Northern Nevada apartment construction gains momentum — yet, rent continues to rise
Almost anywhere you drive in the Truckee Meadows, you can see apartment complexes rising from bare ground and cracked parking lots.
An estimated 3,762 units are currently under construction, while 6,209 units are in various stages of the planning process.
But it will still take years before new construction makes a dent in demand that has pushed the region’s rents up faster than most areas in the nation.
“I think, definitely, we’ll continue to see rents creeping up slowly,” Sarah Fye, appraiser intern for Johnson Perkins Griffin Real Estate Appraisers & Consultants (JPG), told the Northern Nevada Business Weekly in a recent interview.
Fye was in the process of compiling JPG’s fourth quarter 2017 apartment report. Final numbers were not yet available by this story’s deadline, but she expected the report to be similar to the third quarter when rents had increased about 2.5 percent and the vacancy rate hung below 3 percent.
New apartment buildings have been opening in the market for a few years now, from completely new construction, to old hotels receiving new life as urban apartments.
Yet, rents continue to rise.
“Those properties haven’t affected the market,” Fye said. “Expect newer properties to continue to be absorbed. I don’t think (construction) is happening fast enough to keep up with the job growth.
“We’re just shy of 4,000 units under construction. We’ll see them come online in two years, then it will start to help. It’s going to take time. We’re not going to see (relief) anytime soon.”
The construction industry is also keeping a close eye on the tug-of-war between new construction and growing demand.
“Multifamily homes are going up like crazy,” said Aaron West, CEO of Nevada Builders Alliance. “We are seeing significantly more multifamily construction: 2,700 units permitted this year (2017), compared to 1,700 to 1,800 last year (2016).”
Nevertheless, the demand for apartments has also increased as younger generations enter the housing market. Younger people often don’t have the resources for a down payment, and even when they do, many prefer to rent, he said.
“Their lifestyle decisions are such that maybe they don’t want to buy,” West said. “They want to be flexible enough to travel or enjoy more entertainment.”
With changing demographics as well as population growth increasing the demand for apartment units, some developers — who in the past have focused on single-family construction — are adding additional multifamily products to their development projects.
Reno Land Inc. is one of those companies. Among its projects currently under construction or planned, Summit Club off Mt. Rose Highway, has 584 units under construction with 20 percent set aside for workforce housing.
Meanwhile, the Park Lane project on the long-empty site of the demolished Park Lake Mall broke ground midyear 2017. It will include 1,619 apartment units along with retail, dining, open space and entertainment at the south end of Reno’s Midtown. In Fernley, Reno Land is constructing a 200-unit multifamily complex.
Carson City is also seeing multifamily construction pick up. In recent months, approved projects include 105 townhouse units for the Mills Landing project off Highway 50 East; 147 townhouses for Arbor Villas off South Roop Street; Carson Hills Apartments, a 300-multifamily-unit project behind Casino Fandango; and the 150-unit Villas at Silver Oak project behind Glen Eagle’s Restaurant & Lounge.
Further, there are rumors that Ryder is looking at taking on a 300-unit apartment complex in Carson City, West said.
Clarity can swing dramatically from day to day and year to year based on a multitude of factors including heavy precipitation, which increases streamflow and leads to more sediment flowing into the lake.