Developer Darwin Awards

darwin-award

  • Our winner this week is the W 2nd Street District.  With a land acquisition budget of $35/SF, they have an “agreement” to buy the UNR parcel at 3X that.  The Reno RDA parcel next door just jumped to $4M+ based on the comp, and everyone else in the “district” will now be holding out for $100/SF+ for land.  This would just be a comical developer snafu except it has changed ALL the expectations on property value in the downtown core to unsustainable heights.  Nothing will get done as the owners hold out for values that can never be economically achieved.  Instead of invigorating downtown, W 2nd is killing it.

 

  • Shit Costs Money -Kudos to Kelly Rae for going after the Sewer Connection Fee system imposed by COR.  A new studio in Midtown is charged the same $6300+ fee as a 9000 SF ArrowCreek mansion.  They are also charged +/- the same RTC Traffic Impact Fees at the same $4240 rate per unit.  Fees for a small infill project = about 15% of construction cost.  Fees for a new custom home = about 2% of construction cost.  The system is broken if you assume the goal is to encourage urban infill and affordable housing.  As Dad always said, “Assume” is Ass out of You and Me.

 

  • 601 E 4th Street –  The Anchor Auctions building and surrounding properties at 601 E 4th Street just listed for $4.1M.  That’s pretty pricey for the E 4th Street corridor – $50/SF land cost.  But I’m a believer that E 4th will rapidly surpass Midtown as Reno’s entertainment hub.  Midtown is becoming far to genteel, and E 4th offers some pretty cool large spaces at more reasonable rents.

 

  • TXT17-00003 – Just starting to wend its way through Planning, this is an internally generated text amendment that relates to amending parking standards in the Wells district.  I’m presuming that parking requirements for restaurants, bars and retail establishments will be changed to match Midtown = 0.  This will be a boon for Wells Avenue merchants, whose district has been slow to redevelop partially due to the parking requirements.  I’m not sure how the Bungalow Huggers are going to react to the proposal, especially given that the proposed text amendment will open up discussion of residential parking standards in all of WANP.  Currently, a 4 unit condo or rental project consisting of 2 bedroom units requires 5 parking spaces, 3 or more off-street and up to 2 on street.  The EXACT same project designed as individual units for sale requires 8 parking spaces – accidental social engineering that is diminishing the availability and affordability of entry level housing to purchase.  Stay tuned – this will be an interesting if arcane issue to follow, with a couple of council persons doing a bit of sweating out the decision.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Horseshoe

horseshoe_club_reno_nvThe Horseshoe building at 229 NVA just sold to Battle Born Properties aka the Keshmiri’s.  Owners of the Methderosa weekly motel and the Wild Orchid and various other strip clubs.  I’m sure the Horseshoe will be renovated for a use up to their standards. (fun fact – there is a sky bridge to 210 N Sierra, future home of On Common Grounds sliding price grocery store.  Don’t get me started on that one – I think their male stripper fundraiser got reconsidered.)

There really is no hope of saving the casino core.  The Carano’s are pouring $50M in interior improvements into their casino holdings, but not a cent that I can see into streetscape and livability improvements.  Retail is still fleeing N Virginia.  We’ve lost a hair salon and a restaurant in the 300 block and it is a ghost town.  Just wait until the Harrah’s bankruptcy gets finalized.

sc-demoFarewell, Sierra Canyon. It is done – the final 5 permits have been filed.  The sales center has been demoed to make way for 2 more units,  Pulte and the HOA were negotiating to turn the sales center into additional amenities for Sierra Canyon which could have been a win-win, but SC could only move at the pace of an HOA.  I’ll miss throwing darts at the Raisin Ranch.

betsy_caughlin_donnelly_ranch_houseMayberry Gardens  – How to try to save a failed garden center at a historic property?  Adding townhouses is going to be a tough sell.  The Reno Historic Resource Commission is already stepping WAY beyond their charter to fight this one.  This will be an interesting case to follow.

Tea Leaves

arrow-downReno Real Estate Blog will be releasing their monthly median statics in a day or so.  What’s your gut?  FYI, the median dropped 1.75 between September and October 2015.

Prices at the Smithridge Condos are something I track closely – it is an important market indicator for me.  They ballooned to $225+ in the bubble before falling back to $70K.  They have been inching towards $140K for the last couple of months, but no one has breached that barrier yet.  I feel good about that.

I just feel uneasy about the market right now.  The builders aren’t building, and the only reasonable deals I see out there are properties that have gone through at least 1 foreclosure (and I’ve even got a triple!).  None of the Ladies Who Lunch at Napa Sonoma are comparing their portfolios any more.

Montreux properties are selling below 2002 pre-bubble prices.  Somersett is recovering to 2005 or so – the lost decade.  I know we are supposed to be feeling giddy about our regional growth, but I’m not feeling it.  Are you?

 

 

$79,000,000 Dirt Offering

sjv2-page-0Here is your chance to purchase 1177 unimproved dirt lots for $67,100 each.  The remainder of St. James Village and the ghetto Sierra Reflections. Convenient to nothing.  Washoe is usually better than this when reviewing sprawl.

Want to buy Marco Rubio’s old campaign HQ?  1 E Liberty is on the market for $21,485,000.  VERY sketchy pro forma and project rents, especially based on “growing” the building to BOMA standards, but it is good to see a detail if flawed analysis from the listing brokerage.  “Load Factor” is the space a tenant pays for outside its physical premises.  In an efficient building, this will be 15-17%.  Eyeballing 1 E Liberty, I’d guess the load factor is over 30%.

Garden Center to Townhouses?  Messy situation, but Reno will cave.

You can also buy the land under Brasserie St. James if you have a lot of pocket cash.  Would be interesting to read the “new lease” terms before passing judgement on the price.

I forget why I flagged Marshall Ranch.  Very interesting property.

I’m back!

 

Park Lane for $27,500,000 Alex

park-lane-chick-page-0-1The sale of the Park Lane Mall property just recorded with a sales price of $27,500,000 or about $600,000 per acre.  Design concepts will be presented to the Council in 3 weeks on an informational basis and I suspect the planning team behind the W 2nd Street District won’t be at the table this time.

When I’ve looked at Park Lane in the past, it started penciling at $20M.   It’s a new day, and $27.5M probably works for a well-funded developer.  In the end, the seller didn’t suffer too much on the investment, and the Reno National Siegel Sanctuary will get developed.

  • Steak and Shake coming to 400 South Meadows Parkway – permits just filed.

 

  • Las Vegas Raiders – Geopower has been asking me to bow in with a post on the Specials Session to approve $750M in “public” funding and the Washoe County circus to fill our vacant Senate and Assembly seats.  Meh.  It’s a done deal (typo said dome!), I hate any sort of public funding for private business (especially without profit participation), and what I think really isn’t going to count.

 

  • WC1 – Don’t be a moron, vote Yes.  WCSD is a frickin’ mess to say the least, their Board is worse, and I’m certain there will be some abuse of process distributing the funds raised for school construction/renovation.  But at a cost of a latte a week, I’ll take the gamble and try to give our students a fighting chance to succeed.

Developments

Meridian 120 S THUMB-page-0-1So far, the developments in the Mortensen Garson Neighborhood Plan area around Boomtown have centered around the 273 unit Meridian 120 North SFR project, the Dermody Properties 885,000 SF warehouses (site work is under way), and the 242 unit apartment site just north of the KOA.  In fact, the majority of the Plan affects land south of I-80.  The Meridian 120 South properties have just come on the Market.  230 SFRs, 380 Attached units, 180,000 SF of industrial space.  The listing is a rare detailed look into projected sales prices, cost to “finish” a lot, details like West Meadows Estates is now a DR Horton project and not Northern Nevada Home (who swore up and down that it wasn’t an “entitlement” play).  The site plan has been altered a bit to exclude the need for the 1600 unit Santerra development to occur at the same time.

  •  The utterly massive proposed/pending/promoted West 2nd Street development took a knee capping when the owner of one of their prime parcels they had “under control” list their 2.7 acre parcel for $4,281,076.83.  I haven’t bagged on W 2nd – I really hoped my cynicism might be misplaced and that I along with the rest of the entire Reno development community was wrong.Dr. John W 2nd-page-0

 

 

 

  • And the Standard@Reno luxury student-or-maybe-not student housing project northeast of downtown?  “Delayed”.  So we have 61 low income families relocated so that the site can look even worst than it did for the foreseeable future?
  • Real Estate 101 – it ain’t over even after the fat lady sings.  You NEVER announce or even discuss pending deals until the are closed and recorded.  Yet we have had W 2nd Street going for TIF financing (to the horror of the council) before there was a real project, and trying to validate their project by making it public.  The Standard is wavering – either they didn’t do their homework on the 1000’s of student housing units ahead of them in line, there wasn’t enough slop offered up in the development concessions trough, or maybe just a “standard” development hiccup.  Park Lane Mall – Chip assured the readers of Reno Magazine (the cover boy, pictured in front of a Bentley) it will close this month.  You talk about closing after the close.  You cannot will a project into existence.

Retail Roundup

lithia PlumbOne of my MURPs looks like it is getting redeveloped.  Lithia Motors has filed an application with Planning to occupy the entire 110,000 SF “abandoned” Sak and Save shopping center at Plumb and Kietzke.  Glad to see the change happening, though auto retail is probably not my first choice of land use at that intersection.  Just the plans HERE or the complete 128 page application HERE.

While Dick’s Sporting Goods is about to open their doors at Meadowood Mall, Sears is preparing to drastically reduce their presence.  Auto center gone.  37,000 SF of the first floor gone.  Tough to tell if half, none, or all of the 2nd floor is being given up.  These parking lot shots tell the story:

Sears Meadowood photo-page-2

 

Sparks Has Smaller Cars Than Reno

Parking LotA standard 90 degree parking space in Reno is 9′ wide by 19′ deep.  In Sparks, it is 8′ wide by 16′ deep.  Go out and measure your car, then tell me who has it right.  Both require a 24′ aisle.  Who is doing a reality check and supporting redevelopment?

  • There are 20,000 units of housing either approved or moving up the chain in Cold Springs, and this is the work force stuff at best case  that will be built first as our region expands.  Cold Springs is going to bear the brunt of at least 50% of our regional housing growth over the next decade.  395 is already a nightmare especially at the bowl, but developer traffic studies only include their impacts up to the on ramps.  I’m sure RTC and NDOT are all over this trend and are planning accordingly.  Or not.
  • What’s wrong with this picture? new-virginian1

 

  • I’m thinking this PERMIT may be a typo on the APN? If not, WOW!
  • 1250 Sullivan Lane, Sparks.  32 1 bedroom workforce housing units going vertical, again in Sparks not Reno.  This single project tops all the units added in Downtown/Midtown Reno over the past year.  Or 2.IMG_2015

What I’m Looking For

LookingLots of movement downtown, but not a lot of action.  Here is what I track almost daily:

  • The Standard Student Housing – I reviewed a 50% construction document set 2.5 months ago.  No permits for new construction have been filed, no demo permits for the now vacant and boarded up existing structures have been filed.  It is starting to feel like this one is going South.  If there is a land sale, it will kill the assumptions of below.
  • W 2nd Street District – The permit for 235 Ralston has been ready to pick up for over 3 months.  A $435,000 deed of trust was recorded, but I think it was only to pay off the deluded consultants on the project, certainly not construction financing.  Everybody HATES how this proposal was presented (Council to the developer community). I like the idea, and give it a .0% chance of happening.
  • Park Lane Mall – WTF? – Smart developers NEVER talk about projects in process until they close.  I think the public stance is only a negotiating ploy.  Show me a closed deal.