Why do commercial real estate practitioners, politicians, developers, the local Chambers of Commerce, and all of our area economic development agencies place such an emphasis on new construction and expanding commercial real estate?
When new projects are in the works, as commercial real estate practitioners, we get excited ... and then we’re confronted by citizens wondering why new construction matters when we already have old construction sitting vacant. There are three good reasons why commercial real estate should matter to every Nevada resident:
Contribution to the Nevada economy: The economic impact of a new project is far greater than the actual construction project investment. In 2016, the total contribution of commercial real estate construction to the Nevada economy was $3.9 billion! The wages and salaries generated in 2016 in Nevada was $1.3 billion.
Jobs, jobs, jobs: There were 28,914 jobs created and supported in Nevada in 2016 thanks to the commercial real estate industry.
Industry: As the Northern Nevada economy expands, it’s largely because of industrial expansion — distribution and manufacturing, the backbone of our local economy and a vital job creator for so many Northern Nevada residents. While there are just a few vacant industrial buildings remaining, many of them are functionally obsolete, meaning they may not have sufficient clear height, truck dock doors, or other amenities industrial users need today.
As our local and state economies continue their tenuous recovery from the Great Recession, the ability to develop smart projects is vital to our economy. This is our message to our state Assemblymen and women and our state Senators: Let this recovery continue. Legislate wisely, promote smart growth and infrastructure improvements that will enhance transportation and utility services throughout Nevada. Don’t overregulate or overtax our efforts to diversify our economy and create new jobs!
One concern we hear frequently from citizens is “existing spaces should be filled before new space is built.” Remember, gauging vacancy is much more complicated than counting signs. I’ve heard people say “there’s signs all over downtown Carson,” meaning there must be a lot of vacancy. In fact, the vacancy rate for office and retail in downtown Carson is estimated to be below 5 percent, meaning there’s not much space available. But if there’s a 500-square-foot space available in a 10,000 square-foot building, there’s going to be a sign out front, even though it’s 95 percent occupied. A building may even be 100 percent occupied, but one of the tenants has a small office space they’re not using they would lease. So there’s a sign on a fully occupied property. Also, most professional property managers put their signs on the property so it’s obvious who to call in case of an emergency ... again, that sign doesn’t necessarily indicate vacancy.
A rising tide lifts all boats. Next to gaming, tourism and hospitality, commercial real estate is arguably one of the most important economic drivers in our state. Like gaming, this industry is important for so many more reasons than those that are immediately evident.
Look closer, and you’ll see the commercial real estate industry is closely linked to job growth, economic health, and the backbone of our local economy: manufacturing.
Brad Bonkowski, CCIM and Andie Wilson, CCIM are owner/brokers of NAI Alliance Carson City, a commercial real estate brokerage. They can be reached at 775-721-2980.