RENO, Nev. — Todd McKenzie recently was asked why now was the right time for his company to develop the first speculative office project the Reno-Sparks region has seen in a decade.
McKenzie, who owns McKenzie Properties, explained that the inventory of available office space, while not a dire situation, does need to be replenished.
He also pointed out existing office space is rapidly being absorbed; some of the existing buildings are 10, 20 or 30 years old; and because of limited supply, lease rates are on the rise.
“I think if you have someone who’s looking at the current stock (of office properties), we just have a lot of old buildings,” McKenzie said at the Feb. 22 NAIOP Northern Nevada Chapter’s “HOWsing & Development” Forum. “… We have about 350,000 square feet of Class A office space, and that’s basically 1,400 new jobs … so if that many new jobs came here, that (office space) would be basically be wiped out.”
McKenzie was among several panelists at the NAIOP (Commercial Real Estate Development Association) forum.
Other panelists included: Chris Askin of the Community Foundation of Western Nevada; Jim Pfrommer of Pfrommer & McCune Ltd.; Par Tolles of Tolles Development; Aaron West of the Nevada Builders Alliance; Doug Roberts of Panattoni Development Company; Joel Grace of Reno Land Inc.; and Paul Andronico.
McKenzie’s project, the 40,826-square-foot Mountain View Corporate Center business park located just off of South Kietzke Lane in South Reno, should be completed this spring.
While there appears to be a need for more office space in the Reno-Sparks area, panelists said, no other large-scale projects are on the immediate horizon.
The massive Park Lane Mall project in Reno, for instance, was originally intended to have around 40,000 square feet of office space, but developers Reno Land Inc. decided to nix the office portion of the project.
“When we started out with Park Lane, the biggest challenge is finding the right mix,” said Grace, who is vice president of development for Reno Land Inc. “We started out with a mix of residential, retail and office space. We ended up upping the retail space and eliminating office.”
The developers agreed that locations for retail often are not always great locations for office space, considering such factors as ample parking.
While there may not be other large-scale projects in the works, some redevelopments in the region are focusing on adding or refurbishing office space.
For instance, S3 Development recently purchased a 39,816-square-foot building on the southeast corner of Wells Avenue and Ryland Street in Reno, with plans to redevelop the site for mixed-use purposes — including office and medical practices.
KPS3 Marketing, a veteran Reno firm, also recently acquired a three-story, 15,657-square-foot office building at 500 Ryland St. in Reno. The company has intentions of remodeling the top and bottom floors of the building.
McKenzie and others, however, remain bullish on the office market in Reno-Sparks, even if new construction is slow to come.
“We need more development,” he said. “At some point, it’s going to happen, even if it’s slower than, say, the industrial market.”