Shawn Smith, executive vice president of the retail team at Reno’s Kidder Mathews office, said Fernley is poised for commercial growth following the development of Victory Logistics District.
Provided to the LVN
The largest retail shopping center to be built in more than a decade in Fernley is underway.
There have been some big box retail buildings constructed in Fernley over the past decade, but Fernley Promenade is the first large-scale retail center with multiple junior anchors, drive-through eateries and an extended-stay hotel. Privately held LRE & Companies of San Rafael, Calif. is the developer of the 13-acre project that will include:
The project will occupy vacant land between Lowe’s and Walmart supercenter with excellent visibility from Interstate 80.
Shawn Smith, executive vice president of the retail team at Reno’s Kidder Mathews office, said Fernley is poised for commercial growth following the development of Victory Logistics District, a 4,300-acre project under development by Mark IV Capital of Newport Beach, Calif. Mark IV has already completed and leased an 815,000-square-foot warehouse and logistics facility to Redwood Materials of Carson City, and work is underway to build and lease the next slate of industrial buildings at the site.
“Retail follows rooftops, and a lot of the industrial boxes were first to lead the development charge in Fernley,” Smith said. “Now other rooftops are catching up, which is creating demand for retail.
“(Fernley’s) residential real estate is doing well, and the jobs are going to be there with the success of the industrial park,” he added. “Mark IV plans to develop millions of square feet of industrial over the years, and that will bring more rooftops and employees and help Fernley increase in population.”
Akki Patel, founder and chief executive officer of LRE & Companies, told NNBW his company acquired the land in 2021. With a lease already signed for the Hilton-branded extended-stay hotel, that building will be the first vertical development at Fernley Promenade.
Patel said the extended-stay Home2 Suites flag made more sense for the hotel than other types of standard overnight hotel brands because many executives visiting the new businesses cropping up in Fernley and nearby Tahoe Reno Industrial Center require longer stays.
“People are coming in for longer periods than one-day, one-night transit,” Patel said. “They need a great place to stay. Home2 is a great-looking product that fits the profile of people who want to stay longer nights and want a kitchenette and a larger room.”
The hotel also provides a captive audience of customers to frequent the new eateries that will be at Fernley Promenade, Patel added. Groundbreaking for the hotel depends on how fast LRE & Companies can get its hotel plans approved, a process that could take several more months, he added.
“We would like to break ground this fall in a perfect scenario,” Patel said. “The whole site is already entitled, and we will parcel out the retail projects. We plan on doing all the site work at the same time and securing the junior anchors before we start marketing the smaller shop spaces.”
Smith told NNBW that the Kidder Mathews retail team is negotiating with several national apparel retailers to lease the two 20,000-square foot junior anchor spaces. Currently, the only place to buy clothing in Fernley is at Walmart.
“Fernley doesn’t have any (clothing retailers), and that’s the draw – they can capture all the market share for Fernley,” Smith said.
Patel said that Victory Logistics District and the Tesla Gigafactory at TRIC have spurred a large influx of people to the region, with Fernley’s population growing as a result, but retail development has lagged.
“Compared to all the growth you have seen (in Reno-Sparks), Fernley is definitely an underserved market,” Patel said. “A lot of people who work at the Tesla Gigafactory have been priced out (of Reno-Sparks) and live in Fernley. It has grown substantially, and those people need some new clothing and restaurant spaces. There’s a need for all of it.”
Fernley may lack many key services, but convincing a certain segment of retailers that the time is right to expand their physical footprint has taken a bit more convincing, Smith noted.
“The national tenants are self-financed and don’t care about construction costs as much as mom and pops and franchisees,” Smith said. “They are still active, but on the other side we are seeing a slowdown in regional and local tenants because construction costs are still high for tenant improvements. They usually pay for that with SBA loans, and with interest rates as high as they are, it is starting to become cost-prohibitive for tenant improvements.”
Rents also are on the rise due to high construction costs, Smith added.
“We are kind of in a perfect storm with high TI dollars, high interest rates, and high rents.”
Patel said that one big challenge with developing commercial real estate in smaller markets is the fact that national site selectors often don’t fully understand the economic strength of smaller regional markets.
“We know what’s happening in Fernley and understand the growth, but a lot of times, national (site selectors) don’t even know where Fernley is until they go there,” he said. “The growth that is happening in northwest Nevada for real. There’s tremendous growth out there, and it will continue to grow. My biggest struggle is how to educate people on what Fernley is. Some national brands have been there for years, but a lot of upcoming brands don’t know about it.”
Kidder Mathews Smith said that as Reno and Sparks continue to grow, tertiary Northern Nevada markets such as Fernley will continue to benefit — especially since housing costs are typically lower than in the Truckee Meadows.
“The more services and shopping that are there, the easier it will be to attract people to move to Fernley,” Smith said. “(Fernley Promenade) will serve existing residents and help attract more. Right now if you want apparel, you have to go to Fallon or Reno. This will help keep money in Fernley, it will create jobs, and it will help the town expand.”