By Jon Peterson
San Francisco-based Prologis has put up for sale the Tahoe-Reno 3 & 4 industrial assets in Reno that total 1.1 million square feet of product. The potential pricing guidance on this sale was not known at this time.
The seller did confirm that the properties were on the market, but declined to comment otherwise. The listing agent on the sale is CBRE. Two people working on the transaction are Brett Hartzell, executive vice president in the firm’s Seattle office, and Rebecca Perlmutter, senior vice president in San Francisco. CBRE declined to comment when contacted for this story.
The two buildings up for sale are located at 555 Milan Drive and 385 Milan Drive in McCarran, Nevada, an eastern suburb of Reno. Tahoe-Reno 3 at 555 Milan is a 566,874 square foot property that is 100 percent leased to Home Depot. It has a lease that runs through February of 2022. This property was developed in 2008.
Tahoe-Reno 4 at 385 Milan has 566,866 square feet and has all of the space leased to Chewy, Inc. This tenant has a lease that doesn’t expire until the end of March 2024. This building is considered to be a 2015 vintage asset. The two leases have rental rates that are roughly seven percent below market rates, according to industry estimates.
The two properties are located within the 107,000-acre Tahoe-Reno Industrial Center, which qualifies as an opportunity zone and provides foreign trade zone status. Corporate tenants in this locale include Tesla, Google, Walmart, Blockchains, Switch and PPG.
Reno has been an industrial market that has seen vacancy improve significantly over the past five years. Vacancy has dropped from 7.3 percent in 2014 to 4.5 percent at the end of 2019, according to sources that track this kind of information.
Prologis is being cautious on its future plans for buying and selling properties. The public REIT stated in a conference call earlier this month that new acquisitions and dispositions are assessed case by case, but it will have a bias toward patience at the moment.