Industrial real estate in high demand in Douglas County
July 29, 2017
Like much of Northern Nevada's industrial property market, Douglas County is faced with high demand and limited inventory.
Dick Silvera, longtime Realtor and owner of Silvera Commercial Real Estate in Gardnerville, says that he could sell or lease thousands of square feet of industrial buildings if they were available. He pegs the vacancy rate at under 5 percent in the Carson Valley. Companies relocating from California have been responsible for purchasing or leasing the bulk of industrial properties in the valley.
Silvera has only two properties currently listed for sale, one of 51,000 square feet and the other much smaller at 5,700 square feet. Another 24,000-square-foot property is for lease. Rents for industrial buildings are at 60 cents per square foot, up from the 40- to 50-cent range three years ago. However, rents need to rise another 15 cents to make development of spec buildings attractive.
According to Silvera, there is lots of acreage available for industrial development. He estimates that acreage in the neighborhood of 300 to 400 acres. A 12-acre development planned in the airport business park in Minden is currently on hold awaiting financing.
In addition to the airport property and the nearby Meridian Business Park, two other areas contain most of the industrial development in the Carson Valley. They are the Johnson Lane and Heybourne Road area in Minden, and the Industrial Way business park in Gardnerville. But in addition to rent levels still being too low to attract spec builders, a shortage of workers in the building trades is also seen as an impediment. Once the financial logjam breaks, there will be a scramble to find or train people to construct the buildings needed to fill the demand.
One of the main reasons for the high demand is the quality of life in Carson Valley.
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"A lot of California business owners have summer homes or second homes at Lake Tahoe. They see what we have here, and many of them want to relocate or expand their businesses here," Silvera said. "Unfortunately, building to suit lead time is at least a year, and many companies are not willing to wait that long."
For those companies willing to wait, there's hope on the horizon. There is a 31-acre parcel under development on Heybourne Road in Minden, with Sperry Van Ness Gold Dust Commercial behind it. Jack Brower says that the geological work on the site is done, surveys complete, grading permits designed, and other preparations in progress. The plan is to have three buildings totaling 400,000 square feet – two buildings of 112,000 to 113,000 square feet and the third with 210,000 square feet. The buildings can be subdivided in 50,000-square-foot increments, so tenants will be fairly large manufacturing or distribution companies. All buildings are planned for 32-foot clear height, with truck courts.
Brower stated that they have talked to a lot of companies, but no one has yet made a firm commitment. He said that as soon as they have a major tenant, preferably two or more, the project can move ahead. He estimates 12 months from start to completion and occupancy of the buildings.
So what does the future hold for industrial properties in Douglas County?
"The future is bright," Silvera said. "Demand remains strong, particularly among business owners who prefer the quality of life in Carson Valley to Reno/Sparks and the Tahoe Reno Industrial Park in Storey County. More projects like the Heybourne Road development are expected with the rise in lease rates for industrial buildings. A lot of moving parts have to mesh to balance supply and demand, but things seem to be moving in the right direction."