Northern Nevada industrial market: New buildings for new users

Over the past several years, Northern Nevada has experienced a historic surge in industrial development. This is in alignment with what we saw both nationally and globally. However, there were factors that made our region more attractive for industrial users than others. The state’s business friendly climate, available infrastructure, and central location have made Northern Nevada a natural place to distribute product or manufacture goods. While these market characteristics remain true, the conditions that developers are working with have changed. A tightening of available capital, increased construction costs and lack of certain material in the supply chain have impacted the pace of development across the country and more specifically in Northern Nevada.

As we continue into 2024 and look forward to 2025, the appeal of the Northern Nevada market for industrial users remains strong. But now that market conditions have changed, we are seeing a shift in the type of buildings this market will need to continue to attract new users. We are no longer seeing as many general users seeking space. Instead, user demand is being driven by tenant specific requirements that are not available in the market. These are uses where an existing or aged facility may not be a viable option. From food distribution warehouses to data centers, the region is witnessing a transformation in its industrial demand landscape, driven by users who require unique and tenant specific features in a facility.

Food Distribution & Manufacturing

One notable trend in the industrial development market is the rise of food manufacturing and distribution centers. With the increasing demand for fresh and perishable goods across the country, companies are seeking strategic locations to establish hubs that can efficiently serve their customers and reduce transportation cost.

Northern Nevada's proximity to major transportation arteries, including interstates and railways, makes it an ideal location for food distribution centers looking to reach both West Coast and inland markets. Additionally, the region's access to a skilled workforce, supportive business environment and reliable power further enhances its appeal to companies in the food industry.

As consumer preferences continue to evolve, food distribution and manufacturing centers are investing in advanced technologies and infrastructure to optimize operations and meet the growing demand for timely delivery of goods. From state-of-the-art refrigeration systems to automated storage and retrieval systems, these facilities often require new construction with updated features including higher clear heights to accommodate equipment and maximize the use of their footprint.

Data Centers

Another segment driving the industrial development market in Northern Nevada is data centers. With the exponential growth of data generation and consumption, businesses are expanding their digital infrastructure to support their operations and meet the needs of an increasingly connected world.

Northern Nevada's low risk of natural disasters, favorable climate, space for expansion, and access to energy sources, make it an attractive destination for data center development. Furthermore, the region's favorable tax environment and supportive regulatory framework provide added incentives for companies looking to establish or expand their data center operations.

In response to the unique needs of data center users, Northern Nevada is witnessing significant investment in critical infrastructure, including high-capacity power transmission lines, redundant fiber-optic networks and advanced cooling systems. These investments not only ensure the reliability and efficiency of data center operations but also position the region as a leading hub for digital innovation and economic growth.

Challenges and Opportunities Ahead

While the influx of users with unique needs presents exciting opportunities for Northern Nevada's industrial development market, it also brings forth challenges that must be addressed to sustain long-term growth. These challenges include ensuring the availability of skilled labor to support specialized operations, managing the impact of increased traffic and demand on infrastructure, and intentional land use planning.

As Northern Nevada continues to attract a diverse array of users with unique needs, the region is poised to solidify its position as a premier destination for industrial development. By leveraging its strategic advantages, embracing innovation, and fostering collaboration, Northern Nevada can continue its progress as a dynamic hub for economic opportunity and prosperity in the years to come.

Tim Schaedler is a partner with Panattoni Development Co. He is responsible for all aspects of development of commercial projects as well as the supervision of staff personnel in three offices within the region. Over the past two decades, Tim has developed more than $1.5 billion of speculative and build to suit projects. For information visit www.panattoni.com.