610,000 sq. ft. industrial building at TRIC to break ground in March
Special to the NNBV
This is the third in a three-part series of stories that published in January 2019 under the brand of the Northern Nevada Real Estate Journal, which the Northern Nevada Business View publishes on a quarterly basis to provide various real estate market updates across the region. This story focuses on industrial land sales and construction.Read part one here: 4.5 million square feet of industrial space planned for 2019 in Northern Nevada Read part two here: Reno-Sparks real estate — despite brisk pace of sales, office vacancy rates trending up
RENO, Nev. — For Par Tolles, chief executive officer of Tolles Development Company, constructing a speculative industrial building at Tahoe Reno Industrial Center is a return to his development roots.
Although it’s the first foray into new industrial development for TDC, its CEO is no stranger to the nuances of industrial construction. Tolles moved to Northern Nevada in the early 1990s to spearhead an industrial project for Trammell Crow Company, where he worked for many years before moving on to executive leadership positions with CBRE, Dermody Properties and Basin Street Properties.
TDC expects to break ground on a 610,000-square-foot industrial building at the Tahoe Reno Industrial Center in Storey County in March. TDC also is currently working on a 300,000-square foot expansion to the Tire Rack distribution facility at 3300 Waltham Way.
Tolles founded TDC in 2016 and quickly added a slew of properties in the Powning and Midtown districts to the company’s portfolio. TDC also plans to construct a mix of upscale retail and office space at Rancharrah.
But the industrial arena is where Tolles made his bones.
“It’s a resurrection,” Tolles says with a laugh. “It’s going back to where I’ve spent most of my career … I am really coming back to what I love. Gaming and distribution are what Reno was built on, and I am happy to work again in that product type because it is so important to our economy.”
Northern Nevada remains ripe for new industrial construction, Tolles says, especially large class-A buildings with the 36-foot clear heights favored by distribution and internet fulfillment companies (the height accommodates increased vertical racking and greater storage capacity).
Construction on the TRIC building is expected to last roughly 10 months, with the facility coming online around the first quarter of 2020. Q&D construction was tabbed as the design-build contractor, while Tectonics Design Group is the architect and Reno Engineering Corporation is the civil engineer. Leasing will be handled by Eric Bennett and Greg Shutt of the industrial team at CBRE.
TDC is developing the new building in conjunction with financing partner Washington Capital, which built the Microsoft and Intuit campuses in Reno back in the early 2000s. Washington Capital owned the parcel of land at TRIC for some time, Tolles says, and was keeping a close eye on the regional market.
After Blockchains LLC purchased 67,000 acres of land at Tahoe Reno Industrial Center in early 2018 — gobbling up the majority of developable land at TRIC in the process — the time was right for Washington Capital move on its development plans.
Dave Mieding, TDC’s chief development officer, says the new building between Milan Drive and Electric Avenue near the Tesla Gigafactory is one of the last perfectly flat, easily developable sites in the region.
“It’s a great site,” Mieding says. “Most developers are looking at sites with a lot of grading issues. This site provides plenty of trailer and car parking and is a great building for e-commerce or whatever else comes down the road.”
Since it’s a flat site, it lends itself to a robust flow of daily business once a tenant occupies the building.
“We paid a lot of attention to car parking and truck circulation, and what we are finding — especially with e-commerce tenants — is that they have a ton of employees and need more car parking than trailer parking,” Mieding says. “We got a ton of parking onsite and didn’t have to sacrifice any trailer parking to get it.”
In a perfect world, he adds, the building would be taken by one large industrial user. However, the facility is easily subdivided to house up to four tenants if necessary, and there’s a lot of flexibility in the building’s design in regards to power and gas, Mieding adds. TDC also plans to incorporate significant sustainability upgrades, such as additional insulation in the roof, added skylights and high exterior windows above dock doors for increased natural lighting.
TDC spent a lot of time analyzing the market, Tolles adds, and with low single-digit vacancy in large class-A industrial buildings there’s plenty of room for another large industrial building in the area — especially at TRIC, where developable land is now at a premium.
“The market is very strong on large-profile, big-box product; we still are very bullish,” Tolles says. “It’s the right product with the right location, and it will lease very quickly. Even with what’s coming in 2019 and 2020, we are hitting the market at the right time. There is not enough product out there, and we will fill a nice niche.”
While Reno is still considered a secondary industrial market behind western region powerhouse locations such as Seattle, Phoenix and similar destinations, it’s becoming increasingly attractive due to its lower cost structures, Tolles adds. That could open up a slew of additional industrial development opportunities in outlying areas such as Fernley and Silver Springs.
“Reno has a very dynamic future with distribution,” Tolles says. “As long as we stay judicious about how much we build, this will continue to be a bread-and-butter portion of our economy. We have some very good developers and institutional builders who have been in this market for decades.
“Reno has not lost its luster and continues to be a very attractive place for national and international companies to locate and satisfy their regional needs.”
In addition, Argentum Law, the sister law firm of communications firm Argentum Partners, recently welcomed attorney Stacie Truesdell Michaels to its Las Vegas office.