Nevada is experiencing major changes and is quickly becoming one of the first places that industry leaders think of when considering relocation or expansion of their companies. With an attractive business-friendly economy that offers companies abundant tax breaks, the state is gaining prominence as a gateway to western states for manufacturing and distribution, and as a hub for data centers. Major players like Tesla and Switch have already taken advantage of this pro-business environment that Nevada has to offer. Nevada’s industrial market benefits greatly from these companies choosing Nevada as their site for relocation and expansion.
Northern Nevada’s industrial market ends the first quarter of 2019 on a strong note. With over 880,000 square feet of positive net absorption and over 1 million square feet of gross absorption, due to many large lease transactions being signed. The outcome of this has caused a 9% increase in asking rents. As absorption remains strong, there is strong activity coming for both new construction and investment in the industrial market.
A wave of new construction is underway to meet the demand for industrial space in Nevada. More than 2.9 million square feet of new industrial is underway for the northern Nevada region. The most noteworthy of these projects include a 313,000 square foot building on the north side of Virginia Street, a 270,000 building at the Longley Commerce Center, along with a 405,000 square foot building in North Valleys by Dermody Properties, also a 610,000 square foot building at Tahoe-Reno Industrial Center by Tolles Development Company. These new additions continue to heat up the industrial market, creating an even more attractive market for large investors.
Investment sales in the region are reflective of the occupier’s interest in the area. One of the most notable investment activities to take place thus far in 2019, was Dermody Properties’ sale of a 54-building national portfolio to Colony Industrial. The portfolio traded for $1.16 billion. The sales volume in 2018 surpassed the long-term average because of transactions like this. With four large portfolios totaling over five million square feet on the market or currently in escrow, the opportunity to enter the Reno industrial market as an investor has never been greater.
The northern Nevada market shows no signs of slowing down, with thousands of new jobs being brought to the market. The demand for industrial space will continue to thrive with a healthy economy and business friendly environment. With economic expansion, the industrial market will continue to reap the benefits of all that Nevada has to offer for those who enter a growing and profitable region.