With vacancy rates in nearly every economic sector dropping significantly over the past two years in Carson City, it looks like the city is on the road to recovery, a recent local study shows.
"The news is a whole lot better than anyone thought," said Brad Bonkowski, whose firm, Coldwell Banker Commercial Premier Brokers, conducted the study. Results from the "2011 Carson City State of the Market," comparing the new data to results from a 2009 report, were presented Tuesday morning to members of the Northern Nevada Development Authority.
"Industrial vacancies have dropped 47 percent, apartment vacancies have dropped 23 percent, retail vacancies have dropped 11 percent, and taxable sales are up 5.8 percent," Bonkowski said.
"All the numbers are pointing to the fact that we've not only hit bottom, but that we are well into an economic recovery that appears to be sustainable," he said.
Associates from Bonkowski's office - who conducted the research on their own time - used multiple resources including assessor's records, personal interviews with property owners and managers, statistics collected by the Carson City Convention & Visitor's Bureau, and the City of Carson.
Their focus was on five commercial sectors: industrial, office, retail, hospitality and residential. Some highlights taken from the report are:
• Industrial: Of the 4.7 million square feet of industrial space available, 4.2 million are occupied, leaving only an 11.4 percent vacancy rate. That rate has dropped 47 percent since 2009. A 12 percent vacancy factor is typically the point at which speculative building starts. Manufacturers bring in primary jobs, making growth sustainable in all other sectors.
• Retail: Of the 4 million square feet of retail/commercial space available in centers larger than 7,500 square feet, 3.3 million are occupied, leaving a 17.8 percent vacancy rate - 2 percent lower than that in the 2009 survey.
• Office: The city has 119 office buildings larger than 5,000 square feet. Of the 2.2 million square feet of general office available, 1.8 million are occupied, leaving a 17.9 percent vacancy rate, a slight increase over 2009's rate. The medical office vacancy rate has increased slightly over 2009, with a rate of 30 percent.
• Residential: The current vacancy rate of 11.4 percent for multi-family housing (10 or more units) shows a 23 percent reduction over the 14.8 percent rate of 2008 and 2009.
The Carson City retail housing market peaked in 2006, when average-sized homes were selling for more than $200 per square foot. After 2006, home construction ground to a halt and is just beginning to recover. Carson City median home prices decreased by 7.9 percent in two years. But according to BusinessInsider.com, Carson City is poised to become the No. 1 city in the country for appreciating in housing value over the next five years.
Although there are still a number of properties that are distressed (short sales and bank repossessions), the number of new listings that are distressed has decreased from 50 percent in the first quarter of 2011 to 35 percent in the second quarter.
• Hospitality: The average occupancy rate of only 47.8 percent average indicates Carson City may have too many hotels or not enough higher-end rooms. Five properties have sold since May 2008 including Motel 6, Pioneer Motel, Best Value, Hardman House and Frontier.
NNDA Executive Director Rob Hooper said the Carson City area is recovering more quickly than the rest of the state.
"It's important that we put in societal infrastructure that makes Carson City attractive to businesses that want to expand here," Hooper said. "Quality of life is attractive to those who might want to fill our vacancies."
Steve Neighbors, president of the Carson Nugget and trustee of the Mae B. Adams Trust, said the proposed Knowledge and Discovery Center within the City Center Project would be a toolbox that would help businesses of the future succeed in Carson City.
"Right now we're going through the public process and still have to raise money, but (if approved) we could break ground by late spring or early summer," Neighbors said. The Board of Supervisors is set to vote on the City Center Project on Thursday.
Hooper said that what Carson City is doing now with the proposed City Center Project has not missed the notice of out-or-area companies.
"Today, I'm meeting with a San Francisco company which is exploring a headquarters here," Hooper said. "This is one of the most important things we've got going."
Mayor Bob Crowell also talked about the importance of the city's quality of life in attracting investors to Carson City. He cited the proximity of the state Capitol and legislative offices, the nearby recreational opportunities of Lake Tahoe, and other regional attractions.