All considered, the Reno Metro Industrial real estate market did ‘ok’ in 2012. Certainly nowhere near the red hot Inland Empire’s wild influx of new occupancy, but far better than Las Vegas’s overall negative net absorption for their 2012. Overall vacancy dropped almost 2% (from 15.2% to 13.4%) in 2012, resulting from a series of up and down quarters. There were a nice group of larger transactions in the year and a nicer group of sales, with opportunistic tenants and buyers alike snapping up incredible deals, leasing at rates not seen in a decade and buying at significantly lower than building costs.
2012, Q4 saw a large lease transaction with Bizchair ( eRetailer from Atlanta) completing the 100% lease up of Panattoni’s Lear Industrial, 4 building Complex in Stead with 292,500sf. Previously, PPG leased Kennedy’s big box in TRIC for 187ksf, Alfa Aesar leased Prologis’s 110ksf free standing property off Vista in Sparks, Sierra Converting leaving their long term tenancy with Prologis and buying the ex-Quad Graphics building in Stead at 181ksf and Torchmate’s lease of 118ksf. Also CRown Beverage bought the ex-Weyerhaeuser 72,500sf property at 600 Spice in Sparks, Agru America expanded and bought Polypipe’s plastics extrusion facility in Fernley. Building sales continue to be the bargains of the decade. Market velocity, which certainly had both higher and lower trending, did continue to march ahead with fewer and fewer losses of firms leaving the area as the year progressed. As has been the case for quite some time now, land sales are almost nil as well as new construction.
The outlook for 2013 starts out similar to 2012. Rather luke warm. There are potential transactions still circling the market. It does seem that there is a resurgence in the midsized lease users (35-75,000 sf), which has been the dead zone in the market for quite some time. I attribute that size occupant to the typical manufacturer or distributor taking a modest step into the western market service area. This has obviously been an industry sector (small business) that has experienced hard times the past 3-4 years. It is encouraging to see this activity, lets hope it continues.
The big box inventory is evaporating and I expect to experience shortages in this availability size in 2013as the few remaining sites are taken down. New, speculative building still is not on the radar, but sooner or later the first one out of the box with new product will be the recipient of much attention. I would expect the carry time on any new product to be well less than experienced in the 2007-2010 era. It is yet to be seen what rental rates any new inventory will achieve. 2013 should be interesting.