Brad Bonkowski and Andie Wilson: Current trends in Carson City real estate
OK, we survived the election. Now back to our regularly scheduled programming: current trends in Carson City’s commercial real estate market!
We follow economic trending to understand better how to advise our clients. What’s a trend? In a community as small as ours, when we see two or more similar types of transactions happening simultaneously or one right after another, our radar signals we could be seeing the start of a trend, and we pay closer attention to that portion of the market. Sometimes, we don’t understand why a certain trend is occurring, and sometimes, the trend may only last a month or two.
At the tail end of the recession, you might recall we saw new gas stations under construction in Carson City (Golden Gate Petroleum, Smith’s), and there were actually several more out looking for sites at that time (like Maverik, which finally found its site on Highway 50 E. at Fairview).
That trend was an indicator to us the economy was at least strong enough to create demand for vital goods. Immediately thereafter, we saw activity surrounding new fast food locations. Again, as the economy strengthens, food is a necessity so this next trend also made sense. While new gas stations and fast food may not strike you as glamorous, we were sure happy to see them after years of zero new construction.
Right now, we’re seeing quite a bit of interest in bulk land sales, primarily for residential development, not only in Carson City, but everywhere in Northern Nevada. There are projects where the developer has closed escrow and is in the process of finalizing entitlements and submitting for permits (Schulz Ranch, Traditions, Mills Landing) and many projects that are currently in escrow, which we can’t discuss quite yet.
Investment deals are also the deal-du-jour. Once again, we’re seeing a strong 1031 Tax Deferred Exchange market with lots of exchange dollars looking for quality investments.
The multi-family market is strong again, and we’ve participated in quite a few duplex, four-plex, and apartment sales over the past year, but in particular, during the past six months. We’re also seeing strong commercial investment property sales, in all sectors: office, retail, and industrial. If it’s leased, producing an income stream, and priced right, it will sell in today’s market.
In addition to the sales activity we’re seeing, a constant bright spot for our local market seems to be small industrial transactions — leases of 1,000 to 5,000 SF of warehouse and industrial space. These spaces are typically occupied by “mom-n-pops,” or small, family-owned and run manufacturers. We’re on track to complete approximately 20 transactions of this type for 2016, and that’s just for the two of us. When you add the transactions from the other agents in our office and other local brokers, we see even more significant market activity.
With the exception of the downtown core, where we estimate the vacancy rate to be below 5 percent, activity in the retail and office markets haven’t reached what we would call a “trend” quite yet, although we’ve seen enough activity in the north Carson office market to catch our attention. The office and retail sectors have been the slowest to recover. While we’ve seen some healthy retail deals (Sportsman’s Warehouse, Anytime Fitness, Jimmy John’s), there are some centers with continuing, substantial vacancy. There are some deals in the works though that may help the overall retail market over the course of the next year.
Watching market trends will help us to help you be better informed about when commercial sectors start improving (or declining) so you can plan accordingly.
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.