2016 CCIM Forecasts
• OFFICE
• Kevin Annis, ArchCrest
Commercial Partners
• RETAIL
• Gary Tremaine, Dickson
Commercial Group
• MULTI-FAMILY
• Todd Blonsley, Marcus &
Millichap
• INDUSTRIAL
• Chris Fairchild, Colliers
International
2015 Was a Great Year
Leasing Activity WAY UP – Vacancy Rate at 12% down from 19%
Unemployment Rate DOWN 5.6% down from 14%
Housing Prices continue to rise
2015 Was a Great Year
“Tesla Effect”
Trends 2010 – 2015 Absorption
Absorption
Graph
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Trends 2010 – 2015 Vacancy
Vacancy
Graph
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EDAWN
2010 – October 2014* Just Under 11 site visits a month
October 2014* - Now Just OVER 11 site vists a month
2015 Was a Great Year
“Tesla Effect”
2015 Overview Absorption
2015 Absorption
Graph
Supporting Text
2015 Vacancy
Graph
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2015 Overview Vacancy
2015 Vacancy
Graph
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2015 Overview Vacancy
New Construction
0
2000
4000
6000
8000
10000
12000
14000
16000
2011 2012 2013 2014 2015
Squ
are
Feet
12,253
8,506
3,986
14,161
Reno vs Competitors
Market Class A Lease Rate Average Class A Lease Rate High
San Francisco $3.31 $12.07
San Jose $2.16 $7.37
Sacramento $1.82 $4.47
Phoenix $1.71 $8.03
Las Vegas $1.68 $8.28
Boise $1.34 $2.98
Salt Lake City $1.57 $3.11
Portland $1.69 $7.00
Chicago $2.11 $9.17
Seattle $2.29 $6.31
*information courtesy of CoStar
Reno vs Competitors
Market Class A Lease Rate Average Class A Lease Rate High
San Francisco $3.31 $12.07
San Jose $2.16 $7.37
Chicago $2.11 $9.17
Seattle $2.29 $6.31
Sacramento $1.82 $4.47
Phoenix $1.71 $8.03
Portland $1.69 $7.00
Las Vegas $1.68 $8.28
Salt Lake City $1.57 $3.11
Boise $1.34 $2.98
*information courtesy of CoStar
Reno $1.57 $2.72
Reno vs Competitors
Market Class A Lease Rate Average Class A Lease Rate High
San Francisco $3.31 $12.07
San Jose $2.16 $7.37
Chicago $2.11 $9.17
Seattle $2.29 $6.31
Phoenix $1.71 $8.03
Las Vegas $1.68 $8.28
Portland $1.69 $7.00
Sacramento $1.82 $4.47
Salt Lake City $1.57 $3.11
Boise $1.34 $2.98
*information courtesy of CoStar
Reno $1.57 $2.72
2015 Overview Notable Lease Transactions
Tenant Location Sq ft
Nevada Dept Wildlife 6980 Sierra Center Parkway 29,820
ArroHealth 1450 Vassar St 29,776
Coral Academy of Science 6275 Neil Rd 27,000
Dickinson Wright LLC* 100 W Liberty 11,800
Spine NV 780 Vista Blvd 15,300
Koch Industries* 5905 S. Virginia 5,494
Renown Health 50 W. Liberty 15,700
Grand Rounds * 10345 Professional Circle 12,000
Coupa* 10615 Professional Circle 12,000
Washoe County 5450 Riggins Court 10,009
2015 Overview Notable Sale Transactions
887 Trademark
Former WMS Gaming building.
Sold with 100% vacancy
$6,680,000 45,000 sq ft
11/05/2015 $125 per foot
2015 Overview Notable Sale Transactions
10509 Professional Circle
Sold with 100% occupancy
$7,200,000 45,000 sq ft
10/19/2015 $160 per foot
2015 Overview Notable Sale Transactions
10345 Professional Circle
Sold at 91.1% occupancy with University of Phoenix on short term lease
$9,500,000 59,602 sq ft
02/12/2015 $159.39 per foot
2015 Overview Notable Sale Transactions
5470 Kietzke Lane
Sold at 65% occupancy with adjacent 5.5 Acres of future development
$11,500,000 56,000 sq ft
01/26/2015 $166 per foot
2015 Overview Notable Sale Transactions
10315 Professional Circle
Sold to Renown as a owner user opportunity
$11,750,000 63,548 sq ft
05/28/2015 $184.90 per foot
2015 Overview Notable Sale Transactions
885 Trademark Drive
Lease back from Mitel Corporation
*California Investor
$12,442,000 76,800 sq ft
10/02/15 $162.01 per foot
2015 Overview Notable Sale Transactions
5441 Kietzke Lane
100% occupancy
*California Investor
$16,295,274 65,074 sq ft
12/18/2015 $250.41 per foot
2015 Overview Notable Leased Investment sales
Location Sales Price Sq ft Price Per foot Cap Rate (est)
980 Sandhill $6,600,000 31,169 $205 7.48
610 Sierra Rose 2,500,000 5,730 $427.57 6.00
500 Damonte Ranch 2,064,587 8,030 238.85 7
9484 Double R $2,118,000 7,488 $264.16 6.8
6350 Mae Anne $915,000 2,050 $390.24 7.5
3725 Lakeside $1,337,000 4,338 $308.21 7.22
What does this mean to me?
Investor
Tenant
Landlord
Current owner of leased
property
Lock in your rates TODAY. Try
and renew before rates spike
Get Ready for the negotiating
power to swing your direction
Great opportunity to sell! Low
inventory and high demand will
lead to high prices!
If you can find office property
below replacement costs, BUY!!
However low inventory may
push pricing up quickly
2016 Forecast
Absorption
Vacancy
Lease Rates & Sale Prices
New Construction
2016 Forecast
2016 Vacancy Rate Projection:
11.5%
Northern Nevada Retail Forecast
Presented by:
Gary Tremaine Senior Retail Associate
2016 RETAIL MARKET FORECAST
Vacancy
Construction
Net Absorption
Significant Leases Firecreek Crossing
Ulta
14,000 sq. ft.
Legends
Petco
12,500 sq. ft.
Legends
Payless Shoes
7,000 sq. ft.
Sparks Crossing
Home Express Discount Furniture
20,182 sq. ft.
Silver State Plaza
Pet Supermarket
8,500 sq. ft.
Silver State Plaza
Hancock Fabrics
7,700 sq. ft.
Significant Sales
Smithridge Plaza
137,691 sq. ft.
$22,300,000
Crossroads Shopping Center
57,355 sq. ft.
$8,500,000
Southcreek
66,834 sq. ft.
$25,500,000
Southwest Pavilion
75,000 sq. ft.
$8,500,000
New Construction
Sparks Legends
Lemmon Valley
2016 Retail Market Predictions
LEASE RATES $1.50 - $2.00
2016 OVERALL VACANCY 10.7%
“Continued Stability & Growth”
2015 U.S. GDP Estimated End 2015 at 2.52% (was 5% GDP in 2014)
2015 GDP Growth Short of 3.0% to 3.3% Projected GDP Growth
U.S. GDP Growth Averaged over 3% from 1947 to 2014
U.S. Unemployment at 5% End 2015, Down 11% from end of 2014
2.65 Million Jobs Added to U.S. Economy in 2015
Washoe County Unemployment Down 14% to 5.6% ending 2015
Strong Local Job Growth Expectations for 2016
Potential Weakness & Factors Influencing U.S. Economy:
True Health of the Chinese Economy & Fed Actions on Rates
Continued Flat Line Corporate Earnings/Profit (U.S. firms)
Sources: U.S. Bureau of Labor Statistics, St. Louis Fed. The World Bank The Economist
Source: U.S. Dept. of Labor-Bureau of Labor Statistics
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(November 1st of each year)
Historical Unemployment Rates Washoe County (1994 to 2015)
2.7%
4.2%
4.4%
8.6%
13.2%
8.2%
5.6%
6.4%
4.7%
6.50%
9.63%
8.54%
7.16%
6.56%
5.60%
5.10%
4.35%
2.67%
$885
$875
$848
$824
$822
$834
$850
$865
$942
$760
$780
$800
$820
$840
$860
$880
$900
$920
$940
$960
2%
3%
4%
5%
6%
7%
8%
9%
10%
2007 2008 2009 2010 2011 2012 2013 2014 2015
2007-2012 = End of 4TH Q 2013-2015 = End of 3RD Q
Reno-Sparks Apartments Historic Data Year Ending Vacancy Rate & Average Rent
2007-2012 Source: Johnson-Perkins & Associates, Inc
Apartment Sales 2015
Project Name City Sale Price Units Price/Unit Cap Rate Closing
Date
The Element Reno $15,000,000 206 $72,816 6.2% 2/20/2015
Spring Villas Sparks 18,700,000 160 116,875 5.31% 2/27/2015
Sunset Ridge Reno $6,050,000 100 $60,500 6.64% 5/8/2015
Caviata at Kiley Ranch Sparks $33,840,000 184 $183,913 5.2% 5/19/2015
Sundance West Reno $23,450,000 350 $67,000 5.76% 6/16/2015
Trails at Pioneer Meadows Sparks $44,000,000 300 $146,667 4.93% 8/20/2015
Village at Iron Blossom Sparks $35,575,875 404 $88,059 5.8% 1/7/2015
Sierra Bonita Apartments Reno $2,830,000 42 $67,381 6.7% 7/29/2015
Vizcaya at Hilltop Reno $ 36,208,335 318 $113,863 5.5% 9/3/2015
Bighorn Apartments Sparks $3,675,000 53 $69,340 - 12/16/2015
Continued Local Population, Job & Wage Growth
Improved Local Consumer Confidence
Modest Increases in Apartment Supply
Median SFR Prices to Rise 8%-10%
• Potential for Weakness in U.S. Economy
•Health of Chinese Economy
•Fed Actions on Interest Rates
•Flat Lining Corporate Earnings/Profits
San Francisco #1, San Jose #2 & Oakland #4
San Jose pushed New York City from #2 to #3
Bay Area strength = Northern Nevada strength
National apartment vacancy rates end 2015 at
4.2%, likely to remain the same for end 2016
Homeownership at 63.7 (lowest in 20 years)
250,000 apartment units completed in 2015
285,000 apartment units estimated for 2016
Apartment Values Were Up in 2015 and with
Rising Rents Expect Values to Rise in 2016
Nationally Apartment Vacancy Rates Should
end 2016 in the 4.2% to 4.4% range
Apartments Continue as Most Favored Asset
Multi Family 2016 Forecast
Reno-Sparks Vacancy Rates ends 3Q
2016 at 2.95%
Average Rental Rate Up (1.0%-1.5%)
ends 3Q 2016 at $954
2015 Completions & 2016 Planned Development