Our "State of the Market" update released in September 2011 was full of some much-needed local good news: The retail sector in Carson City has seen vacancy drop by 2 percent in the past two years, to 17.8 percent.
The office market, still suffering from the greatest pressures, remains flat at about 17.93 percent vacancy. The multi-family vacancy factor has seen an impressive 23 percent improvement, from 14.8 percent two years ago to 11.43 percent today. But the best news can be found in the industrial sector, which has seen a 46.8 percent improvement in the vacancy rate, to just 11.43 percent.
A healthy market, with fairly balanced supply and demand, would show a vacancy rate of 8 to 10 percent, so believe it or not we are not far from depleting current inventory in the industrial sector. Industrial developers, it's time to jump off the fence. In reality, investors are doing just that, as evidence by the increased sales activity in Carson City reported by the Assessor. There have still been no sales in the industrial land category since September 2008, but we know of at least two parcels in escrow now, so that frozen market is about to thaw. There have been five duplex sales in the past six months, where the prior 12-month period showed only one sale. The first half of 2011 showed three sales in the three- to nine-unit multi-family category, but we're up to eight sales in the last six months. In the 10-plus multi-family units category, we have the first sale since October 2010. There were three sales in the general commercial category during the first half of the year, and 13 sales during the last half. Indisputably, the local market is recovering.
The average lease rate for office and retail space in Carson City is about $1 a square foot. Don't be too attached to that number, as it varies greatly depending on the type of lease, location, and condition of the property. So if you're a tenant in prime retail space, paying $1.50 a square foot plus common area maintenance charges, don't expect to renegotiate! You're in market range.
Everything is relative, and we can assure you the activity we are seeing now for both new leases and new sales is terrific! It turns out that The Great Recovery is much better than The Great Recession. If there is a better investment than commercial real estate right now, we don't know what it is (but if you know, please call us and tell us). Financing continues to pose barriers, but it turns out there's cash out there, as well as seller financing and private money for those investors who can still qualify. We hope you are participating in the recovery!
Andie Wilson is a principal at Coldwell Banker Commercial Premier Brokers in Carson City, where she specializes in commercial sales and leasing. Contact her at 888-6168 or brandie.llc@prodigy.net.
