440 1/2 E 7th Street

I applaud some very creative thinking on this project (I ran it up the flagpole when the property/lot was for sale).  440.5 E 7th Street is a new infill duplex on a very difficult 28×50′ lot.

Zoning is DRRC Downtown Reno Regional Center  where single family detached residences are prohibited – 440.5 was considered a non-conforming preexisting condition.  Reno Zoning Code would not allow the wonderful existing SFR to be demolished and replaced with a new SFR. (440 E. 7th in front of this is also a non-conforming SFR that burned – they were allowed to rebuild due to a code technicality.  440.5 probably should have called in Tony the Torch!).  The owner went through permit hell, and is now approaching completion.  The Plan Check Comments from Building without guidance on how to correct issues resulted all overhangs being deleted – unintended consequences as usual.

I would have skinned this differently with a studio/1bedroom on the 1st Floor and functional 2/3 bedroom unit in the 2nd Floor, but that is without knowing the owner’s pro forma.

In any case, props to the developer for creative thinking and navigating the Permit and Planning mazes.  I hope the project makes them some money for their efforts.

 

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The Pan-Galactic 3-Day Pass

This snippet from Vonnegut has been on my mind the last couple months.

I think small commercial renters are about to get their own Pan-Galactic 3 Day Passes.  Who would blame you for walking out of your new lease, and what sort of landlord would risk the bad publicity to sue you right now?  I see new retail projects like The Village at Rancharrah (SUP, Coffebar, Centro, Dorinda’s, Base Camp Pizza all show as “Leased” but have not submiited construction permits), Park Lane Retail (no tenants announced), 5th/Keystone (Starbucks, Cracker Barrel, and rumored Panera), and Reno Public Market aka Shopper’s Sqaure with no real tenants announced that will be impacted by tenant defections.  I expect 30-50% of shuttered Midtown retail to never open up again.  Bleak future for retail.

In my market sector which is primarily Urban Infill, I still have new projects coming in the door but they don’t make up for the projects that are going on hold or only progressing to a logical stopping point.

Stuff is still being listed on the MLS and LoopNet.  Well priced and well located properties are going into Contract rapidly, while crap listings linger.  I’ve seen a few “get out of Dodge” listings, but no spate of panic listings.

So what are you real estate professionals and dabblers seeing in real life?  Is this a good time to list properties?  Are home inspections “critical jobs”?  Are realtors critical or just one step closer to being technologied out?  I’m looking for voices from the field!

Farewell, Lakeridge Tennis Club

It is no secret that the Lakeridge Tennis Club has been in play for a couple years and that Chip Bowlby’s Reno Land has it tied up.  It is now proposed to be scraped in favor of a 340 unit active adult community (amenities do no include a tennis court!).  SPR FILING – on Record Info, open Attachments for the full filing.

At $44,000 per key (assuming the asking price) with asbestos laden presumably  demo ahead, this is really expensive dirt for that use.

Reno Land’s jenius is spinning their properties to gullible Funds and developers (Park Lane, Rancharrah, Meridian 120 S, where is 150 N Arlington?).  Drive the residential portion of Rancharrah next weekend  and bring along a barf bag or alternately a “chuck buc”.  $1M+ for these stucco shit boxes?  You will find very well paid shills walking their (rented?) horses around the development during showing hours!

Recovery

Well the my business world ended a little more suddenly than I expected.  Over a 2 day period I went from being fully booked into Spring 2021 to turning tricks on 4th Street for toilet paper.  Some thoughts:

– Owner optimism for a speedy recovery is directly proportional to their leveraged LTV.  Unicorns and rainbows in 2 months from those at risk due to high LTV.  Low LRV and cash owners are settling in for at least 18 months.

–  100+ New Home Permits Applied For This Week – Production builders submit “Master” permits with variants for permit review and approval and pay the review fees.  Once the Masters are approved, review fees for the actual units are a couple hundred bucks each – the real fees are when the permits are actually picked up.  So submitting is just keeping your team active and does not necessarily indicate new construction.

– Anyone building or leasing Bar/Retail/Restaurant right now is running scared – the market died and the prospective tenants have no financing to move forward.  Where are the Tenant Improvement permits for Rancharrah Retail?

– Park Lane – 700 or so $2400+ units about to come online this year.  I’m sure pre-leasing is going well.  So Park Lane will have to drop pricing, and competing properties will RAISE pricing to meet Park Lane.  Don’t be surprised if our rent crisis doesn’t actually accelerate as prospective SFR buyers waver and rent instead.

– Midtown Commercial – It was dying before Covid 19, and I can’t imagine it will thrive after it.  Not at the current rents.

Not meaning to spread my negativity, just wanting to get a discussion started and hear from you on the front lines.

 

Covid 19 and Reno Construction

I sent out 1 March billings covering February 2020 today.  It was a very good month.   I expect 1 April billings will be down 10% or so, and then 1 May billings to crater 50% or more as clients react and assess their projects.

Lending rates are at an all time low, and residential refi applications are soaring.  My Prime -1% HELOC is going to get $200/month cheaper and keep the dogs in kibble.  On the commercial end of things, rates may be lower but standards are higher – 70% LTV may be a thing of the past as “value” is re-calibrated.

I think the dream projects in the Casino core will be grinding to a halt if they were ever more than dreams in the 1st place.  CAI Investments at Harrahs,  Jacobs at 4th and Keystone, Compass Point at 5th and Center.  661 Center?  Woolworth’s at 101 NVA is already cancelled (WeWork).  T3 has no momentum with nothing happening around it.

I could never figure how you could buy $90/SF land in Downtown and create a viable project, and we have some $200/SF land purchases.  In  my opinion, the Casino Core is a “run away” sector.  I suspect the developers will soon agree.

The Lazy 8 Redux

Feel the need to build an “approved” 18,000 SF casino with an unlimited gaming license?  The Lazy 8 project is back!

The back story is ugly and even reached the Nevada Supreme Court for a ruling.  Just Google “Lazy 8 Casino Sparks” for background on the Ascuagas’ hissy fits when they still owned the Nugget and Harvey Whittemore’s rebuttals before he went to prison.

A unrestricted gaming license in Washoe requires 200 hotel rooms.   Will that fly in the North Valleys and at this project site?  Not.

 

 

Ballardini Ranch Annexation

Ballardini Ranch is back in play.  The 1019 acre property has been a hot topic for more than 20 years.  HERE is history that was lost when the RGJ accidentally deleted their archives a couple years ago (and still want $73/month!).  Glad someone thought to save the source document.

Washoe tried to take the property through Eminent Domain for open space, lost, and had to pay out $13,000,000 in damages.  They did get an easement for the popular trail head in return.

The last time Ballardini applied for annexation to Reno, it was a project of Regional Significance proposing upwards of 1850 new dwelling units.  The ranch is on the McCarran Loop, has a 2 minute fire response, and had all other utilities and public service easily obtainable.  We would all lose “our” views and open space (a “give”) but would have realized a “take” of dense housing in an appropriate infill location.

This newest annexation request is only for annexation and it APPEARS Reno is going to rubber stamp it (Record Information/Processing status on the drop down menu).  The final end game seems to be 203 5 acre ranchettes.  Are you frigging kidding me?  After more than 20 years of struggle, million dollar ranchettes because they require the lowest infrastructure investment by the developer?   This would be all “take”.  Where is the “give” to the community on a low density development that will destroy the existing views sheds and open space and yield hobby vineyards?  Is this what ReImagine Reno imagined?

I would love nothing more than to see Ballardini Ranch remain open space, but that’s not in the cards.  But give me a “give”.

Town House Motor Lodge

The Town House Motor Lodge at 303 W 2nd Street sold at a foreclosure sale this morning for $1,725,546.00.  In the fastest rush to Washoe I have ever witnessed, the transaction has already recorded.

 

This was pretty much the last vestige of the W 2nd Street District that Don Clark controlled.  He lost his own building on Bell street a couple months ago.  Secundo Vita bought the Town House for $4.4M on 9.15.2015.  There was a new $1.1M 1st loan, and the seller (Joey Laub) took back a 2nd for $3.3M which is an unusually risky loan.  They defaulted on 11.23.2016 as the project collapsed.  The original 1st Note holder sold it to Reno Property Manager LLC who low and behold turns out to be Jacobs Entertainment of Neon Line fame.

So Jacobs scored 79 hobotel unit for $21,000/key.  The current market is around $60K/key and several are asking $100/key right now.  This also works out to $35/SF land value, where Jacobs has routinely been paying $100+ to complete their assemblage.  And poor Joey ate dirt.

Cirque du Jacobs

Jacobs has submitted a Development Agreement / Special Use Permit application for their (temporary) events facility on W 4th Street.  It is an embarrassing piece of crap.

The full application is available HERE.

I get that this is meant to be a temporary fix until Jacobs finds a developer who has the deep pockets and “vision” to build $2400/month 1 bedrooms high-rise rentals on the site.  I believe Park Lane is going to crash and burn on the same pro forma, and their basis is much lower and their location is far superior.

– The 60’x120′ tent is heinously ugly, unfit for filming My Big Fat Greek Wedding III and certainly unfit for one of Reno’s arterial streets.

-1 single dumpster for a 2000 person events center?

– Porta Potties on W 4th Street?

-Fence heights?

The one saving grace is this is the first time we have had a look at the Neon in the Neon District, and what they have in inventory to install.  It appears that they actually plan to use neon and not fake the look with LEDs – DO NOT let this distinction be changed moving forward!

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MultiFamily Monday

Jessie Greer is a commercial broker at Avison Young that gets it – he is asking all the right questions of the right people and posting videos on his MultiFamily Monday series.  The current series about how to (try) to cure discrepancies between what the Assessor shows as unit count, what Reno Building/Planning show in their data bank, and what Business Licensing shows is an absolute must watch.