What’s the difference between “empty” and “vacant”?
It’s a distinction that makes a lot of difference these days to the owners of large office buildings around Reno.
Ever since the arrival of the COVID-19 virus eight months ago, lots of office space has been empty as white-collar folks decided to work from home. But so far at least, their employers are holding onto the space, paying rent while they try to figure out what’s next.
About 10.8% of the office space in the Reno-Sparks region stood vacant this autumn, finds a new study from Colliers International, a commercial real estate brokerage. That vacancy rate is up from 9.4% this summer as about 108,000 square feet of previously occupied space now is available for rent.
The big question is what companies will decide to do in early 2021, says Melissa Molyneaux, a Colliers executive vice president in Reno who specializes in office properties.
“With many of our largest tenants not occupying their offices since early March, they are not yet making decisions to contract or expand,” says Molyneaux. “We think this will have a delayed impact on the office market that northern Nevada may not feel until 2021, pending the timing and effectiveness of the vaccine for COVID-19.”
On the other hand, some new companies continue to open operations in Reno — a couple of tech companies announced their plans just within the last week — and that’s going to soak up some of the available office space.
The Colliers analysis found that the downtown market was fairly weak during the autumn months, ending this year’s third quarter with a 12.5% vacancy rate, much of it in top-class buildings. Office rents downtown are the most expensive in the region, averaging $1.98 a square foot per month.
The market for office space is tightest in South Meadows, where Colliers estimated the vacancy rate at 2.7% this fall. Rents in that area average $1.88 a square foot.
While Molyneaux says the relatively small uptick in the vacancy rate came as a surprise, it may have been enough to cause second thoughts among some developers who have office projects on the drawing boards.
Several good-sized projects such as the conversion of the old Harrah’s casino downtown into office, residential and retail space already are in the pipeline. Between those new projects and the newly vacated existing space that becomes available, developers have to decide if their projects will be needed to meet the demand when the new buildings are completed, Molyneaux says.
