The Reno Experience District has constructed one building of 11,000 square feet that’s ready for occupancy, with another 35,000-square-foot building under construction that should be delivered sometime in 2023.
Two new retail openings at West End Commons at Fifth Street and Keystone Avenue will further solidify the retail resurgence happening along the Keystone corridor.
Several West End retailers, which include Mountain Mike’s Pizza, Firehouse Subs, Chipotle, Starbucks and In-N-Out Burger, are enjoying higher than expected pro-forma sales numbers, said Shawn Smith, executive vice president of retail services with the Reno office of Kidder Mathews. Adding Cracker Barrel Old Country Store and Panera Bread to the mix is likely to make the new retail center even stronger.
“It is going to be the new entrance to downtown, going along Fourth and Fifth streets,” Smith said. “It gives Reno a more upscale look – In-N-Out, Cracker Barrel, Panera, and Starbucks are all the darlings of retail right now, and it gives us a nice image when people come to Reno from out of town. Everyone is very happy with that location.”
Cracker Barrel formally announced its entry into the Reno market in September. The company confirmed in a press release that it would build a 10,486-square-foot restaurant and store that should employ as many as 200 full- and part-time employees. The location is scheduled to open in spring 2023.
It’s the third Nevada eatery and store for Cracker Barrel. Headquartered at Lebanon, Tenn., Cracker Barrel has two locations in the Las Vegas area, though it hasn’t opened a new location in the Silver State in seven years. Blake Smith, chief executive officer of S3 Development and developer of the West End center, told NNBW in a previous interview that Cracker Barrel was slated to be among the early businesses to open their doors at West End but pushed its plans back when the COVID-19 pandemic hit.
Panera Bread, meanwhile, will open a 3,800-square-foot store east of the Starbucks. Panera already has a location near the University of Nevada, Reno, and it’s scheduled to open another location in The Crossing at Meadowood Square in the middle of 2023.
The Keystone Avenue redevelopment extends across Interstate 80 as well. CVS demolished its obsolete building on Seventh Street and constructed a new prototype store that includes a drive-through, improved exterior lighting, landscaping and other site enhancements. The blighted Starlite Lanes bowling alley also is slated for redevelopment as Starlite Express car wash.
Heading south, retail development is underway at Reno Experience District. Smith said Lyon Living already has constructed one building of 11,000 square feet at RED that’s ready for occupancy, with another 35,000-square-foot building under construction that should be delivered sometime in 2023.
The first building has five retail sites available, with leases signed by Hub Coffee Roasters and Heyday Barber Co. Smith said Kidder Matthews is in lease negotiations on two other shop spaces for a pizza and Italian concept and a high-end Mexican restaurant. Retail concepts should start opening in the middle of next year, Smith added.
The retail offerings at RED, coupled with the opening of Reno Public Market, should serve to draw residents back to the corners of Plumb Lane and Virginia Street, once one of the region’s strongest retail destinations.
“This really helps bookend Midtown to the south,” Smith said. “You have downtown to the north and (RED) to the south, and it really helps buoy the whole area.”
Northern Nevada’s retail market has surged since the pandemic all but ground regional retail to halt back in the second quarter of 2020. Kidder Matthew’s Smith said overall retail vacancy dipped below 5 percent in the third quarter of 2022, with average rents pushing $1.78 cents per square foot.
“That’s the highest I’ve seen in my 22 years of doing this, and the same with the vacancy – I’ve never seen it this low,” Smith said. “All the rooftops we added during the pandemic created strong demand for retail, and I see it doing well over the next couple years barring a big recession.”
And despite rising interest rates, there have been a significant amount of retail properties changing hands in the past two quarters across Reno-Sparks, noted Gary Tremaine, senior vice president of retail with Dickson Commercial Group.
The largest sale so far this year was Iron Horse Shopping Center on Prater Way in Sparks, which was purchased by privately held Rhino Investments Group of Henderson in the second quarter for $18 million. The sale encompassed more than 187,000-square-feet of retail space that’s anchored by AutoZone, Tractor Supply Company and Harbor Freight Tools.
Sale activity is expected to taper off, Tremaine noted.
“There are plenty of investors out there with money, but everyone is pretty much on hold,” he said. “They are holding on to their cash and not wanting to buy anything because and waiting to see what happens with the economy.”
Investment purchases through the fourth quarter and beyond may be all-cash deals so owners don’t have to worry about carrying loans and rising interest rates. Tremaine also said the region is entering a dearth of retail spaces available for lease.
“We are running out of product,” he said. “Spaces are being leased up, and there’s not a lot available. New construction is few and far between because of construction costs – building costs are extremely high, and when (new construction) happens, rental rates are over $3 per square foot. The only tenants that can truly pay that are national tenants.”
