By james art Things are a little slow in the development and real estate industries right now, Parr Tolles, CEO of Reno-based Tolles Development, told Nevada Newsmakers recently.
Conventional wisdom would say that this has to do with anxious anticipation of the upcoming election.
“Everybody’s saying that,” Tolles told host Sam Schad.
However, other factors are more important.
“I think it’s the interest rates,” Tolles said.
The Federal Reserve cut its key federal funds rate in September, lowering it to a range of 4.75 percent to 5 percent from 5.25 percent to 5.5 percent, according to business news websites.
It was its first rate cut since 2020 amid the COVID-19 pandemic. Multiple published reports also mention the possibility of two more layoffs before the end of the year.
“You just had a downgrade, and so a lot of businesses are waiting, (saying) ‘When are we going to get debt that will allow us to grow?’ “And we know there are two more rate (cuts) coming,” Toles said. “At least that’s the forecast at the moment. So I think it’s more of an ‘economic wait’ than anything.”
Tolles questioned the historical implications of the election and real estate.
“Everybody always attributes it (slowdown) to the election, but from a real estate perspective, if you look at the last 20 years, there hasn’t been a significant change in real estate because of an election year.”
Still, some businesses can be significantly affected by elections, he added.
“For some companies, if there is legislation, perhaps on environmental issues, and if companies think that if one side is chosen it will promote their sector, then maybe they will wait.
“So maybe for some companies there is a (selective factor), but I think it’s more economic reasons,” Tolles said.
Business isn’t slow for Tolles, though. He talked about four Tolles Development projects — three in Reno and one in Southern Nevada — that have reached milestones. Logistics and location will be an advantage for all. Consider:
HYATT SOUTH RENO: The 132-room Hyatt Place South Reno opened earlier this month near Summit Mall on Mt. Rose. Its location will appeal to both leisure and business travellers.
“It’s the southernmost hotel in Reno, so close to Carson City, and it’s the closest hotel to Lake Tahoe,” Tolles said. “So from a business travel perspective, it’s going to be a great hotel because you have all the amenities of the Summit Mall, restaurants, the Apple Store, etc., and then it’s going to be a refugee hotel, I think, for Lake Tahoe. you know, lake tahoe has gotten so expensive.
“It’s really hard for the middle class to enjoy it. So we’ll be 25 minutes from Incline (village), if that.”
The recent opening caps the Hyatt project’s four-year journey from start to finish, Toles said.
“For those of you who aren’t familiar, we started the hotel before COVID, and a week after we broke ground, I was very nervous,” Toles said. “I had GFC (Global Financial Crisis Disorder), possibly PTSD (Post Traumatic Stress Disorder). There are a lot of acronyms, but we’ve covered it. So we waited until the COVID was over and then started back.”
AIRWAYS TRADE CENTER: The 900,000-square-foot Tolles Employment Center with office space, warehouse distribution, light manufacturing and showrooms is leased.
“I would call it the best-located industrial park in the city,” Tolles said.
The Airways Mall is located in the former Home Gardens area south of the airport, according to the Reno Gazette Journal. Tolles will lease the land from the Reno-Tahoe Airport Authority.
“We’ve been working very well with the airport and we just finished it,” Tolles said. “And it is in the leasing stage. So the rental is a bit slow. It’s slow across the country. We have about 20 percent of it leased so far and we have good tenants.
“It’s well positioned, it’s attractive, it’s great for overnight logistics,” he said. “And you can’t build anything else there because of its proximity to the track. We had population limits and height limits. It all goes hand in hand with the development of the airport and we felt the time was right to partner with the airport to build it.”
UNIVERSITY BREAK: Tolles said his company recently completed an 8,000-square-foot building in downtown Reno next to The Row, which is six contiguous downtown Reno city blocks uniting Eldorado Resort Casino, Circus Circus Reno and Silver Legacy Resort Casino. It was quickly leased to four restaurants to serve the growing student market as the University of Nevada continued to expand in the downtown corridor.
“We’ll be able to serve the university, more fast food, Jimmy John’s, Teriyaki Madness, etc.” But it showed me that there is a demand for the center. And as the university continues to creep over (Interstate) 80, I think it’s worth continuing to push for downtown redevelopment.”
JEAN WAREHOUSE, DISTRIBUTION CENTER: Perhaps Tolles’ biggest project is the construction of a 1.9 million-square-foot warehouse and distribution center near the small southern Nevada border town of Jean. Construction of the first building there will begin in November.
“We think we have a tiger by the tail,” Toles said during an interview with 2023 Nevada Newsmakers.
The land is 34 miles from the Las Vegas Strip and 13 miles from the California border. It has established infrastructure from the old Gold Strike Hotel-Casino and the potential to become an ideal location for the delivery, receipt, production and storage of products and cargo of all kinds. A railroad and an interstate pass by it, and Jean has a small airport.
“We’re going to be — hands down — the southernmost industrial submarket in Las Vegas,” he said. “And I repeat: This allows a truck to come in from the Port of Long Beach to Gene and make a detour, turn around and come back the same day. So (it will help reduce) all the truck traffic congestion that goes down -15 to The Strip, on the way to North Las Vegas.”
Tolles was referring to the rule for truck drivers to drive a maximum of 11 hours in a 24-hour period, followed by 10 hours of rest. By leaving the load at Jean, truckers can turn around and head back home instead of putting up with a mandatory night’s rest in the Las Vegas area before the return is allowed.
“Our pitch was if we could build a significant submarket that could attract rail and Union Pacific was excited about our project. Rail transport runs right through the middle of it. And if we can get the ground traffic, the truck traffic to get to Gene and not have to travel all the way to North Las Vegas, then from an environmental standpoint, from a congestion standpoint, we’re going to serve the market well.”
Tolles sees Jean’s property as a way to help diversify Las Vegas’ economy, which is now heavily dependent on tourism and gaming.
“We want to continue to diversify Las Vegas,” he said. “You can see the production numbers and the skilled production is increasing in Vegas. I think 25 percent is still games, but there are many more. And I’m very excited about the diversification of Las Vegas. And I think we can really facilitate that, from the end of Las Vegas all the way to the state line.”