Airway Commerce Center, just south of McCarran Boulevard by the airport, will consist of four buildings totaling 890,000 square feet. Tolles Development Co.
The large tree-filled lot just south of McCarran Boulevard by the airport that’s stood vacant since the 1980s will soon give way to an infill flex and industrial center by Tolles Development Company.
Airway Commerce Center will consist of four buildings totaling 890,000 square feet, said Kyle Rea, chief operating officer of Tolles Development Co. TDC entered into a long-term ground lease with the Reno-Tahoe Airport Authority, which essentially is the landlord. TDC, meanwhile, will own all vertical improvements at the site.
“It is an incredible infill opportunity,” Rea said. “The site is not appropriate for really dense uses, like multifamily, retail or a lot of offices. Since it’s right under the flight path, there are limitations on density. There will be fewer employee counts, and it's certainly not appropriate for high-density multifamily.”
Tolles Develop Co., will construct all four buildings at roughly the same time, Rea said. Building A will be a flex industrial property totaling 140,000 square feet, while building B will be a class A industrial development of 440,000 square feet. Buildings C and D are slated to be 200,000 and 113,000 square feet, respectively.
Tolles Development Co., broke ground at the end of October and expects to bring Airway Commerce Center to market in the first quarter of 2024. Plenium Builders is the general contractor for the Airway Commerce Center project.
The triangle-shaped parcel of land is wrapped by Airway Drive to the west and Louie Lane to the east. McCarran Boulevard to the north fronts the largest section of land, which was once a bustling subdivision. However, after receiving numerous noise complaints — the parcel is directly under the flight path of air travel at Reno-Tahoe International Airport — the airport purchased all the homes and demolished them in the ’80s, Rea told NNBW.
The 185 trees still standing at the site are all that remains of the former Home Gardens subdivision. Rea said that about 150 trees will be removed — many are diseased and dying, he noted — while the rest were incorporated into the final design of Airway Commerce Center.
“We moved our design around to accommodate and keep as many trees as we could,” Rea said. “And 440 new trees will be planted at the site that will be a mix of FAA-approved species that are also drought-tolerant to encourage water conservation.”
Tolles Development Co., had long been eyeing the parcel, Rea added, because it’s extremely rare to find that much developable land in the urban core. The airport ran a process seeking proposals for the site, and after a number of years and numerous site plan revisions, TDC was selected to develop Airway Commerce Center.
Vertical construction will be funded through a mix of private equity investment and bank financing, Rea noted. The turbulence caused by rising interest rates and declining property values slightly complicated the funding process, he added, but in the end the merits of the project outweighed the potential risks for private equity and institutional investors.
“In June when real estate values across the country took anywhere from a 10 to 20 percent correction, that kind of jolted our financing process,” Rea said. “But this is infill industrial product in the center of town. It is just in super-high demand — there’s not enough of it in Reno to support our growing population. Having pretty much the perfect location and building what the market really needs won the day in bringing our financing partners to our side.”
Rea told NNBW the airport moved forward with plans to develop the site in part to increase and diversify its revenue streams. Communications executives at Reno Tahoe International Airport did not return NNBW’s requests for comment on the project.
Spaces in the smaller flex buildings will be divisible down to 5,000 square feet, while the larger industrial building could be subdivided or leased to a single tenant, Rea said. Eric Bennet, senior vice president with the industrial services team at CBRE, will handle tenant leasing at Airway Commerce Center.
The new development not only fills strong demand for smaller quality industrial spaces in the Truckee Meadows, but it also provides employment opportunities from small- and medium-sized businesses in the light industrial space who are located in the urban core and closer to services rather than the outskirts of town, Rea said.
“This is a great project to keep good-paying jobs central to town,” Rea said. “It doesn’t tax our city and county infrastructure. We are happy to provide a platform for small-sized businesses to provide good-paying jobs to workers in the center of town.”
