Reno market basking in big wins

Reno's commercial market is booming.

A new trend in the commercial real estate industry is that of demand for space surging in smaller markets and suburban communities, such as Louisville, Ky.; Greensboro, N.C.; and Reno, Nev. Those areas have been prospering as the commercial real estate industries in other larger cities has declined.

This new trend has cropped up recently as many of the top-tier buildings in major markets like New York and San Francisco – and even Portland, Ore., and Houston – have been snatched up.

"There's plenty of capital for real estate," Jim Sullivan, a managing director of a California-based property-research company, said to Bloomberg. "If investors are in search of bargains, they do need to move a bit further out on the quality spectrum."

Investors are attracted to Reno for the affordability of buildings there. As Bloomberg reported, office buildings of more than 40,000 square foot sold for about $200 per square foot from 2005 to 2007, but plummeted to $100 per square foot from 2009 to 2012. Now, the going rate is about $110 to $140, which is considerably less than the $180 to $200 it would cost to build such space, according to Tim Ruffin, senior vice president of brokerage at Colliers International in Reno.

The city has seen commercial property sales surge 222 percent by dollar volume in the first eight months of this year, compared to the same time period in 2012.

"It really caught us all by surprise," Ruffin said. "We're recovering. Businesses are doing better."

The trend of suburban markets growing is likely to increase, because of the 56 million square feet that has been absorbed by the U.S. office market in the past year, about 90 percent was in the suburbs, Walter Page, director of office research at CoStar Group in Boston, told Bloomberg.

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