[Repost from NNBW] – Small business owners are doing all the heavy lifting when it comes to stabilizing office property occupancy rates in Greater Reno-Sparks.
Regional office brokers tell the NNBW the office sector is nearing a semblance of normalcy, although some companies are still navigating the aftereffects of work from home trends.
Overall vacancy in the second quarter was unchanged from the previous quarter and held at 12.6%, Colliers International reported. Overall asking rates for full-service gross leases, meanwhile, held firm at $1.85.
Dominic Brunetti, principal with the office team at Dickson Commercial Group, said that small businesses have composed the bulk of tenants signing new leases in the area.
“Leasing activity for the first half of the year was primarily small companies,” Brunetti said. “Business owners that typically occupy under 5,000 square feet have been the No. 1 returners to the office. “They are active and are looking for space,” he added. “Those are the companies that are getting back after it sooner rather than later and want to be in the office.”
Many of those smaller operations are consumer-facing businesses that must interact with customers in public settings — think title companies and the like — as well as attorneys, engineering, architectural and construction companies, and other businesses in the professional services space.
Smaller tech firms and some creative services businesses, meanwhile, continue to operate effectively with home-based workforces and medical office users are another group that’s been leasing office space, Brunetti noted.
“We haven’t seen a slowdown in the healthcare industry at all,” he said.
‘IT’S JUST ALL OVER THE PLACE’
A handful of larger companies, meanwhile, such as Clear Capital and Scientific Games, continue to leave their large office spaces dark. Further, several companies that had multiple office locations are still trying to figure out what a company-wide return to the office looks like, Brunetti added.
Melissa Molyneaux, executive vice president of the Colliers International office in Reno, told the NNBW that leasing for her team has truly been a mixed bag and depends upon the tenant’s line of business, employee headcount, and other factors.
Many new leases are from businesses that simply can’t operate from home, or they require a lot of collaboration and need to be in an office, she said.
“It’s wild. We have firms moving here and it’s just all over the place,” Molyneaux said. “A lot of businesses are leaving it up to their employees. We have a lot of tech companies, and I do see a trend for those folks to stay at home when it’s not super collaborative, and those employees like to be in their own space.
“But when you have a financial firm or doctor’s office with customers coming in to have meetings or see people face-to-face, those people are fully in the office or are working on some type of hybrid (schedule).”
Office leasing started picking back up once COVID-19 mask restrictions eased. During the pandemic, many tenants re-examined their office space needs, whether it’s adding space or downsizing, Molyneaux said.
Sales prices remain strong, and with the scarcity of quality investment properties in the market, most sales are being done off-market, Brunetti said. The largest sale in the second quarter was the newly constructed offices of Fennemore Craig at Rancharrah, which sold for $535 a square foot.
“It is incredible what investors are willing to pay,” Brunetti said. “That is top of the market right there.”
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Source: Small businesses stabilizing office occupancy rates across Reno-Sparks, Northern Nevada Business Weekly
Written by Rob Sabo for the Northern Nevada Business Weekly.