Although millions of square feet of new Class A industrial space has been added to the greater Reno area industrial market over the past decade — and much of that product has been leased to large companies taking down hundreds of thousands of square feet at a time — there’s been scant attention given to smaller light industrial tenants who need just a few thousand square feet for their business operations.
Private commercial real estate developer Herman Christensen & Sons of San Carlos, Calif., is changing the landscape for smaller flex industrial users with the development of Kiley Commerce Center in Spanish Springs. The development at the corners of Wingfield Hills and David Allen parkways consists of five buildings, three of which have already broken ground.
Two of the buildings under development are each 23,750 square feet, while the third is considerably larger at 67,500 square feet. The two smaller buildings will be subdivided into 20 total spaces of 2,375 square feet, while the larger building will be subdivided into 10 total spaces of 6,750 square feet. However, spaces can be combined to accommodate mid-sized businesses, said Gavin Christensen, president of Herman Christensen & Sons.
Each of the larger units will include a dock in the rear, while the smaller units will have drive-in capabilities with roll-up doors.
“We are targeting smaller users,” Christensen said. “We feel like that market has been a little underserved in Reno. There has been a lot of big distribution space built, but not a lot of space catering to smaller local businesses. We feel there is an opportunity to provide space for them.
“We have found from experience that it’s also hard to find docks on spaces in that size range,” he added.
Historically, smaller light industrial users had few options outside of leasing outdated Class B and class C industrial space in submarkets such as Sparks near the Truckee River or by the airport. Herman Christensen & Sons acquired nearly 35 acres in Spanish Springs several years ago with the goal of developing between 18 to 20 acres into modern light industrial that caters to local businesses.
Pat Morrissey of Morrissey Realty helped Herman Christensen & Sons acquire the land. Tomi Jo Lynch, first vice president of industrial properties at the Reno office of CBRE, will handle leasing for Kiley Commerce Center.
“With the number of rooftops in Spanish Springs there’s a need for this type of product,” Lynch said. “We will attract some users from Sparks who want to upgrade their space, but there’s really no fully planned business park like this in the area. All the industrial in the area is much larger, and we are filling a niche in the market that hasn’t been filled for a long time.
Tomi Jo Lynch
“There is a lot of older product in Reno and Sparks, and the demand on that product has remained really high,” Lynch added. “Occupancy also has remained relatively high in those spaces – especially in the newer buildings. It speaks volumes about the need for this type of product."
Christensen expects the tenant base at Kiley Commerce Center to be a mix of light industrial users such as assembly or manufacturing companies, smaller regional contractors and construction services firms, and professional office users who also need warehouse storage.
Kiley Commerce Center is the company’s first development play in Northern Nevada, but it has a long history of developing commercial real estate in the East Bay and San Francisco Peninsula regions. The company develops commercial real estate as a long-term investment, Christensen said.
Herman Christensen & Sons Greater Bay Area portfolio includes three light industrial parks and some research and development space totaling more than 1 million square feet. It also owns a few multifamily properties, Christensen said.
“We are long-term owners; we have no intention of selling,” he said. “We plan our product for the long haul. We don’t build it and spin it off, so we do try to design good assets for the long-term hold.”
Herman Christensen & Sons wanted to cast a slightly wider net outside of the expensive and overcrowded Bay Area market, and Reno was a logical choice for the company’s development capital, Christensen said.
“Geographically it's relatively close, its economy is booming, and we had contacts there. It was a natural (play) for us,” he said.
“It wasn’t easy to find land,” he added. “There’s not a lot of vacant land.”
Pinecrest Construction is the general contractor on the development. F and P Construction has almost completed mass grading for all five building pads at the site. The first three buildings are expected to come online in the spring.
The next phase of development calls for another 67,500 square-foot building, along with a smaller 28,500 square-foot building.
“We haven’t totally defined its use,” Christensen said. “It depends on absorption and what kind of market demand we see.”
