Carson City could miss out on the current economic boom due to a lack of industrial real estate.
The vacancy rate here for commercial/industrial space has dropped from 21 percent to just under 7 percent, according to Brad Bonkowski, principal, NAI Alliance.
“We basically have very few usable buildings left here,” Bonkowski, who’s also a Carson City supervisor, told attendees Wednesday at the monthly breakfast at the Carson Nugget hosted by Northern Nevada Development Authority.
That led to Carson City recently losing out on five new businesses that looked at the area and ended up locating in Washoe County where they found suitable space.
Those businesses brought with them 170 new jobs, according to NNDA.
Exacerbating the problem, Bonkowski said, is a dearth of financing for speculative building. And manufacturers don’t want to wait a year to build their own.
“We have got to figure this out. We could build 200,000 square feet of industrial space in Carson City and it would be sold in 12 months, but we have nothing to show,” Bonkowski said. “We’re going to miss out on the whole cycle.”
This cycle, like others, is sparked by industrial users who bring jobs that drive residential development and, eventually, office and retail growth, he said.
The shortage of industrial space in Carson City is mirrored region wide by a lack of residential property for workers filling what’s expected to be 50,000 new jobs in the next four or five years, thanks to Tesla Motors and Switch data centers building huge facilities in Northern Nevada.
“Two things could hurt this corridor of growth and one of them is the lack of affordable housing,” said Bruce Breslow, director, Nevada Department of Business and Industry.
Breslow said 5,000 new homes need to be built every year for the next five years to meet the demand.
Housing is even tighter than commercial space. Vacancy rates for apartments, for example, in Reno and Carson City are below 3 percent.
“If you’re in the market to rent you may not be able to find anything,” Bonkowski said.
The picture is similar for home buyers.
“There is no inventory in Carson City right now to meet the demand,” Vince Scott, broker, Sotheby’s International Realty in Incline Village, said.
That’s driving up home prices. In Carson City, Scott said the price per square foot recently rose from $125 per square foot to $140 and he expects it to soon reach $225.
The issue is particularly acute for lower income workers.
The Economic Development Authority of Western Nevada recently produced a report on economic indicators for northern Nevada called the EPIC Report.
Eddie Hult, director, real estate operations, Nevada Rural Housing Authority, said the report underscored the need for more affordable housing for lower wage earners, workers making $17 per hour or less who currently can only afford homes in Churchill, Lyon, and Storey counties.
“We found (the need for) 12,000 more homes that the report did not find,” Hult said.
There’s some relief on the horizon.
A 584-unit development called The Summit Club, near the Summit Mall in south Reno, is beginning construction this year with some occupancy starting in 2017.
The development is being financed through so-called 80/20 bonds that requires 20 percent of the units be reserved for workers making $15 an hour or less, said C.J. Manthe, administrator, Nevada Housing Division.
Manthe said a similar project is in the pipeline for Lyon or east Washoe county to serve workers at the Tahoe Reno Industrial Park.
Whether commercial or residential, the issue comes down to the same thing, said Rob Hooper, executive director, NNDA.
“One word: capacity,” he told attendees. “We had so many empty buildings eight years ago. Guess what? Times have changed.”