Opportunities continue to grow for Northern Nevada’s industrial development and real estate market, including the steady interest of data centers, energy investments and a burgeoning workforce in the mix, a panel of experts said at a Northern Nevada Development Authority luncheon in Reno.
The NNDA’s “Business Edge” briefing, moderated by Western Nevada College President Kyle Dalpe on Oct. 26 at the Atlantis Casino Resort Spa, offered various perspectives to industry leaders from a panel on the regional economic development and the industrial real estate outlook.
NNDA Executive Director Jeff Sutich said the topic was not previously embraced but deemed relevant given the current climate as the Reno-Sparks area or the Tahoe-Reno Industrial Center (TRIC) have become hubs for manufacturing and distribution. The region continues to gain the attention of larger companies. Members spoke on the trends on Nevada’s major projects in the past decade or more that have opened the “floodgates” to real estate investments, construction and automation.
Jeff Brigger, director of business development for Nevada Energy and previously with the Economic Development Authority of Western Nevada, said recent inquiries from outside manufacturers and companies interested in the region’s offerings and space, likely is being driven by energy demands and automation. Brigger, who leads major accounts and economic development teams for the utility, said the state has seen major requests for logistics in infrastructure and is set up for transportation. It also offers the potential for high-voltage distribution with new projects on the horizon and has new water cooler technologies available in its southwest areas.
“You see companies that are transitioning fleets over to electric vehicle charging,” Brigger said. “But I think we want to talk about the data center industry off the charges in the last year or so. I think we’re fortunate to land big players like Apple and Google and Switch and others who were adopters of the big Northern Nevada market.”
Dalpe asked Kyle Rea, partner and chief operating officer of Tolles Development and president of the National Association for Industrial and Office Parks (NAIOP) in Northern Nevada, for his assessment on industrial development in the region. Rea addressed 2021-22 as a record absorption year for the market.
“We have good projects that are getting off the ground, and that’s fantastic,” Rea said. “But we’re seeing projects being put on hold because the money’s not out there like it used to be. … In TRIC, there’s a lot of lot of supply coming on the market. They have lot of supply coming on the market in the coming months, and as it gets delivered, we’re seeing it gets absorbed, which is encouraging.”
Rea said it’s important to remain mindful of quality development and for government to write “smart, thoughtful development codes” to help attract companies willing to invest in the community with good business.
“A few years ago, Reno updated its community development codes,” Rea said. “I would be aware if you’re in a community that you pride yourself on being development friendly, when I’m in the permitting office, sometimes that’s not actually the case. When you’re asking candidates what are they looking for in a city manager, you’re really looking for someone the business community can work with that has business sense and to figure it out.”
But achieving growth is more than just about land or buildings, the panel said. Bob Potts, deputy director for the Nevada Governor’s Office of Economic Development, said closing major deals with major investors and companies involves offering an attractive workforce and a solid human resources strategy, which ultimately showing potential employees Northern Nevada provides quality of life in all aspects.
Potts, who leads the Governor’s Economic Advisory Council, said currently Northern Nevada’s unemployment rate averages 4.4% while statewide it’s 5.5% because Southern Nevada’s numbers are higher than in the north.
“Some say, ‘How can you have these high unemployment rates when you have such strong such job growth? Nevada had the fastest job growth of any state in the United States in September. Right now we’re sitting at 120,000 jobs above the pre-pandemic peak at statewide. Here, locally, it’s about 21,000 above pre-pandemic peak.”
Potts said this has changed consumer purchasing behaviors.
Brigger also discussed NV Energy’s upcoming Greenlink initiative, a two-phase project. Greenlink West comprises a 525-kilovolt line spanning 350 miles from Las Vegas to Yerington to be in service in December 2026. Greenlink North will be a 525-kilovolt line going 235 miles from Ely to Yerington and will be running in December 2028. There also will be three 345-kilovolt lines from Yerington to Reno.
The project will help generate approximately $690 million, create 4,000 jobs and produce clean energy in the state’s rural communities, providing flexible opportunities to industrial and residential customers, Brigger said.
Tomi Jo Lynch, first vice president of Coldwell Banker Richard Ellis (CBRE), Inc., addressed the influencing factors of the industrial real estate market and said the velocity of transactions has decreased in the past six months, noting investments are at a standstill for now.
“There were none in this quarter to talk about, but it doesn’t mean you can’t find something … so if you are looking, definitely talk to a real estate professional and come up with a strategy that works for you,” Lynch said. “As far as a leasing strategy goes, I’ve been advising all my landlord clients on lease renewals to push toward market rent, but be careful. There is a tipping point where tenants can’t bear the weight.”
She observed on a national level, manufacturing building saw a 23% increase in asking rents last year, and said approximately 150 manufacturing executives said they had planned to increase onshore manufacturing options in the past year as well.
She added, however, Northern Nevada continues to offer a business-friendly environment and strong building fundamentals and said “that won’t change.”
Sutich said the event was very successful and it was an opportunity to bring in new groups and banks who haven’t frequented the NNDA’s events before.
“We thought with everything going on with growth, the idea of a slowdown and capital markets getting tighter and companies wanting to come here and the economic process, we thought it would be a good time for the community to engage and talk about it,” Sutich said.