Friday, July 24, 2009

A Downtown in Full Swing

Posted by: Dominic Brunetti
Vice President Office Properties
775 336 4674

During his career, Dominic has worked with clients such as: Centex Homes, CTX Mortgage, Landmark Homes, 1st Premiere Mortgage, AG Edwards, Alere Medical, CHSI Nevada, The CFO Group, Ameriwest Financial, North American Title, Andregg Geomatics, Manhard Consulting, HDR Engineering, State Farm, Gizmo Wireless, The Corner Doc, First American Title Company, Stewart Title Company, GI Consultants, The Hilton Foundation, Hartford, PC Doctor and more.

Reno’s Downtown office submarket is slowly but surely benefiting from the “makeover” taking place. The revitalization projects over the past five years have transformed downtown and the trend continues. New and redeveloped condo complexes, coupled with street beautification projects and the Reno Aces AAA baseball stadium & event center truly make downtown a desirable place to live, work and play. This all spells good news for the downtown office market, although competition with other Northern Nevada submarkets for the relatively limited demand will likely remain tough through 2010.

In the 2nd quarter of 2009, Class A downtown office vacancy increased to 18.7% from 16.49% compared to the same period the year before. This is largely due to overall market conditions; office vacancy rates in every northern Nevada submarket increased over 2008 levels and are at or near their highest levels since official records have been kept.

The biggest news for downtown in 2009 is the Reno Aces Baseball Stadium, which has revitalized the east side of downtown, known as the Freight House District, and has breathed new life into one of Reno’s largest office buildings, 300 E. 2nd Street. Basin Street Properties, with a touch of luck and talent, put 300 E. 2nd Street, also known as the Park Center Tower; into contract prior to the Baseball Stadium development was announced. Now proud owner and soon to be tenant, Basin Street Properties is relocating their corporate headquarters from Petaluma, Ca to Downtown Reno. Both Basin Street and baseball fans alike have benefited from the eleven floors of parking this fifteen story office building provides. The building has undergone significant redevelopment and more is planned with ground floor retail scheduled to open as early as Q4 2009.

While the new baseball stadium seems to steal most of the headlines regarding downtown redevelopment, let’s not forget some other notable office redevelopment projects in the Downtown submarket.

Downtown Office Redevelopment Projects

100 and 140 Washington Street
Despite market conditions, AMH Properties continues to gain ground in this 32,000 square foot two building redevelopment project. After acquiring this nearly vacant office complex in 2007, AMH Properties completely updated the interior, exterior and landscaping with new energy efficient, contemporary designs. The complex is now home to a number of new tenants such as, The Laughton Company, Gaston & Wilkerson and more.

275 Hill Street
The next in line for an AMH Properties’ redevelopment is this two story office building which is currently being converted into a mixed use project with ground floor retail and 2nd floor office.

250 Bell Street
Cathexes Design recently turned this dated 20,000 square foot office/warehouse into a new vibrant multi-tenant office building. An artistic design coupled with green building construction makes this a truly unique downtown redevelopment.

445 South Virginia Street
Dermody Ventures LLC is in the process of redeveloping this former multi-tenant office and once downtown grocery store into a mixed use Retail/Office complex. The building is surrounded by the heavily traveled S. Virginia Street, Sierra Street and California Avenue. The building has great visibility and one of the highest parking ratios downtown.

Downtown New Office Construction

State Street Plaza
MTK, LTD. recently completed this centrally located mixed use project on the corner of State Street and S. Virginia St. This Class A development is in the heart of Reno’s financial district sitting neighbor to Reno’s Pioneer Center for the Performing Arts. State Street Plaza consists of ground floor retail and 2nd floor office.

The aforementioned projects have driven the insipid reputation of the CBD into an energetic downtown. Yes, statistics show an increase in office vacancy, but with a hint of new construction and sprawl of the national economy, a two point increase depicts a healthy performance when compared to the double digit increases in alternative submarkets. As once characterized as the “rubber band” effect, tenants and citizens alike are realizing, once again, the convenience, amenities and diversity Downtown Reno bestows.

Matt Grimes, Associate, NAI Alliance
Dominic Brunetti, Vice President, NAI Alliance

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