Building Nevada - September 2001

Office Space Projects Continue -

Nevada Developers Bullish on Office Market

by Tom Dye

With Nevada looking more attractive to the corporate world, office parks are on the rise in both the Reno and Las Vegas areas. Several projects are scheduled for completion in the next two years, in order to meet the demand for office space. Developers say the low cost of doing business in Nevada, plus recent energy problems in California, are factors in corporations’ decisions to relocate or expand to Reno and Las Vegas. An office market survey conducted by the Restrepo Consulting Group, showed that the office vacancy rate for the first half of 2001 was less than 10 percent, compared to 8 percent last year. Developers say the downturn in the national economy affected the office market, but they believe it is now picking up.

Southern Nevada

"We [Las Vegas] are doing just fine in my opinion," said Don Haze, managing partner of the Las Vegas affiliate of Grubb & Ellis, a major commercial real estate firm. Haze said several office projects are being built on speculation and most of the 850,000 square feet of space under construction is available for either lease or purchase.

"I’m afraid I won’t have enough product on line to satisfy the demand," said Michael Panciro, chief executive officer of MagnuM Opus Development, which is developing a $24 million office center on 19 acres in the Black Mountain Industrial Park in Henderson. "This has been the most active market for offices since I came here in 1976." The company, which was founded in 1998 by Panciro and President Maranda Chen, has completed seven of the 14 buildings planned for the 315,000-square-foot project. Construction on the final phase will start in the fourth quarter of this year and will take about a year to complete. Two buildings have been sold to corporate clients, and Panciro said he is having little difficulty making deals for other buildings, which also
have warehouse space. Panciro estimates that 60 percent of the companies seeking his office-warehouse space are from California.

Stoltz Management recently purchased the Hughes Airport Center in Las Vegas from the Rouse Co. and plans a major expansion. "This is still the premier business park in the state," said Kirt Klaholz, senior regional vice president of Rouse. The 420-acre Sunset Road center includes 65 buildings and 3.3 million square feet of office and light industrial space. Stoltz manages the center and owns 34 buildings. The company plans to develop an additional 500,000 square feet of office and flex space. A 57,000-square-foot office-flex building is scheduled for completion early next year and a 100,000-square-foot, suburban-style office building is planned for later in 2002. The remainder of the $50
million project will be completed in phases.

"The Las Vegas community continues to grow and thrive, and citizens have a strong pro-business attitude," Klaholz said. "We are one of the fastest-growing cities in the nation, and the expansion of the gaming industry is generating business for the commercial real estate sector. I feel we need to create a central business district, and I think this area between Summerlin and Henderson is a perfect location."

Thomas & Mack Development Corp. is nearing completion on the final phase of the 1.5-million-square-foot McCarran Center, which is close to the Hughes Airport Center. The company plans to finish an 80,000-square-foot office building in the center, with another two buildings totaling more than 100,000 square feet to be completed next year. The center is a mixed-used development that includes retail facilities and a Double Tree Hotel. "We are looking for long-term leases," said company President Tim Snow.

Thomas & Mack also plans to take advantage of the growth in northwest Las Vegas by developing the Las Vegas Tech Center II. The 100-acre project at Buffalo Drive and Smoke Ranch Road will contain office and flex buildings. Construction on roads and utilities started in May. Nevada Title Company is leasing a 90,000-square-foot building, scheduled for completion in March 2002. The remainder of the $250 million, 1.2 million-square-foot project will be developed over the next several years. "This project will attract large out-of-state users because of its proximity to interstates and downtown," Snow said.

Construction will start early next year on the second phase of the Stephanie Beltway Center, a $100 million project in Henderson, which will eventually have more than 800,000-square-feet of space. Pacific Properties developed three buildings with combined space of more than 110,000 square feet. Western Realco recently purchased the center and will start a second phase early next year, which will be about the same size as the first. Western Realco had one major tenant lined up in late July and is looking for more, according to Vice President Gary Edwards.

The recent opening of the Siena Campus of the St. Rose Dominican Hospital in Henderson encouraged Plise Development to build a nearby project to provide office space for doctors and other professionals. The four-phase, $25 million Sierra Office Park is near the Eastern Avenue-Sierra Heights Drive intersection. Its first two buildings will be finished in January. The 300,000-square-foot center is scheduled for completion in the second quarter of 2003. "This is the first office project to support the hospital," said
Michael Townsend, company president. "The hospital will need between 600,000 and 1 million square feet of space [for support facilities]."

Even downtown Las Vegas, which has been disappointed many times when planned projects such as the Minami Tower fell through, is getting a new office building. The Pauls Corp. recently completed the six-story, 103,000-square-foot City Centre Place at Fourth and Lewis streets. "A lot of firms need to be downtown, and because of a lack of office space, many have gone to the suburbs," said Rhonda Panciro, regional leasing director. "We are pulling them back to this area. This is an excellent, central location."

Northern Nevada

One of the most ambitious projects in development in Northern Nevada
is the Reno Tahoe Tech Center in the South Meadows area, about 10 miles south of downtown Reno. Tanamera Commercial Development Corp. is promoting the 70-acre, 850,000-square-foot project as an ideal location for high-tech companies to install their co-location centers. These facilities are designed to provide back-up computer systems for companies in case something happens to their main systems. Despite the recent slump in the high-tech industry, Reno developers are confident that the area’s low land costs, strategic location and mountain scenery will attract companies from Silicon Valley. Space will be available for either sale or lease. Tanamera also plans restaurants, banks and other support facilities for the center. The first tenants are expected to move in during the first quarter of 2002. Plans are being formulated for the second phase, which will include seven buildings. Tom Hantges, a principal with USA Investment Partners in Las Vegas, and Kreg Rowe, who developed the Double Diamond Ranch master-planned community in Reno, are partners in the project.

Las Vegas-based Templeton Development Corp. broke ground in mid-year on
the Mountain View Corporate Center, three miles north of South Meadows near Reno-Tahoe International Airport, with easy access to US 395. The project will feature trees and other landscape elements and will be unlike other office centers in Reno, said Bill Quinn, Templeton vice president. "Until now, there has been no true Class A office space in Reno," he said. "We went through some zoning battles, but for the most part, this project has been well received." The 29-acre, 401,000-square-foot center will take about three years to complete, according to Quinn. Sun West Bank (company President Ken Templeton is chairman of the bank) will relocate its headquarters to the center. A major brokerage firm and a medical firm also have committed to the center, which will include a coffee shop, deli and a Town Suites By Marriott hotel.

Tom Dye
Tom Dye is a freelance writer based in Las Vegas.