"The reason we put in the retail is because of the location there are 60,000 people going by there a day," Sabatini says. "We thought it was perfect for retail.
"We are building for the long term," he adds. "As soon as the economy comes back, that is really a high-traffic corner and it should do really well."
Sabatini says profits from the 138,000-square-foot storage facility will offset costs of the $15 million project, the bulk of which was privately funded by Sierra Management Group.
Other developers also figure on high traffic counts to usher in tenants for newly constructed space. Jamy Keshmiri, owner of Ben's Liquor, completed 4,500 square feet of new space at the corners of Keystone Avenue and West Fourth Street but has yet to secure a tenant.
Chris Waizmann, senior vice president with CB Richard Ellis, says infill at sites such as Keshmiri's make sense because of low vacancy rates at surrounding properties and low construction costs.
"Developers are maybe looking at the market in a micro basis rather than a macro basis," Waizmann says. "They are looking at surround vacancies and seeing that the market is still pretty healthy.
"Right now contract jobs are few and far between, and there is a lot of competitive pricing. Developers committed to projects are bullish on taking advantage of aggressive pricing."
Other developers seek to reposition older properties that will bring new retail online.
The owners of the Woolworth's building at First and Virginia streets in downtown Reno are redeveloping the first floor of the seven-story property into 14,000 square feet of retail space, and Basin Street Properties has started work to redevelop 11,000 square feet of retail space on the ground floor of its 15-story headquarters building at 300 E. Second St.
Basin Street's plans are part of the greater redevelopment of the Freight House District. SK Baseball is developing phase 2 of Aces Ballpark to include restaurant and retail. Both developments are intended to capitalize on the high volume of people heading to Reno Aces baseball games.
"We have a focused audience, that being the ballpark," says Scott Stranzl, vice president of Basin Street Properties. "If you look at how that district is being gentrified with the retail we intend to bring in and what SK Baseball is doing, it continues to breath new life into that area. There is ample space for existing retailers if they want to find a new home, but it comes back to location; if there is a need, people are trying to fill it."
There are signs of life in far-flung communities as well. In Yerington, Miles Construction of Carson City recently began digging footings for the third phase of the Copper Pointe Retail Center, bringing online an additional 10,000 square feet of space using pre-engineered buildings with insulated metal panels.
The development at Bridge Street matches 7,000 square feet of existing retail space that came online in 2008.
Construction is expected to be completed in winter of 2010.
