Dominic Brunetti, CCIM
Scott Shanks, SIOR
Chase Whittemore, MS
Chase Whittemore, MS
Looking back to our Q1 2011 report of nearly 12 months ago, the adage repeats itself; activity breeds activity. The Northern Nevada Office Market closes out a two year trend of positive net absorption and a decrease in overall vacancy. Some of the impactful players of 2011 were newcomers to Northern Nevada; Reality Engineering out of California, Fusion Contact Centers out of Arizona and Stifel Nicolaus out of Missouri. The other impactful players were the local staples such as Jones Vargas and Muckel Anderson; two companies that remained downtown, but after a combined 20+ years of tenancy in the former Porsche Building moved out of 100 W. Liberty St. into the Jones Vargas Center at 300 E. 2nd Street. Most people report this good news to inbound companies such as Brightpoint North America and Benco Dental Supply which are absorbing hundreds of thousands of square feet within the advanced logistics niche market. On the other hand, we do not hear enough about companies within the business service sectors such as Consolidated Agency Partners, MyNewPlace.com, Sanare, B&B Medical Services, Enel Geothermal and others that are new to our market or expanding locally, creating an economic impact, diversifying the economy and absorbing office space.
Ending 2011 with a decreasing overall vacancy rate of 17.36%, the office market continues to improve netting positive absorption of 27,200 square feet. Possibly the better news, the funnel of sublease space on the market is diminishing, a tell tale that the general office market is preparing for steady improvement. From a submarket perspective, Meadowood, particularly the Kietzke Lane-McCarran Boulevard corridor, continues to outperform the overall market standing at 14.28% vacancy. Rents within the Meadowood Submarket are exceeding an effective $2.00 per square foot, full service gross. Yet, Downtown recorded the most improvement absorbing nearly 90,000 square feet year over year.
The outlook, although optimism persists, continues to hinge on the growth of GDP, consumer confidence and the woes of widespread deleveraging. These factors, affected gravely by the upcoming election and future legislation, will determine the organic and inbound office space absorption of 2012. Specific market sectors such as alternative energy, tech infrastructure and mining substantiate innovation in the local economy, yet the anxiety level remains high and is the impediment for job creation. Northern Nevada must continue to focus on industry diversification and the quality of life, Reno-Tahoe experience to attract and retain emerging companies.