Lewis Apartment Communities broke ground on a 306-unit multifamily project, Homecoming at Kiley Ranch, in Sparks. Courtesy Lewis Apartment Communities
Robert Lewis has spent a lifetime reading regional real estate markets.
In an interview with NNBW last week, Lewis, president of the Nevada Division of the Lewis Group of Companies, said multifamily properties remain in high demand as the cost of goods and interest rates have skyrocketed. It’s one of the primary reasons that Lewis Apartment Communities broke ground on a 306-unit multifamily project at Kiley Ranch in Sparks.
“We are constantly trying to evaluate where opportunities are in the market, and with the two new schools that recently opened across the street, we thought it would be a good place for an apartment community,” Lewis told NNBW. “With interest rates and home prices going up, our sense is that more people are looking to rent rather than buy. That’s what prompted us to convert some land we originally thought we would develop for single-family houses and shift it to a rental community.”
Homecoming at Kiley Ranch is located on 15 acres at 1234 Sabata Way, near Bohach Elementary School and Sky Ranch Middle School. The development, the fifth multifamily project for Lewis Apartment Communities, consists of 23 buildings split between three-story apartments and townhomes. Floor plans range from 745 to 1,562 square feet, said Gigi Chisel, vice president for Lewis Group of Companies.
Each unit has its own garage, Chisel added. Garages for the apartments will either be part of the building or located just across the drive aisle, she said. The three-story townhomes will be an upstairs-downstairs configuration stacked above a garage.
“It is really exciting for us to be coming to Sparks with multifamily,” Chisel said. “We have been involved in Sparks before, but we have not been there in a long time.”
Johnstone Moyer Inc. (JMI) of San Carlos, Calif., is the general contractor on the Homecoming project. JMI previously completed a multifamily project for Lewis Apartment Communities in Tracy, Calif. Chisel expects first leasing at Homecoming at Kiley Ranch to occur this summer, with full buildout likely taking another year or longer after that.
Robert Lewis
HISTORY IN SPARKS
Though Lewis Apartment Communities has focused its development efforts on multifamily projects in south Reno, it also had land holdings in Kiley Ranch. The development company had improved some land for single-family housing but eventually sold those parcels to Lennar, Robert Lewis said.
The company started building homes in Sparks about 50 years ago, although its last single-family subdivision there was Aspen Glen, which was constructed in the initial phases of development at Kiley Ranch.
Robert Lewis said the company will use apartment floor plans from its Indigo community and townhome floor plans from its Esprit community in south Reno for Homecoming at Kiley Ranch — with some minor improvements.
“We are always trying to develop new floor plans and assess what the market is telling us,” Lewis said. “As we have been developing both in Nevada and California, we see what’s in vogue and what potential renters are looking for.
“From the construction end, we are always in the process of value engineering — we start out drawing plans, and as construction gets going and you do framing walkthroughs, you see if it's coming out the way you envision,” he added. “We often make adjustments on windows or cabinets and are always sort of in a continual improvement process. At (Homecoming), the plans are similar to what we are doing in Reno, but they are slightly improved — everything we learned from the last build is incorporated into the new one.”
Chisel said that repurposing existing floor plans also makes for a quicker construction start and gives a better sense of where the company will exit the project financially.
“We certainly have saved time, and we also understand our cost structure because they are current plans that have already been bid,” she said. “You know going in essentially where you are going to come out as far as construction costs other than the normal fluctuations in materials and labor.”
Gigi Chisel
ADDING NEW CONCEPTS
Lewis Apartment Communities has about 72 acres of additional land for multifamily development in the Kiley Ranch area. Robert Lewis told NNBW that the company is continually exploring different product types and might introduce some new concepts in future developments at Kiley Ranch.
“One of the things we have been building in Southern California and the Sacramento area is duplexes that have a little bit of a backyard — it's sort of a cross between an apartment and a single-family home,” he said. “We are trying to design a product like that that might work for (Kiley Ranch) to give people a little bit of a different lifestyle.
“It wouldn’t be quite as intense of land use and gives them a little more elbow room and outdoor private space,” he added. “Hopefully, something like that makes sense. One of our constraints is just to see what the cost would be to do a product like that and whether that would match the income levels of people we expect to be looking for rental units. But it would give us a different product type.”
Lewis said one goal for Lewis Apartment Communities is to provide multifamily communities that meet the needs of a wide range of potential renters.
Lewis is kicking off its Homecoming project at a time when rising interest rates significantly impact the cost of construction debt. High interest rates affect profitability and liquidity, Chisel said, but they also tend to buoy the for-rent sector.
“In our 50-year history in Northern Nevada, we have encountered multiple up-and-down cycles,” she said. “But we are a strong company with good financial strength, and our experience holds us up when it comes time to survive downturns. Interest rates are a huge challenge, but they slow the for-sale sector, which delays home ownership.
“Another benefit is that projects not yet started by potential competitors may be postponed, which may even out supply and demand,” Chisel added. “There are pluses and minus. We would prefer a better interest rate market to do our projects in, but we hold our assets for a long time. We don’t stabilize our assets and sell them off; it’s a long-term business for us.”
