Northern Nevada’s Current Phase in the Real Estate Cycle, June 2015

Our previous post detailed the fact that “the recovery phase was upon us” and noted that the big box users had absorbed the remaining long vacant facilities, hitting huge home runs with extended free rent periods and bargain rental rates as well as securing long term, excellent Class A locations. While these transactions had relatively big impacts on the vacancy rates, things got much more sedate relatively quickly. The assessment of being in the recovery phase was accurate, and in hindsight we can say that we were in the early portion of the recovery phase.

As our recovery continues to unfold, we are experiencing a high degree of all of the economic factors that define a commercial real estate recovery. These include:

1. broad-based growth of demand

2. landlords being more selective rather than chasing every possible deal

3. eroding inventory

4. broad-based balanced supply/demand

5. increased investment interest in commercial real estate with significantly lowered cap rates

6. rising prices that are now the norm

7. shrinking lease concessions

8. new speculative construction becoming typical

1. developers with nothing coming out of the ground feeling they are missing the boat

All of these factors are in place at this time in the Reno/Sparks industrial real estate market, with solid demand across all property size ranges. We detail all the specifics of current market velocity with quarterly updates in our free Market Advisor. To view the most current edition, visit our Resources page and scroll down to “2015 Northern Nevada Market Reports.”

A follow-up question to “Where are we in this real estate cycle?” is often, “How far into the recovery cycle are we?” That’s hard to tell, but my bet is that, barring any unforeseen factors, our area will continue to experience very similar economic conditions well into the 2017 timeframe.

#industrialrealestatecycle