Report: Reno-Sparks lacks large industrial sites

The third-quarter industrial absorption of 1.8 million square feet in Reno and Sparks has developers moving on large speculative buildings and commercial brokers scrambling to find suitable locations for prospective tenants.

And it could get much harder to find room for distribution and manufacturing firms in the future.

Though there’s currently an adequate supply of industrial land for development in Washoe County, a study by the Truckee Meadows Regional Planning Authority finds the county lacks a pipeline of development-ready land for new industrial companies entering the region over the next 20 years.

There’s certainly no shortage of developable land in Storey County at Tahoe Reno Industrial Center, where wild mustangs and sagebrush far outnumber large industrial buildings. But TMRPA’s Industrial Lands Needs Analysis finds that in Washoe County there currently is about 1,200 vacant acres of land that’s zoned for industrial development, and another 1,600 acres zoned for mixed-use development. Additionally, the Reno-Tahoe International Airport owns 2,400 acres of land at Reno-Stead Airport that could be available for long-term lease.

Projections for job growth, the TMRPA report says, show that between 13,000 and 17,000 new employees will join the industrial sector between 2012 and 2032, and the sector will need between 1,100 and 1,500 acres of industrial land to house new companies.

It may seem like Washoe County has plenty of available space, but much of the land zoned for industrial use isn’t serviced by utilities or necessary infrastructure to support development. About 220 acres are considered well-served, while another 200 are supported to a lesser degree by industrial-scale infrastructure, the report finds.

“For industrial land in the region we have some pieces that are looking really good, and some places that don’t have much, and we have to think about what that means in terms of potential infrastructure needed to support industrial development, says Kim Robinson, executive director of Truckee Meadows Regional Planning Authority.

The supply of developable land came into sharp focus in 2013, particularly after the last three months, when the region’s industrial brokers placed a handful of tenants that far exceeded the region’s long-term absorption average of 1.3 million square feet per year.

There’s no shortage of industrial land or buildings in the Truckee Meadows — Washoe County has 67 million square feet under roof, with another 10 million at TRIC. But current absorption rates and continued interest from companies moving operations to the Truckee Meadows could lead to a whole slew of new industrial construction projects that would impact the region’s supply of developable land. And most new large industrial users require much more modern buildings than are found in the area’s industrial corridors.

“We are at a real turning point,” says Dan Oster, senior vice president and principal with the industrial team at NAI Alliance. “We have turned the corner on what has been a real terrible five years. It’s slowly been getting better, but in the last quarter we exceeded the long-term average and we already had a good year in the making.”

In Washoe County, some companies that need larger sites, such as Urban Outfitters, located in Stead. However, most of the large tenants coming into the region, such as Randa Corp. or Ardagh Group, took land at Tahoe Reno Industrial Center, where they could purchase sites of 100 acres or more and have room to expand if necessary.

The keys for Washoe County to land large industrial tenants, Oster says, is having land with water, power, sewer and other infrastructure in place — a key decision in Lake Washington Partner’s recent purchase of 66 acres at Spanish Springs Business Center off Pyramid Highway.

“Yes there are a lot of parcels and wide open spaces in northern Nevada, but when you start to apply the logic that developers and users of industrial space use to evaluate sites, we don’t have an over-abundance,” Oster says. “There is work to be done to make more areas accessible for industrial development.”

Reno and Sparks can’t compete head-to-head with Storey County for large distribution or e-fulfillment centers, the reports says, but it does well in positioning smaller manufacturing firms that need five to 10 acres. These firms want sites with easy access, and there currently are 208 sites around the Truckee Meadows that could house smaller firms in the next two decades. Additionally, many new firms in the region are renovating older buildings to suit their needs rather than erecting new buildings.

The only way to accomplish the goals of economic development organizations of bringing new manufacturing and distribution companies to northern Nevada is to increase the supply of cost-effective land for industrial development, Oster says. The TMRPA report suggests that with historical and projected absorption rates, the greater Reno-Sparks region needs about 500 acres of industrial land available at any given time. For the region to compete with TRIC, however, it needs more than 800 acres of buildable land.

And that, Oster says, requires some careful foresight and planning in where to build.

“We are still under-supplied for pad-ready land for development,” he says. “The process and insight required to pick a site that is going to work for the next phase of building in northern Nevada really needs the insight of brokers and development professionals. When you drill down to it, you can’t just pick any piece of dirt. It has to have infrastructure, and it has to have a price that makes sense once a building is complete.”