Huge industrial buildings are sprouting across northern Nevada, and the region’s roaring economy means they’re being filled as fast as they’re built.
Colliers International, a real estate brokerage firm, estimates that 15 major industrial buildings totaling well over 5 million square feet of space were planned or under construction at the start of this year.
To help envision the amount of space represented by those new buildings, the combined total is more than five times greater than the square footage of the Meadowood Mall.
Colliers International’s brokers said the new projects are all over the region — from North Valleys to South Meadows and from the east side of Reno-Tahoe International Airport to the Interstate 80 corridor east of Sparks.
Developers rolled the dice on almost all of the new projects, beginning work before they have a signed lease with a manufacturer or distribution company to occupy the space.
But it’s a fairly safe bet, Colliers International brokers said, because of the nearly constant flow of new industrial and distribution companies into the Reno-Sparks area.
E-commerce companies have thrived through the COVID-19 pandemic, and industrial companies continue to move to the region from California. The Economic Development Authority of Western Nevada reports that at least 30 industrial companies moved to the region or expanded existing operations last year.
As a result, even though 2.4 million square feet of buildings were completed last year, only about 4.4% of the industrial space in the region is vacant, the Colliers analysis found. That’s about half the vacancy rate five years ago.
Smaller spaces — smaller, at least, by industrial standards — are particularly difficult to find. Colliers said the market for spaces of 50,000 feet, for instance, remains critically light.
(Envision a 50,000-square-foot space this way: The Rose Ballroom at the Nugget Casino Resort is 30,000 square feet, so one of these “smaller” industrial spaces is nearly twice the size of that big ballroom.)
The intense competition for the few available spaces is pushing rents up fast. The average rent for industrial space stood at 49 cents a square foot at the start of this year, an increase of 16% in just the past 12 months. Those rents are likely to continue rising, Colliers said.
Higher rents, however, make it easier for developers to convince lenders to provide financing for new projects.