Decisions near on new industrial jobs
The first robins of spring are singing in the northern Nevada economy.
Two major e-commerce fulfillment centers planned in the region appear to be harbingers of a recovery in industrial job growth.
The effects of companies’ decisions to locate in northern Nevada could ripple widely through the region’s economy as they may take much of the available top-class industrial space off the market, meaning that new construction would be needed to meet the needs of companies that come after the current wave.
GSI Commerce expects to hire about 100 workers in the first year after it opens an e-commerce fulfillment center at Tahoe Reno Industrial Center in late summer. Seasonal employment could run as high as 300.
The company, which has worked with Northern Nevada Development Authority to develop its plans, expects to invest more than $6 million in the center.
GSI provides contract fulfillment services to e-commerce companies, and the facility at Tahoe Reno Industrial Center would provide better service to its West Coast customers.
Toys R Us, meanwhile, appeared before Storey County officials last week to seek their backing for state incentives to develop a distribution center at Tahoe Reno Industrial Center. It also is working with NNDA on its plans.
Other companies that are nearing decisions about locations in northern Nevada also are preparing to position their West Coast distribution operations to meet the demands of a rebound in consumer spending.
Companies that are nearing decisions would need about 1.1 million square feet of industrial and distribution space, says Eric Bennett, an industrial broker with CB Richard Ellis in Reno.
Stan Thomas, vice president for business development with the Economic Development Authority of Western Nevada, says the agency since November has hosted visits from 36 companies looking for locations in the region.
“It’s been very busy,” Thomas says. “People are making decisions now. It’s really taking off.”
Along with retail-oriented distribution facilities, companies scouting the region for sites include manufacturers looking to escape the tax and regulatory climate of California, Thomas says.
Some companies Pacific Cheese, for instance that previously located distribution operations in northern Nevada now are looking to move manufacturing as well from California.
And California isn’t the only fertile field for recruitment.
Kris Holt, executive director of Nevada Business Connections, a privately funded industry-recruitment effort headquartered at Carson City, says he was heartened when he called on companies in Portland, Ore., last month.
Three of the 10 companies he visited are likely move eventually to northern Nevada, he says.
Along with the jobs that would come with new distribution centers and manufacturing facilities are the construction jobs that might begin to return as industrial spaces are filled.
NAI Alliance reported last week that about 11.3 million square feet of industrial space is vacant in the region.
But relatively small amounts of that space is available in new buildings with the features that distribution companies now demand, says Bennett at C.B. Richard Ellis.
And just over the horizon after the current round of decisions, he says, is a second wave of companies that potentially could fill another 1.5 million square feet of industrial space.
Already, some of those companies are preparing to build, rather than lease existing space, says Dave Simonsen at NAI Alliance.
“There are a few large 600,000-square-foot built-to-suits under negotiations which could add to our construction numbers significantly,” Simonsen says.
Impatient companies that don’t want to wait for new construction could look elsewhere to locate facilities.
But few options exist in competitive markets in the West, Bennett says, because none has seen speculative construction since the market crash of late 2008.
“It’s the same story all over the West Coast,” he says.
The agreements are designed to split the costs of improvements such as traffic signals between Carson City and developers whose projects generate the traffic increases that trigger the need for improvements.