Northern Nevada Real Estate A special publication brought to you by the
Volume 4, Issue 3
COMMERCIAL | INDUSTRIAL | RETAIL | LAND | OFFICE
Monday, November 6, 2017 | www.nnbw.com
Aging industrial building in Sparks to get facelift By Rob Sabo info@nnbw.biz The owners of one of the largest – and oldest – industrial buildings in Northern Nevada are breathing new life into the property and plan to reposition the building for lease beginning next year. Kin Properties, the management arm for the owner of the shuttered Kmart distribution facility at South McCarran Boulevard and Greg Street, will spend more than $12 million to demolish sections of the building to open up the site for better tractor-trailer movement and parking, increase the number of external docks, and upgrade existing infrastructure such as electrical and heating to modernize the building. Kin Properties plans to demolish about 120 feet of depth on the facility’s south side. Work is expected to begin in early 2018 and be completed by the third quarter. A general contractor has not yet been selected for the job. Constructed in 1970 and expanded in 1973, the Kmart distribution center sits in the heart of Spark’s industrial core. The facility totals just over 1.55 million square feet; however, due to its age, the facility does not meet many of the requirements for large industrial users. It has tight interior column spacing (40’x40’) which inhibits the flow of goods and materials inside the
building, outdated office facilities (25,000 square feet), limited external docking, and 24-foot clear heights. Industrial buildings constructed today often have 36-foot clear heights, which allows for much more storage racking in a smaller footprint. Once the renovation work is complete, the property will be marketed in spaces ranging from 150,000 to 200,000 square feet. The industrial team of Chris Fairchild, Greg Shutt and Bryce Wiele at Colliers International will market the spaces for Kin Properties. The privately held commercial real estate investment company headquartered at Boca Raton, Fla., owns more than 750 properties in primary and secondary markets throughout the U.S. and Canada. “Because of the building’s obsolescence, the owner is taking offline about a million square feet and will redevelop the building to make it more usable,” Shutt said. Once renovations are complete, the footprint of the building will total about 1.27 million square feet on 56.6 acres. The renovated facility is a prime location for mid- to large-size industrial users looking to relocate or establish operations in Northern Nevada, Fairchild said. Potential usage includes call centers, company headquarters, distribution, manufacturing and storage. The building also could be leased to one
entire user, if desired. “The owner is doing a significant remodel on this building to make it much more functional for many more years,” Fairchild said. “It’s kind of a new slate as to what we can do with the building and who we can put into it. The landlord has no debt on the property and can add significant capital improvements per tenant needs.” Location is one of the property’s primary benefits. Fairchild says prospective tenants can pull labor from the entire Reno-Sparks Metropolitan Statistical Area since it’s easy to get to and located on the Regional Transportation Commission bus line – there are three bus stops adjacent to the property, he said.
This 1.55 million-square-foot industrial building in Sparks has been empty since 2014 when the Kmart Distribution Center shut its doors. Constructed in 1970, it no longer meets the needs of the modern warehouse industry, so owners have planned a $12 million renovation. Photo courtesy Colliers International
“It’s central to Sparks and that whole submarket immediately surrounding it,” he added. “It’s within one mile of Interstate 80, and it’s right on the McCarran loop. If (a new tenant) is coming in and hiring new people, that location gives them an advantage.” continued on page 7
Office market: ‘Going in the right direction’ By Bill O’Driscoll wodriscoll@nnbw.biz There’s sustained life in the office sector of the Reno-Sparks commercial real estate market as the broader industry continues its post-recession recovery. For the July-September third quarter, total office vacancy rates shrank by a full one-half of 1 percent, according to Colliers International Reno office. Another report put vacancy rates at all-time lows. In addition, net absorption continued in a modest — but still positive — vein: More office space — 36,041 square feet — was filled than was vacated over the three-month period, according to Colliers data. That followed a second quarter also showing positive net absorption, specifically a net of 51,475 square McKenzie Properties is building a 40,000-square-foot office building south of the Kietzke Lane-Neil Road roundabout in south Reno set to open in 2018. Photo by Bill O’Driscoll
feet of office space filled in the AprilJune period. While the third quarter gains were less, “It’s still going in the right direction,” said Melissa Molyneaux, Colliers senior vice president/ executive managing director in Reno. At Dickson Commercial Group, Principal Dominic Brunetti said his data also shows continued improvement. “We’ve had a nice run, quarter to quarter, of positive absorption, nine quarters so far over two years or so,” he said. At the same time, office vacancy rates are at all-time lows, according to Brunetti’s assessment of the third quarter, with rates in the continued on page 7