Reno is rising to the top ofinvestment lists for 2020. The market is a cheaper alternative inNevada for investment, and it is showing significant growthpotential. The Lear Industrial Center in Reno recently traded handsfor $117 million, illustrating the activity and growth in themarket. Clarion Partners purchased of theproperty, a 1.4 million-square-foot four-building class-A businesspark, from Panattoni Development Co.

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"This deal shows the continuing trend of compression in caprates and increase in dollars per square foot," MarkDetmer, senior managing director at JLL,tells GlobeSt.com. "Also the buyer of Lear is looking to add valueby further demising the vacant unit and pushing rents 23% in thenear term." Detmer represented the seller in the deal along withJLL's Bo Mills.

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The market is showing tremendous growth and has become a popularinvestment market as of late. "The market is robust from astabilized or ground up basis," Detmer says. "On the former, we areseeing rents year-over-year increase by 7-10% depending upon theclass and size so there is a value add component.  On thelatter the spread between initial yield and exit is 100-150 basispoints. Nevada is also an attractive alternative to less stableregulatory environments for investors chasing yield."

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Clarion Partners, the buyer in this deal, is one of the mostactive players in the market, along with major investors, likeBlackstone, Prologis, AEW CalSTRS and BlackCreek. "Starwood hashigh level of interest and has been the bridesmaid on two largeportfolio sales," adds Detmer.

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Nevada in general is getting a lot of attention. Las Vegas isone of the fastest growing markets in the country, and isattracting California residents looking for more affordable living."Reno is a cheaper alternative in Nevada from a rent and investmentstandpoint," says Detmer. "Also, LV occupiers are more SoCalcentric whereas Reno has a more diverse distribution model withaccess to 11 Western States in one to two days. Reno is a more puredistribution and manufacturing market and LV has a conventioncenter component."

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While there is a lot to be excited about in Reno, findingopportunities might be a challenge. Already, the market is seeing ashortage of deals. "I believe we will continue to see continuedinterest in assets in Reno, assuming they can find something to buywhich is becoming problematic," says Detmer. "Owners who haveacquired industrial property in Reno are currently not interestedin selling."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.