The Tesla Effect in Northern Nevada
There is no doubt that there is an overall warm and fuzzy feeling with industrial park owners, landlords, economic development agencies and the like because they all have noticed a definite increase in call in traffic following the Tesla announcement. Our firm, among others, noted an increase in real estate investment interest in the area following the announcement. In general, there is significant optimism and excitement over the anticipation of a brighter real estate market thanks to Tesla’s investment into northern Nevada. That excitement is creeping into the real estate market in the form of some higher sales pricing as well as tougher negotiating stances from sellers and landlords.
The Tahoe Reno Industrial Center, Tesla’s selected location, is reported to be booming with two new escrows for land closing and several other deals in stages of negotiation. Resales are also hot at TRIC. The Storey County building department reports to be loaded with new building plans in for permit on new facilities planned to start in 2015. At another industrial development further east, there has been new interest from financial partners wanting to get into the action as well.
The state and regional economic development agencies have all reported that activity has escalated significantly after the announcement. The commercial title company departments all report increases in activity. Tangible evidence of the impact is that at least two for-sale industrial properties increased their for-sale asking price by 15% immediately following the announcement.
It is interesting to note that this is all despite the cooling impact of the midterm elections and the negative impact of having the Nevada margins tax (business gross receipts tax) initiative up for public vote, which was soundly defeated.
However, despite all the positive energy surrounding the Tesla project, we cannot highlight new data points on leases and sales that indicate a direct escalation of sales prices and market values due to the Tesla announcement, quite yet. My estimate is that by Q2 or Q3 of 2015, we will in fact be able to point to an escalating impact on our northern Nevada industrial real estate market. For now, the anticipation is high and it is evident in buyers and tenants losing the extreme leverage they have enjoyed in the past few years.