Montreux for $2M

Montreux 2MThere have been resales of 3 housed for over $2,000,000 in Montreux so far this month.  Who buys $2M houses in Reno?  One was a move up buyer from another Montreux home, and two were RCCOTHs (Rich Californians Coming Over The Hill, though one was actually from Seattle).

In a region where the median income does not support the median home price of $285,000, I suspect many if not most new home buyers are coming from out of the region.  Lennar has sold 10 homes at their Plateau subdivision in Somersett.  Pricing ranged from $341-436,000 with the average at about $385,000, or about 135% of the median.  2 homes appear to be investor owned.  2 homes are move-up purchases.  6 were buyers making their first home purchase.  I suspect all 6 were from out of state.

The residential portion of the land purchase around Cabela’s is already on the market (price not disclosed).  At up to 284 lots at 6000 SF, if feels like Lennar bait.  Financing is incredibly tough to get on new construction, so I don’t think the local builders will be in the running.

When the Pennington mansion sold for $8,000,000 last month, I commented that it was probably a land deal.  7.25 acres in blue has already been put on the market for $2.5M and could take up to 30 houses in a PUD.  That might be attractive to local builders.

Sales and Tales

Chism ParkThe Chism Trailer Park just closed escrow for $4,975,000.  The new owner has commented on expanding the event center facility, but has been silent on plans for the trailer park.  The Chism’s ran a quite, relatively safe refuge for a 100+ low income households, and it is difficult to imagine how those folks will be able to assimilate assuming redevelopment is looming.

The Bourbon Street Casino in Sparks just closed escrow for $3,800,000.  Instead of the “local developer” claimed to be the purchaser, the new owner is LandCap Investment Partners LLC out of San Juan Capistrano CA.  The do, however, count Marina Village and Marina Gateway I and II as part of their portfolio, so I guess that counts as local.

Remember Project 8 at 888 Mount Rose?  It just sold for $1,550,000, only $50,000 below asking to the Bay Area (former?) owner of the Simplified Bee web commerce site.  Renovations are already underway and it appears that the site will stay a water and land pig in the middle of town.

Speaking of water and land pigs, I had the opportunity to take a run at 775 California Street recently.  It sits on 3 riverfront acre zoned SF9 with the 6400 SF main house, a pool to die for, and a 2500 SF caretaker’s house / pool house.  It is currently listed for $1,790,000 down from $2.8M originally.  You could easily subdivide off 3-4 lots on California, renovate the pool house, and maybe nuke the pool itself for an additional lot.  The renovation of the main house was featured on HGTV and I thought it was going to be spectacular.  It wasn’t.  Original single pane windows.  Original asbestos encrusted oil furnace.  No AC.  Modern kitchen totally out of scale (small) for an estate like this.  “Tahoe Room” scabbed on which was actually a pretty cool space, but completely at odds with a unified design concept.  The main house in itself should fetch $1.2M+ in the Newlands market, but it will take $500,000+ to get there.  So this one will sit another 5 years.  At least they are keeping their evil green grass green.  If anyone would be interesting in a scrape and redevelopment project (cultural suicide in Newlands on a non-historic historic house but the right option), give me a shout at macnv@charter.net.

No new Seagull Sweets action lately.  I can’t find any active permits on any of his so called projects.

Dog walk time!  What do you think?

RE Ramblings

ranch-turkey-burger–  Reno Median Sales Prices continue to soar.  We are back at May 2008 levels, or May 2004 levels for the glass half empty crowd.

–  Where is the new product?  There are virtually no new Subdivision Maps being filed, just continued phasing of existing developments.  Being a glass half empty guy on occasion, I believe the major developers are holding back product to increase demand and drive up prices.  Bubble alert.

–  Bubble?  The entry level market is already decimated by low inventory, tight credit, and “predatory investors” .  Prices at Smithridge, Silver Creek, Highview are already 100-200% above valley levels.  Try to buy a run down shack in Midtown or Wells for under $250K today.  These are the EXACT locations that started the bubble run-up last time.

–  RCCOTH – Rich Californian’s Coming Over The Hill.  The $500-600,000 market seems to be a sweet spot right now.  These sales ARE NOT generally to move up Reno buyers.  The mortgage is far less than a typical SF or Silicon Valley 2 bedroom rental, so what’s not to like?

–  The WTFs – Have you seem all the $2M+ monuments to ego hitting the market lately?  At 2007 peak pricing?

–  Just to crow a little, Downtown Makeover did a write up on some of my MidTown Projects.  I’m also working on 40 units of workforce housing throughout Sparks, and my own infill developments at Mayberry Canyon.  And the biggest project of all, de-oaking and de-brassing my 1987 Ranchburger!  Wish me luck with that one – oak and brass breed when you are not looking.

Pennington, Apple, and Ramblings

457001[1]Yeah, the Pennington mansion at 2490 Manzanita just sold to a TRIC investor.  What the RGJ couldn’t tell is for how much.  $8M, far below the original $18,500,000 asking price.  The house sits on over 20 acres of land. With an additional 15 acres next door potentially available, this is looking like a buy and scrape land deal to me.

Apple just applied for permits for 4 new 20,000 SF modular data center cluster buildings at their cloud farm east of Sparks.  This is there single biggest commitment ever, and should silence the folks that say Apple has given up on Reno.  By the way, the rumors that Apple was driving trucks of servers to a site in Tessera to get their tax breaks without ever unloading the truck or hiring the technical staff/consultants is false.  Apple has not applied for their approved tax breaks.

Cottage Row @ Midtown just raised their asking prices 5% or about $25,000 today.  But wait, they raised the prices on the properties that were already on the MLS as “Active/Pending”.  I have suspected that their pendings were a sham, and this backs that up.  Show me a closing.  show me a comp.

If you want to buy the Ramada Inn, tours start next week.  Does anyone know why this property ever got built in East Jesus?

Pulled up all the Siegel Group properties this week, and there are no pending permits in the system for any of them.

Reno Shake and Bake.  Director of Parks and Recreation “retired”.  Police Chief called it a day after getting publicly Schievie’d for sending officers to the Ukraine.  Director of the whole Community Development Department is leaving with no stated reason, no even to “peruse family matters” or to “peruse private sector opportunities”.  And now Fire Chief Hernandez may be off to Plano, TX where 2 in 2 out plays to a more receptive audience.  Your take on this upheaval?  Is Hillary cleaning house or are key personnel bailing on her?

Great discussion and debate in the last thread on gaming and Reno.  Keep it up!  Circus Circus is destined to close as is Harrah’s.  How do we rethink downtown now?

The New Downtown Plan

PAVICHNorthern Nevada Urban Development aka Tessera South just received a NOD on their 128 E. 6th Street property.  This following almost losing 595 Lake Street at a tax sale last week (it is unclear if the owner or the lender paid off the delinquent taxes) and losing the linchpin corner of 6th and Virginia to foreclosure.  And they are pushing to have their STAR Bound entitlements extended!

The conventional wisdom was that downtown would transform itself from the North Virginia Street corridor outwards.  But you have Italian Capital and NNUD criminally over leveraged on their Tessera properties, Siegel Slums now anchoring the south end, and disinterested casino and Old Money Reno owners in the middle.  So it will literally take a work-around, and that is what is happening.

Yes, the Siena is changing hands and will go upscale (for Reno) and non-gaming with Nando (Montage, CommRow) at the helm.  Well funded Simon Properties owns the big lot at 2nd and Lake, and a prominent local developer just bought the sales office for the Waterfront Tower across the street on the SW corner of 2nd and Lake.  There is Startup Row growing on the West of downtown, and the Pignic distict to the south connecting to Midtown.  Development is progressing AROUND downtown, not in it.  If you have driven NVA lately, you can see that the retail element continues to decline and even the tattoo parlors are failing.

So this is a come to Jesus call for the traditional downtown core ownership.  Upgrade, sell, or die – Reno won’t wait and simply does not need you anymore.

Frankenwarehouse

Verdi Insustrial Elevation-page-0Directly on the heels of the land around Boomtown being sold, the proposed Industrial Building is wending its way towards a 1 June Planning Commission hearing.  The building is 1500 feet long and 40 feet tall (up to 45 feet with the proposed variance).  It is claimed to be 855,000 SF, but is actually 885,000 SF if you backtrack through the parking calculations.  That is 7X the size of Cabela’s.  The exhibit with the Traffic Counts is HERE, and the more graphic site plans and elevations are HERE.

I say bring it on!  If there ever was a stealth location to bury a building this size, the bench north of Cabela’s fits the bill.  The traffic study is a bit goofy and has 90% of the truck traffic arriving from the east and then departing back to the east with 46 peak hour semis.  The traffic study does not take into account the new Boomtown Truck Stop and the 415 semis per day it will generate not the 289 peak hour vehicles it will add to the Garson Intersection.

My only concern about these two mega projects is the Garson overpass.  It is a narrow 2 lanes and currently serves literally hundreds of bicycles on an average day plus the vehicular traffic and the occasional frightened poor soul on foot.  There are no pedestrian accommodations whatsoever.  RTC has a Garson/I-80 intersection rebuild project in their 2018 budget (unfunded), but it is really an NDOT issue.  So this is a plea to the Reno Bike Project, the Procrastinating Peddlers, and all the recreational cyclers out there to put the screws to NDOT to fix this woefully inadequate interchange STAT.  Reno will approve the Frankenwarehouse project, as they should, and the truck stop is already coming.  We don’t need dead people in the name of progress.

Ramada Out

Ramada RenoThe Ramada Inn at 1000 E 6th Street will go to AUCTION on 3 June.  284 keys plus banquet and meeting space, and the opening bid and reserve price are both $500,000.  The Room Pictures and Reviews for Ramada’s own site are pretty revealing.  Outstanding staff and cleanliness (usually), dated rooms, sketchy neighborhood, and pretty consistent references to plumbing issues.  The auction comes free of management and brand affiliation – Ramada is out and you would be on your own.

Diamond’s Casino is next door on a separate parcel, attaches to the Ramada, and provides most of the food services for the guests.

Meatloaf-Dinner

Verdi Mega Land Sale

boom2All the land around Boomtown that we all think of as Verdi but is really Reno just sold for $13,125,000.  The buyer is Reno Land Development Company LLC, which has the same address as Monterey Advisory Group and email address as the old Monterey Development Group (MDG – The Village at Somersett).

The purchase excluded lots 7, 8, 9, 10, and 12 from THIS offering from a few years ago.  HERE is the land uses approved under the Mortensen Garson Area Plan and HERE are the parcels involved in the sale (excluding the 300 acres of remote properties).  There is a $10M 1st Loan and a $600,000 2nd.  Note the 586.86 AF of ground water rights and up to 250 AF of surface water rights that come with the parcels.

So what’s next?  The properties north of I-80 are level, served with sewer and water, and I would expect terraforming to begin almost immediately for about 500 units.  I also expect the developer to try to densify the project from its current zoning – it has all City services and Reno loves this sort of “infill” stuff on the edges of their service area – and rezone the commercial properties just north of Cabela’s to residential.  The properties south of I-80 do not have City sewer or water, so I don’t expect development in the near future (some of it is really zoned for a high-rise casino!).

There goes the neighborhood!  At least it isn’t going to be an “Everything Included”  Lennarburger.

 

Project 8

24001[1]Project 8 was my code name for 888 Mount Rose Street, the Mapes Walker mansion (Google it for a lot of history on Gloria Mapes Walker).  Sitting on 3.18 acres on the ever growing fringes of Midtown, it is zoned SF9 for 9000 SF lots.  Across the street to the north the zoning drops to SF6.

The property is/was listed at $1.6M and is now in contract, but that made the entry price for any redevelopment really high for my guys.  The “smart” development scheme would be to scrap the mansion (it is not historic but is over 50 years old, so would have to be reviewed by Reno’s Historic Resources Commission) and build as close as possible to be maximum 15 parcels allowed (I maxed out a 12 with access easements).  My SCHEME  was to restore the mansion into 3 or 4 units (requiring a Special Use Permit in a single family zone) and build around 9 new homes.  Everyone loved the concept, but didn’t want to be the ones to disrupt the neighborhood.  I have no idea what the prospective owners plan to do, but it would actually be sad if the restored the mansion and did not redevelop.  Cities evolve, and 3 acre estates adjacent to a Transit Corridor are relics.

It has been sort of amusing seeing the Marmots being dissed over at the Downtown Makeover site for not adding units when I know that they have over 10 in the permit loop.  528/538 Sinclair is my favorite.  They are digging a courtyard between two bungalows and adding wicked pisser basement units that won’t feel like basement units.  124/126 Caliente  each get an additional bedroom, bathroom and sleeping loft.  3 new units at 130 Caliente.  2 more dig downs with courtyards at 225/231 Moran.  227 Moran like you would never believe possible.

Reno Rundown

Just a bunch of random item to keep you amused:

–  For the first time in 8 years, units at Smithridge are selling north of $100K.  These were trading for $225K at the peak.

–  Single Family Homes coming to Keystone Canyon.  If you can read topo maps, so will see this will require a lot of terraforming to get in 109 houses.

–  Upstream out on Dickerson Road is Back.  Sold out of foreclosure 2.5 years go for $1.125M and included 90 vacant townhouse lots and 6 or 7 finished townhouses.  The lots just changed hands for $1.548M.  About a million and a half profit on a million dollar investment is pretty good ROI.

–  Also out on Dickerson, the Generator tried to lease option some of Reno’s Retrac land for a sculpture park, artist residences, and a new 50,000 SF co-working facility.  They ran into an absolute shit storm of unexpected opposition.  Issues ranged from the perceived sweet heart no bid land deal, to a NIMBY outpouring from the future owners of the Chism House and Trailer Park.  So the Generator is getting relocated to less desirable (but more appropriate) Retrac land east of Wells, the Chism’s get some land back.  No word on what the new owners plan to do with the trailer park.

–  Lennar is getting into the rental SFR business with their Frontera project.  Expect this to be a virtual man-camp for the Tesla factory construction crews.  They know the construction will go on for a limited time and don’t want to buy, credit is still tight, and a lot of the trades have had their credit wrecked from the effects of the Great Recession.  I think this will be a home run.

– D’Andrea Country Club is facing yet another day on the Courthouse steps (actually the County Commission chambers).  For $461,954.07, it can all be yours at the Delinquent Tax Sale on 22 April.

–  As the City Council was reviewing their Legislative agenda, a surprise new Bill was discussed.  STAR Bond Districts are in effect for 20 years after the date of the districts’ establishment.  The Bill allows that to be able to be extended in Districts that were established but no construction occurred for 5 years.  The ONLY District in the State that the Bill applies to our very own Tessera District!  Kudos to Jenny Brukhus for being the only council person to cry bullshit.

There, that should give you enough to chew on for a few days.  Next up will be a review of a couple interesting projects going up (and down!).

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