If you work in commercial real estate development in Northern Nevada, you already know that infrastructure isn’t a background issue, it’s the whole game. NAIOP’s Q2 Transportation Panel made that point with clarity and urgency, and if you missed it, here’s what the room was talking about.
The conversation brought together a sharp group of voices: Bill Thomas, Executive Director of the Regional Transportation Commission (RTC); General Rick Nelson of Mark IV Capital in Fernley; Geoff Donahue, Co-Founder and President of My Ride to Work; and Chris Kuhn, Project Manager at NDOT, all moderated by Chris Reilly of Tesla. Together they painted a picture of a region that is, in many ways, outgrowing its own infrastructure in real time and scrambling, creatively and collaboratively, to catch up.
Bill Thomas opened with a sobering figure: RTC’s current model projects roughly $4.8 billion in road improvements needed over the next 20 years. The region now sits at half a million people, and Thomas was candid that the old model where government built the road and development followed, is gone. Today, the private sector is increasingly bearing both the cost and the decision-making weight of infrastructure investment.
For developers, this is not an abstraction. It means that the infrastructure surrounding your next project may not arrive on a government timeline unless the private sector helps make it happen.
The most immediate issue discussed was the westbound I-80 backup near the Patrick Interchange, something anyone commuting to or from the Tahoe Reno Industrial Center (TRIC) knows all too well. With Tesla and Panasonic now employing roughly 14,000 people across the Gigafactory campus, and construction on the south side of the park funneling about 2,000 vehicles per hour through an interchange designed for a fraction of that, the backup has become a daily ordeal.
The good news: in what was described as a first-of-its-kind arrangement for NDOT, Tesla and Panasonic partnered with contractor Granite to accelerate interchange improvements privately, working through the permit process rather than waiting on a full public project cycle. Storey County was also a key partner, committing to reimburse the upfront costs to help speed the solution along.
This public-private model where private dollars and urgency are driving a publicly-designed solution through the system faster may be one of the most significant procedural innovations to come out of Northern Nevada’s growth era, and it’s worth watching closely.
Geoff Donahue shared the origin story of My Ride to Work, a company that began eight years ago with a single van shuttling workers to what is now the Gigafactory campus. Today, the company moves employees across Nevada and beyond, operating buses and serving major employers from the mines east of Fernley to operations across the state.
This story illustrates the genuine gap between where public transit can go- constrained by federal oversight, public hearing requirements, and fixed routing- and what the private sector can deliver- speed and adaptability. It also shows how “stranded” infrastructure assets can be creatively redeployed. Through a transportation partnership with ACE High School, a tuition-free charter and trade school that had struggled to find transit solutions for 15 years, they are now seeing an increase in enrollment since the collaboration.
That kind of creative asset utilization is exactly the kind of thinking that develops when the private sector takes ownership of a problem rather than waiting for a public solution.
If there was one through-line in the entire conversation, it was this: the old infrastructure playbook no longer fits the pace of Northern Nevada’s growth. What’s emerging in its place is something more dynamic, more collaborative, and frankly more interesting.
The panel’s central theme, stated and unstated, was this: infrastructure is no longer something the development community can afford to wait on. The public sector is doing its part, but the scale of Northern Nevada’s growth has fundamentally shifted who needs to be at the table.
For CRE developers in this region, the implication is clear: infrastructure is increasingly part of your project pro forma, whether you build it, fund it, or advocate loudly for it. The good news is that the partners, NDOT, RTC, and a growing ecosystem of private operators, are ready to work as the development community is committed to showing up consistently to shape what gets built, and when.
If the collaboration on display during this discussion is any indication, Northern Nevada is well-positioned to turn today’s growth challenges into tomorrow’s competitive advantages.
NAIOP, the Commercial Real Estate Development Association, is an association of developers, owners, investors and professionals of office, industrial, retail and mixed-use real estate. They promote responsible development through advocacy, networking and education to benefit the economic vitality of the communities in which we work and live. Visit http://naiopnnv.com/ for more information.
The NAIOP CRE Sentiment Index for Northern Nevada in September 2025 is 56, indicating that respondents expect generally favorable commercial real estate conditions over the next 12 months. The score obtained by NAIOP’s national survey for the same period was also 56, suggesting that local expectations are aligned with national sentiment for the first time in recent survey periods.
Respondents expect occupancy rates to remain stable, with Northern Nevada scoring 54, slightly below the national score of 58 (see Figure 2). Expectations for face rents are neutral locally at 50, compared to a more favorable national outlook of 59. However, effective rent expectations remain less optimistic, with Northern Nevada scoring 44, trailing the national score of 56, indicating continued pressure from concessions and tenant incentives in the local market.
Outlooks for construction costs remain elevated in Northern Nevada. Respondents anticipate continued increases in both construction material costs and construction labor costs, each scoring 65, significantly higher than the national readings of 43 and 38, respectively. These results suggest ongoing concerns regarding development feasibility and cost pressures unique to the regional market.
Expectations for capital availability are moderately favorable but remain below national sentiment (see Figure 3). Available equity in Northern Nevada scored 53, compared to 63 nationally, while available debt scored 52 locally versus 65 nationally. Respondents expect first-year cap rates to remain relatively stable, with Northern Nevada at 54, slightly below the national score of 58.
The outlook for employment in Northern Nevada is slightly less optimistic, with a score of 48, compared to 54 nationally. While still near neutral, this may reflect caution around hiring and broader economic conditions that could influence tenant demand over the next year.
Overall, the Fall 2025 survey indicates a moderately positive outlook for commercial real estate in Northern Nevada, with sentiment in line with national expectations. While elevated construction costs and softer effective rent expectations persist as challenges, stable occupancy, neutral-to-favorable capital conditions, and alignment with national sentiment point to a cautiously optimistic environment for the year ahead.
NAIOP, the Commercial Real Estate Development Association, is an association of developers, owners, investors and professionals of office, industrial, retail and mixed-use real estate. They promote responsible development through advocacy, networking and education to benefit the economic vitality of the communities in which we work and live. Visit http://naiopnnv.com/ for more information.
Northern Nevada continues to attract interest from technology and infrastructure companies developing data centers, the digital backbone of today’s global economy. As this growth accelerates, residents and local leaders often have questions about what these projects mean for our region. NAIOP Northern Nevada has prepared the following responses to help provide clarity and facts about data center development in our community.
A: No. The Public Utilities Commission of Nevada (PUCN) and the Consumer Advocate ensure that new data centers are not subsidized by residential or small business ratepayers.
NV Energy uses Rule 9 (Transmission) and Rule 15 (Generation) to allocate the costs of new infrastructure directly to the commercial user. Large power users are also required to provide letters of credit and participate in “take or pay” tariff programs, meaning they pay for the power they contract for even if they do not use it.
The rate-making process is transparent and public, held three times per year, with participation from the public, NV Energy, PUCN staff, and the Consumer Advocate. These safeguards ensure that ratepayers are not affected by new data center demand.
A: Data centers must comply with all existing water regulations and supply limits. Developers work closely with local and state authorities to ensure water resources are responsibly managed.
Water use in these facilities is measured using Water Usage Effectiveness (WUE™), a global industry standard created by The Green Grid, an alliance of companies such as Intel, Microsoft, and Symantec. WUE calculates how much water a data center uses for each kilowatt-hour of IT energy consumed, helping operators track and reduce consumption tied to cooling and power generation.
In Northern Nevada, water use is considered a non-issue for most projects due to the region’s use of non-evaporative or closed-loop cooling systems and the opportunity to incorporate reclaimed or effluent water sources.
A: Yes. In fact, most data centers are actively contributing to renewable energy adoption.
Many operators initiate renewable integration as part of their development plans. Nevada’s Renewable Portfolio Standard (RPS) already mandates a statewide transition to renewable energy, ensuring that data centers are built in alignment with the state’s sustainability goals.
Data centers in Northern Nevada often use non-evaporative cooling systems suited to the region’s dry climate. Some projects, such as Switch’s investment in effluent water infrastructure at the Tahoe-Reno Industrial Center (TRIC), demonstrate how private development can also benefit municipal water systems while minimizing environmental impact.
A: Data centers generate significant economic and fiscal benefits for Northern Nevada.
According to NAIOP’s analysis, these projects provide:
• Sales tax contributions of about 2 percent following standard abatements.
• Full property tax payments with no abatements.
• Regular equipment replacement every three years.
In addition to direct tax revenue, these developments stimulate local construction and service industries, helping diversify the regional economy and strengthen Nevada’s long-term fiscal base.
A: Data centers support both short-term construction jobs and long-term operational and induced employment.
Construction typically lasts two to five years, depending on project size. A single hyperscale data center can employ up to 1,000 workers at peak construction.
Although ongoing facility staffing is relatively small, each direct job supports up to five induced jobs in sectors such as maintenance, security, utilities, and local services, creating a strong multiplier for regional employment.
A: Local municipalities oversee zoning, land use, permitting, and infrastructure coordination for data center projects. However, certain aspects, including energy regulation and utility tariffs, fall under state and federal jurisdiction.
NAIOP Northern Nevada is advocating for flexible, forward-looking zoning policies that allow for by-right zoning for data centers in specific appropriate areas. This approach helps communities remain competitive and responsive to rapid technological change. Overly restrictive local rules could unintentionally slow innovation or lead to obsolete buildings.
A: Data centers represent the digital backbone of modern industry. They enable logistics, manufacturing, healthcare, education, and commerce, all of which depend on reliable, secure data infrastructure.
Beyond their operational value, data centers bring high-wage technical jobs, long-term tax revenue, minimal traffic impacts, and infrastructure investment to the region. They also create opportunities for renewable energy innovation and help position Northern Nevada as a national hub for technology and economic diversification.
NAIOP Northern Nevada, the Commercial Real Estate Development Association, is an association of developers, owners, investors and professionals of office, industrial, retail, and mixed-use real estate.
Northern Nevada’s retail market continues to evolve, shaped by new population patterns, rising construction costs, and shifting tenant priorities. While national brands dominate new developments, investment opportunities are also emerging for smaller centers and adaptive reuse projects.
NAIOP Northern Nevada gathered three regional experts to explore what’s driving activity in the market, which areas are attracting the most interest, and what may lie ahead.
Shawn Smith, Executive Vice President at Kidder Mathews
Ian Cochran, Partner at Logic Commercial Real Estate
Morgan Randis, Senior Vice President of Development at The Barclay Group
What types of retail tenants are most active right now, and what’s driving demand?
Shawn Smith: Grocery stores, department stores, and warehouse-style retailers are extremely active. They’re targeting gaps in the market (Spanish Springs, South Reno, Northwest Reno) and their presence often attracts additional fast-casual, sit-down, and quick service restaurant (QSR) tenants. We’re also seeing significant growth from dental operators like Aspen Dental and Pacific Dental, as well as fitness brands ranging from boutique yoga to Planet Fitness.
Shawn Smith
Morgan Randis: We’re seeing demand from grocery anchors, QSRs, banks, and car services, most of them national tenants. Our 47-acre development in Sparks, interest has been high across the board. In-fill shop space is where local tenants tend to land, but the drivers of activity are still major national brands.
Ian Cochran: We’ve largely shifted away from working with national tenants directly and are focused more on investment sales. Right now, there’s strong demand for unanchored strip centers between 18,000 and 50,000 square feet. Rents are often well below market, and buyers see opportunity for growth.
Morgan Randis
How would you characterize current tenant expectations around lease rates and terms?
Smith: Rents are higher than we’ve ever seen, averaging around $2.25 per square foot. That’s pushing tenants toward longer terms, like 7- to 10-year leases, in exchange for more tenant improvement dollars. But triple nets are also rising, driven by increasing property taxes, insurance premiums, and maintenance costs.
Randis: We’re not seeing any relief on the development side. Land and Construction costs remain expensive, which supports higher rents continuing into the near future.
Cochran: On the redevelopment side, we’re seeing rents jump from $1.25 to $2.50 per square foot on some centers. Tenant improvement allowances range from $20 to $60 per square foot depending on the deal. Lease terms are generally 5 to 7 years. Ten-year terms are harder for local tenants to justify.
Ian Cochran
What areas of Northern Nevada are seeing the most retail development or repositioning activity?
Randis: Sparks continues to be one of the strongest submarkets. Our Kiley Ranch development is benefiting from surrounding housing growth and interest from national tenants. We’re also seeing activity in smaller markets like Carson City and Minden, where we’ve delivered projects with tenants like Chipotle.
Smith: Spanish Springs is hot. WinCo opened at Stonebrook, and now Panera, Les Schwab, Jiffy Lube, KinderCare, and other national brands are following. Meadowood remains a key trade area, with several tenants relocating within the region to newer centers like Redfield Promenade. That said, older vacancies still exist. Think of the old Circuit City and Sports Authority boxes. North Valleys is also poised for growth due to high housing capacity.
Cochran: Most new growth is happening in fringe areas like Spanish Springs and North Valleys. South Reno and Meadowood continue to see strong leasing activity, but development opportunities are limited due to land constraints.
Are tenants favoring second-generation spaces or pushing for new construction?
Smith: There’s strong demand for quality. Class A centers like Summit and Legends have multiple LOIs on most vacancies. But for older Class B and C centers, demand depends on existing improvements, especially restaurant buildouts, which are expensive to replicate.
Cochran: Ownership mindset plays a huge role. When landlords invest in upgrades, like the $2 million renovation we’re working on, those centers lease up quickly. But if owners are just holding without reinvesting, tenants aren’t biting. That opens opportunities for investors to revitalize those centers and reposition them.
Randis: Corporate tenants prioritize second-generation space. National brands are actively looking for 20,000 to 40,000 square foot boxes they can retrofit. We’re also seeing former bank buildings converted to drive-thru Starbucks or other QSR concepts. It’s often more cost-effective than new construction.
What’s your outlook for the next 12 to 24 months in the retail sector?
Smith: Vacancy is already below 4%, and with tariffs and construction costs still high, I expect limited new construction and a continued focus on national tenants that can afford higher rents. It might feel like more of the same for a while.
Cochran: Investment activity has slowed a bit recently, possibly due to interest rates or summer seasonality, but I expect it to pick up in the coming quarters. There’s still a lot of runway in the unanchored center segment. Anchored centers trade less often, but when they do, they draw a lot of interest.
Randis: Grocery anchored shopping centers, national QSR brands, and shops tenants are still expanding which is what our company is focused on in near and long term.,
Anything else worth noting?
Cochran: Institutional interest in the Reno market is growing. Bridge33’s acquisition of Fire Creek Crossing is a good example. But institutional players tend to look for $25 million+ grocery-anchored centers, and there’s just not a lot of product like that on the market. It’s still largely a family office and regional fund market, but that could shift.
NAIOP Northern Nevada is the premier association for commercial real estate professionals in the region. Learn more at naiopnnv.org.
After a decade of strong momentum, Northern Nevada’s multifamily sector is entering a period of recalibration. Market-rate apartment construction has slowed, rent growth has plateaued, and high interest rates continue to challenge project economics. Even as population and job growth persist, the numbers just aren’t penciling for many developers—yet.
NAIOP Northern Nevada sat down with industry leaders Bryce Clutts (Metcalf Builders), Dan Lorenz (TriEx Strategies), Lane McQuatt (Royce Baylor Construction & Development LLC), and Ben Galles (CBRE) to discuss current conditions, future forecasts, and how multifamily development is shifting across the region. Here’s what they had to say about where we are—and where we’re headed.
Q: What trends are currently shaping the multifamily market in Northern Nevada?
Dan Lorenz: There’s been a clear pullback. Construction costs remain high, rents have stabilized, and there have been significant increases in fees from municipalities. If rent growth isn’t there and costs don’t ease, new construction just doesn’t pencil for the time being.
Ben Galles: A wave of deliveries in late 2023 created a lot of competition, especially in Class A product. Lease-ups slowed, concessions increased, and new development has been tough. The upside is that overall quality has improved.
Ben Galles
Q: How does Northern Nevada compare to other similar markets?
Bryce Clutts: It’s more expensive to build here than in surrounding metropolitan areas such as Las Vegas, Salt Lake, and Phoenix. Our trade base is smaller, so costs are closer to Northern California. Developers are often surprised by that delta, and it’s a real challenge.
Galles: Our job base is more diversified—we’re not solely dependent on hospitality. Logistics, tech, and manufacturing provide stability. Plus, no housing at TRIC pushes demand into surrounding communities.
Bryce Clutts
Q: What product types are moving forward despite the slowdown?
Lane McQuatt: Affordable housing is still active, particularly senior-focused projects. We’re also seeing interest in build-to-rent townhomes and some high-density for-sale options, especially in Fernley and Fallon.
Galles: Areas designated as Difficult Development Areas (DDAs) or Qualified Census Tracts (QCTs) offer incentives that help affordable pencil. There’s also strong demand for single-family rentals as mom-and-pop landlords continue to exit the market.
Dan Lorenz
Q: How are tenant preferences changing—and how is that influencing design?
Lorenz: Renters want attainable housing. Amenities like pools aren’t as valued as in-unit washers and dryers. Pools also drive up insurance and maintenance costs.
McQuatt: Affordable projects are cutting back on high-cost amenities and focusing on practical ones—tot lots, dog parks, and workspace in clubhouses.
Galles: Projects like Seasons at Stonebrook and The Kallan show that well-built, reasonably priced apartments lease up faster than over-designed Class A units
Lane McQuatt
Q: What strategies are your clients using to adapt?
Clutts: It’s about design efficiency. We work with developers early in the design to create a constructable and efficient product. Reducing material types or rethinking amenities can make or break a project. Smart, economical design is key.
Galles: Some groups are shifting to longer-term holds. With rising cap rates and fewer buyers, build-to-rent developers are often choosing to operate rather than sell.
Q: What’s your outlook for the next 12 to 18 months?
Galles: For the next six to nine months, owners will still compete for tenants. But once the current supply is absorbed, we’ll see tighter vacancy and renewed demand.
Clutts: I’m very optimistic about the future of Northern Nevada. We have a real housing shortfall. Once rates drop and rents tick up, we’ll see activity resume. We can’t go years without new supply—it’s not sustainable.
Q: Any other issues not getting enough attention?
Lorenz: We’re seeing higher sewer, fire, and permit fees—while being asked to cap rents. You can’t raise costs and cap income.
Clutts: We need to better educate our elected officials on how to work with development to bring attainable housing to northern Nevada and revitalize the downtown corridors. The municipalities want attainable housing, but their high fee structures make it difficult to deliver. We will need to find a balance.
Q: Final thoughts?
McQuatt: If we don’t make development feasible, capital will go elsewhere—Boise is already on the radar. We need to be proactive.
Galles: I’m excited about downtown. Jacobs’ work and others are bringing new life to the core, and that benefits the whole region.
Clutts: Northern Nevada feels like Las Vegas 25 years ago—poised for big growth. We just need to ensure it is responsible growth.
NAIOP Northern Nevada sat down with industry leaders Kyle Rea (Tolles Development), Chase Houston, SIOR (LOGIC Commercial Real Estate), and Lea Wilson (OneStudio D+A) to discuss how office demand, design, and investment are evolving in the region. Here’s what they had to say about where we are—and where we’re headed.
Q: What’s the current state of the office market in Northern Nevada?
Chase Houston: The market has held up better than many projected. In Downtown Reno, vacancy is around 11%, and well-located properties with quality finishes are still seeing strong activity. Investment interest hasn’t disappeared—just become more selective.
Kyle Rea: I’d echo that. We’re not seeing distress in the way other metros are. Instead, there’s been a shift toward “right-sizing”—companies are reevaluating how much space they actually need and where they want to be.
Kyle Rea
Q: Has hybrid work permanently changed office demand, or is there still a place for traditional space?
Kyle Rea: Hybrid isn’t a trend—it’s a reset. But people still want a place to connect. What’s changed is that the office has to earn the commute. That’s where thoughtful design and amenities come in.
Lea Wilson: Exactly. People aren’t just coming to the office to sit at a desk—they want spaces that support collaboration, creativity, and wellness. Flexibility in layout is key. This requires planning to accommodate varied work schedules, but also times where the entire team is there and needs functional space.
Lea Wilson
Q: How has office design shifted since the pandemic?
Lea Wilson: Clients are prioritizing features such as natural light, and access to the outdoors over private, dedicated offices. We’re designing fewer static spaces and more zones—quiet areas, breakout spots, wellness rooms.
Kyle Rea: We’re also seeing increased demand for hospitality-driven environments—coffee bars, lounges, outdoor work areas. It's all about creating a reason to show up and balancing that with the work that needs to be achieved.
Chase Houston
Q: What’s your outlook for the next 3–5 years in this market?
Chase Houston: I see steady, organic growth—especially from local companies that are expanding thoughtfully. We're not reliant on one big splashy relocation. Instead, it's a lot of smaller, strategic moves from businesses that are committed to Northern Nevada and growing at a sustainable pace.
Kyle Rea: I think we’ll see more repurposing of older product and a continued flight to quality. The days of filling space just to fill it are over—tenants are being intentional.
Q: Any advice for companies approaching their office space needs in Northern Nevada?
Lea Wilson: Understand what tenant improvement allowances really cover—and what they don’t. TI (tenant improvements) budgets aren’t infinite, so having clear priorities early in the design process can make all the difference in allocating budget to must-haves.
Chase Houston: I don’t see lease rates going down anytime soon. If you’re a stable business and you find a space you like, consider signing a longer-term lease—or even buying. Locking in now could protect you from rising costs.
Kyle Rea: Engage a broker early. This market isn’t one where you just browse listings and pick a space. Brokers bring strategy, relationships, and insight into deals you won’t find on the open market. That guidance is more valuable than ever right now.
About the Panelists
Kyle Rea is Chief Operating Officer of Tolles Development Company. A Reno native and past NAIOP Northern Nevada president, Kyle leads investment strategy and business development with a focus on impactful, community-first projects.
Chase Houston, SIOR is Senior Vice President at LOGIC Commercial Real Estate, where he specializes in office and industrial leasing and sales. He brings over a decade of experience and deep knowledge of the Northern Nevada market.
Lea Wilson is the Director of Interior Design at OneStudio D+A. Known for her bold aesthetics and solutions-minded approach, Lea designs workplace environments that are flexible, human-centered, and brand-aligned.
John Ramous
Responses provided by John Ramous, Nevada Region Partner at Dermody Properties.
1. Of the projects you have built in northern Nevada, which are you most proud of and why?
Dermody Properties has a longstanding history in this community—one that spans more than 60 years. Since joining the company in 2019, two projects have stood out to me.
The first is The Park at McCarran, a combined 1.35 million square feet state-of-the-art logistics project. The Park at McCarran was a joint venture with Locus Development and is one of the largest developments Dermody Properties has contributed to in the last decade in northern Nevada. It offers a strategic opportunity for our customers due to its Class A logistics offerings, incredible infill location within the City of Reno and position within the western U.S.
What some people may not realize about this park is that it was initially slated to be a five-building spec development, whereby buildings are vacant without a specific customer in tow. Then, when the pandemic hit, we pivoted to a build-to-suit model for a rapidly expanding, one million square foot customer, with a couple of spec buildings surrounding that.
This agility helped address the uncertainty within the market-place, de-risking a majority of the development, and making it one of the largest build-to-suit projects in northern Nevada—and in the country—at the time.
The other project that stands out is LogistiCenter® at I-80 West Phase II on the west side of town totaling 430,000 SF.
We worked closely with the City of Reno and the surrounding neighborhood groups to ensure community feedback was incorporated into the final project design. Additionally, it offers great visibility & access fronting Interstate 80 and is in the closest logistics submarket to California, which is something our customers are especially interested in.
Both The Park at McCarran and LogistiCenter® at I-80 West Phase II are strategic, infill locations, offering a compatible and sustainable workplace. These locations provide minimal commuting distances, good proximity to childcare facilities and schools, abundant amenities, incorporate ESG and attract nationally recognized customers and well-paying jobs to the state.
2. What projects do you have planned in the next 12-24 months?
Over the next 12 to 24 months, our project pipeline shows sustained strength and exciting potential. Construction is underway at LogistiCenter® at Kiley Ranch, with two buildings offering nearly 400,000 SF of logistics space. These Class A facilities cater to the local market with their optimal location in Sparks. There are currently limited new construction starts in the market and we’re confident these facilities will attract logistics customers from advanced manufacturing, light industrial, third-party logistic providers, last mile and distribution uses.
We have also broken ground on Phase I of the Reno AirLogistics Park in the North Valleys. This entails two buildings that offer access to many amenities, a strong labor base, as well as major arterials and distribution hubs. Building 1 will be 654,500 SF, and Building 2 will be 468,740 SF, divisible to 218,980 SF. Both facilities are available for lease with Building 2 available initially and ready for occupancy early 2025..
3. In a rapidly changing market conditions, what do you expect to see in the coming year? Can you address all product types you build?
While we have seen a shift in demand within the logistics sector in northern Nevada, we believe it to be temporary.
Throughout the first three quarters of 2024, companies gave up space they no longer needed and are now rightsizing—space they were planning for during the pandemic. Coupled with recent new construction, we currently have an excess of space. As a result, the vacancy rate in northern Nevada is currently 10.5%. It is also the first time we have seen a year with negative net absorption in more than six years. Sublease space flowing into the market contributed 2.7 million additional SF of total available space. By mid-to-late 2025,we anticipate the market will begin to level out.
The expectation in 2025 is that corporate America, which has primarily been on the sidelines for the last 12-18 months, will re-engage in leasing activity as the elections are over and as interest rates continue to decrease. We are starting to see larger customers wanting to be in northern Nevada and we are still seeing strong interest in requirements for over 250,000 SF. Transactions are simply taking longer as companies have more considerations and now require more internal approvals.
Dermody Properties is highly specialized in the type of product we build—Class A logistics facilities. The nationally known LogistiCenter® brand was developed by Dermody Properties and represents the company’s business philosophy for meeting corporate America’s supply-chain requirements for Class A industrial distribution facilities, including warehouses, manufacturing, assembly, processing, and research and development.
4. What product type or asset does northern Nevada need most?
Northern Nevada will benefit most from well-located, well-thought-out facilities. As demand grows, areas outside of the core cities will become more viable options, but the desire to be near residential communities and a strong labor force will still be preferred. Companies want to be where their employees can live near where they work, with shorter commutes and access to quality education and childcare.
They want to work with a developer that not only understands the advantages of being located in northern Nevada, but also understands and works well within the community. At Dermody Properties, we’re committed to an owner-operator approach that emphasizes community integration and customer-centered solutions. Our focus on operational efficiency and value-driven asset management enables us to create and maintain facilities that serve both the businesses and the communities in northern Nevada, fostering local opportunities for residents to live and work close to home.
5. How important is it to you and to Dermody Properties to give back to the communities where you work?
At Dermody Properties, we believe it is our responsibility to share our success with the communities in which we do business. There are several ways in which Dermody Properties gives back, including through an employee-managed Foundation, which provides funds and volunteer support to worthwhile nonprofit organizations and community causes across the country. The Dermody Properties Thanksgiving Capstone Award is another way we show our appreciation for the communities where we live and work. During the
Thanksgiving season, Dermody Properties makes a substantial donation to one or more nonprofit organizations in the community to help them continue their vital efforts throughout the holiday season.
6. How long have you been involved in NAIOP and what made you choose to get involved?
I’ve been involved with NAIOP, the Commercial Real Estate Development Association, for nearly 25 years. When I first joined the Southern Nevada Chapter, it was clear NAIOP was really the voice for commercial real estate. While active on the board, I participated on many of the various committees, including chairing the Government Affairs Committee, which offered ongoing interactions and collaboration within the community and municipalities. This was critical as we strived to have a balanced land-use model for the region.
In northern Nevada, NAIOP continues to serve as a key networking, advocacy and educational platform for the commercial real estate industry. It allows me, along with many of my colleagues, to also give back and serve newer professionals starting out in their careers. Through the Developing Leaders Institute, designed for professionals 35 years and younger, I’ve taught course work around feasibility analysis, entitlements, leasing/marketing and other areas within the development process. It’s been especially rewarding to witness the diverse demographics that NAIOP is recruiting within the community.
This is especially critical as it will help positively impact developments and the projects we look at in the future.
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John Ramous is the Partner in Nevada for Dermody Properties and is responsible for the company’s existing Nevada portfolio as well as new industrial speculative and build-to-suit projects and acquisitions throughout the state.
Mr. Ramous was previously Senior Vice President and Regional Manager for Schnitzer Properties where he managed an industrial portfolio of more than 10 million square feet in southern Nevada. While with the company, he was responsible for the sourcing and oversight of all acquisition and development projects in southern Nevada as well as major leasing, capital, operating, budget and management decisions within the region.
A 30 + year real estate veteran, Mr. Ramous has also served as Portfolio Manager with First Industrial Realty Trust, Senior Real Estate Manager with Mutual Benefit Life Assurance Corporation and Senior Acquisition Associate at Prudential’s PGIM.
Mr. Ramous holds a bachelor’s degree in finance from the University of Connecticut. He is a recent Corporate Board Member of the NAIOP, the Commercial Real Estate Development Association, and an active member of the Urban Land Institute (ULI) and the Society of Industrial and Office Realtors (SIOR). He is a Past Chair of the Henderson Chamber of Commerce and Past President of its Henderson Development Association. He’s also an Executive Advisory Board member at the University of Nevada, Las Vegas’ Lee Business School. Ramous served as a North Las Vegas Mayor’s Financial Advisory Council member and was a member of Congressman Heck’s Economic Advisory Task Force.
Andrew Backstrom
1. What makes a project attractive when you are considering funding?
On the investor CRE front, it would be supportable (and realistic) NOI projections that generate debt coverage of 1.20x plus at stabilization, or a solid, verifiable take out source (sale/permanent financing) at completion of the project. We also look for sponsors/owners that have an established track record and high personal character (have they kept lenders whole through tough times). On the corporate banking front (operating lines of credit, equipment loans, owner occupied CRE, etc.), we look for profitability and strong recurring cash flow from operations that can cover debt service, recurring Capex at 1.15x or greater.
Financial metrics aside, a very desirable factor is a true, long-term relationship with the client. This means that the client/borrower is serious about moving other ancillary business (deposit balances, personal banking, equity & fixed income investments) over to the bank to make our relationship ROE’s desirable. Loans are actually a very low margin product for banks – often with net spreads of well under 2.50%. Imagine trying to attract an equity investor with that kind of return, especially when you can get 4-5% on a simple Money Market account.
2. Once you have interest in funding a project, what are the next steps?
We work closely with the client to answer all of the “why’s” behind the historical and projected financials. At this juncture, we also gather information on the history, management, and the product/market that the client serves so that the full story can be told. This is then put into a formal write-up (Credit Memo) that we present to a credit approval officer or loan committee. At this point, we also begin gathering all of the formation/entity documentation and any required appraisals to make for a timely closing on the back end.
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3. What are the biggest roadblocks you see when customers approach for funding?
On the client side, it would be inadequate cash flow and/or lack of a solid take-out source (discussed above). From the bank side, it would be an overly restrictive credit approval environment or a specific industry or project type that the credit team is not comfortable with. As already stated, a financing only project with no long term relationship component can be a big hurdle, as the ROE is simply too low – bank CEO’s are really holding their ground on this right now.
4. How can they offset those roadblocks?
The client really needs to be detailed and forthright in their explanations of weaknesses in the historical financial statements so that the lending officer has a solid story to tell when presenting up the chain. Second, help us mitigate noted weaknesses. For example, if historical cash flow has some weakness, maybe offset with verifiable projections or pledging of additional collateral until the weaknesses correct.
5. When you consider funding, how much of that calculation is based on the developer versus the project itself?
This can vary by bank (credit culture) and by stage of the economic cycle. I am a classically trained corporate banker, so I will always assert that we look to our primary repayment source first (the project or business) and the developer/sponsor second if things do not go as planned. I have seen construction/development specific bankers that put more weight on the developer, but this is not as common.
However, if we have a developer with substantial financial strength that is diversified, it is possible to make credit policy exceptions on the underlying financial strength of the project itself. If they have multiple avenues to get the bank repaid in a timely manner, then it is somewhat logical that a banker would take on more risk on the project side. Again, we have a mitigating factor in place.
6. What are your goals in your role in Northern Nevada?
My primary goal will be to build Customers Bank into the best commercial banking franchise in our state. This will be accomplished by remaining flexible and creative in our commercial financing solutions, growing our deposit base through high touch, single point of contact service; and continuing to recruit the top banking talent. At $21 Billion in Total Assets, Customers Bank is the perfect size to be more flexible and innovative than the larger, national banks, yet still large enough to be product and price competitive with the largest national bank brands.
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Andrew Backstrom holds a B.S. in Finance and Economics from San Jose State University and an MBA in Finance from the University of Nevada, Reno. With 33 years of experience in corporate banking, Andrew has held various senior-level positions at U.S. Bank, Bank of the West, and Customers Bank, including Senior Credit Officer, Market President, and Team Leader. He has successfully funded financing facilities ranging from $2 million to $750 million, with a focus on corporate borrowing entities with credit needs ranging from $3 million to $60 million. Over his career, Andrew has financed over 150 real estate transactions across all sectors, including multi-family, office, retail, and industrial. Currently, he serves as the Northern Nevada Group Director (Corporate & Specialty Banking) for Customers Bank, a $21 billion banking franchise headquartered in Pennsylvania. In this role, Andrew is excited to lead the growth of this brand-new geographic market for Customers Bank into a major player in the region over the next 3-5 years and is proud to serve as the current Treasurer of NAIOP Northern Nevada.
NAIOP Northern Nevada announced they will host a transportation-infrastructure breakfast panel featuring experts in the field on April 25, 2024. The event will offer an insightful panel discussion on the state of infrastructure in northern Nevada.
The event will be moderated by Loren Chilson, PE, Founder & Principal Engineer at Headway Transportation and expert panelists will include Daren Griffin, A.A.E, CEO for the Reno-Tahoe Airport Authority; Dale Keller, PE, Director of Engineering for the Regional Transportation Commission; Jeremy Smith, PhD, Director of Regional Planning at the Truckee Meadow Regional Planning Authority; Nick Johnson, PE, PMP, CPM, Project Management Chief at the Nevada Department of Transportation; Jeff Brigger, Director of Business Development at NV Energy. The panel will provide an insightful update and discussion on the state of infrastructure in northern Nevada.
The event will take place at the Tamarack Casino located at 13101 South Virginia Street, Reno, NV 89511. Networking will begin at 7:00 am, with the program running from 8:00 am to 9:30 am. A full breakfast buffet will be available from 7:15 am to 8:15 am. Members can buy their tickets in advance through April 24th for $50 and non-members for $65. For ticket purchases please visit https://www.eventbrite.com/e/crossroads-of-progress-a-northern-nevada-infrastructure-update-tickets-871527681757.
NAIOP Northern Nevada, the Commercial Real Estate Development Association, is an association of developers, owners, investors and professionals of office, industrial, retail and mixed-use real estate.
They promote responsible development through advocacy, networking and education to benefit the economic vitality of the communities in which we work and live. Visit http://naiopnnv.com/ for more information.
