May 1, 2017 By Las Vegas Business Pressfrom the
ULI Nevada Member George Garcia weighs in on Mixed-Use Development in Nevada
The 45-acre site of the former Park Lane Mall in Reno—about seven times the size of Reno’s Greater Nevada Field ballpark—has sat vacant for ten years but now is about to get made over into a development encompassing residential, retail and commercial components. As of mid-April, ground was slated to break soon on the infrastructure, then the 1,260 apartments to be followed early next year with work on the other elements, said Chip Bowlby, managing partner and CEO of Reno Land Inc., the property owner and developer. Along with the movie theater already on site, amenities would include a park, dog runs and spas, a grocery store, fitness centers, coffee shop and a dry cleaner.
“To be able to have a canvas that size with nothing on it and be able to create the perfect community, it’s probably the only place in Reno that you can do that,” Bowlby said. “It’s very exciting.”
What They Are
Park Lane fits the traditional definition of mixed-use by the Urban Land Institute, a non-profit land research and education organization, in that it will contain three or more significant revenue-producing uses, integrate its components functionally and physically and conform to a coherent development plan.
The most classic mixed-use configuration combines commercial, retail and residential, said Blake Smith, owner of S3 Development Co. in Reno.
However, the term mixed-use has evolved over the years and, to non-purists, become perhaps less strict and more encompassing. For instance, projects today with only two uses often are deemed to fit the category.
Also, mixed-use projects can be integrated in one building, which are referred to as vertical, and are common in urban settings and more complex to design, said George Garcia, president of G.C. Garcia Inc., a Henderson-based land planning and development services firm. One example is The Virginian in downtown Reno, a former 16-story hotel-casino that was converted into a residential, retail and office property.
They can also be spread out in multiple buildings on one parcel but connected in an integrated way. These are called horizontal and most often are found in suburban areas. Downtown Summerlin, for instance, cohesively contains all of the elements of mixed-use but spans a large area.
Today, a spattering of mixed-use projects—some capturing two uses and others with three—are underway in Nevada.
This is a major change from the period during the recession and subsequent years when developers avoided mixed-use undertakings, which before the economic crash had been a hot pursuit. In solid economic times, Garcia said, mixed-use projects tend to be more expensive. Such projects weren’t feasible financially during years of a depressed economy, said John Stater, research and GIS manager at Colliers International in Las Vegas.
“As the market is coming back, there is a renewed interest in either continuing with [previously tabled] projects to try to finish some or starting new with mixed-use yet again,” Garcia added.
Mixed-use development in the North seems to be gaining momentum, albeit slowly.
“There is a moderate amount of projects, and there is talk of some,” said Kelly Bland, senior vice president of NAI Alliance’s Retail Properties Group in Reno.
Here’s a look at some in progress:
Fountainhouse in Sparks, by Reno-based Silverwing Development, is underway. Located near Victorian Square, popular for numerous annual community events, and a movie theater, the development will contain apartments, which already are being leased, along with 8,500 square feet of retail planned for the second phase. A third phase could bring 200 to 300 additional residences. Planned amenities include a clubhouse with a business center and coffee bar, gym and swimming pool.
1401 Midtown is a revamping of the 9,000 square foot, former Heritage Bank building and more than doubling in size in Reno’s burgeoning Midtown region, Smith said. The building, designed for retail, office and restaurant occupants, is already 92 percent leased. Tenants include Bristlecone Holdings, a fintech firm, and Morgan’s Lobster Shack. Behind this structure, Tonopah Lofts, eight 1,700-square-foot townhomes, will be constructed next to create a live-work community.
Rancharrah, the 141-acre historical mansion property of Bill Harrah of Harrah’s hotel-casinos, is undergoing a transformation by Reno Land Inc. and ground has broken, Bowlby said. Rancharrah will encompass 690 residential units in eight villages, a 30,000-square-foot clubhouse/events center, 30,000 square feet of commercial and retail, a 52,000-square-foot equestrian facility and a 1.5-mile trail system.
308 N. Curry Street in Carson City, the site of the former Citibank building, is under construction. The plan there is to combine at least retail and restaurants, office space and apartments in one building.
“The mixed-use developments where you mix residential, retail and commercial have not been seen for quite some time in Northern Nevada,” Bowlby said. “I think there are more that are coming, but they’re very few and far between.”
Changes in real estate market fundamentals in Northern Nevada are opening the door for mixed-use projects to be developed. They include escalating land prices, commercial and residential rental rates, and housing prices, Smith said. Additionally, demand for additional multi-family housing is increasing, brought on by continuing job creation and the resulting influx of people to the region, Bland said.
Because demand for office space is low, he added, most of the current mixed-use projects incorporate retail instead.
The number of millennials coming into the market, who are said to seek places to live where they can play and work nearby, is also a driving factor behind mixed-use projects, Bowlby said.
Further, cities are pushing for higher density development in certain areas, Bland said. Reno and Sparks, for instance, want such development in regions identified as transit-oriented development corridors.
“I’m very bullish on Northern Nevada,” Smith said. “I think it will continue to grow and expand. I think [mixed-use] is a logical product to be built up here.”
The Las Vegas Valley also has some mixed-use projects under development.
“I think there’s that budding, nascent reviving of interest in these kinds of mixed-use places,” Garcia said. “We see that there is that interest occurring.”
Here are some projects underway:
Fremont 9, at 901 Fremont St. in Las Vegas, is under construction. It’s a 231-unit, mixed-use, multi-family residential project of The Wolff Co. and 901 Fremont LLC, an affiliate of the Downtown Project, Stater said. The five-story building will feature 15,000 square feet of retail on the first floor, along with a resident lounge and resort-style pool. It’s slated to open this fall.
Vegas Trade Village should have construction start in the next few months. It’s a $100 million, nine-phase, horizontal mixed-use development planned for North Las Vegas, said Garcia, whose firm is involved with the project. Developer James Liu’s vision is a hotel and some type of residences along with office, retail and light industrial spaces.
Union Village in Henderson is one ongoing mixed-use project, this one with a medical focus and of the horizontal type. The goal is an integrated health village where traditional providers, including inpatient and outpatient care, physicians, skilled nursing, home health, senior living and wellness all exist on one campus to provide a continuum of care. Completed so far are Henderson Hospital and one medical office building, Stater said. Additional elements would include shopping, entertainment and residences for senior living.
The Gramercy is recently finished and now in the leasing phase. This Las Vegas live/work/play project by The Krausz Companies Inc., headquartered in San Francisco, combines high-rise residences, urban-style apartments and lofts, and 200,000-square-feet of office and retail space, all in one place. On-site amenities include a gym, dog park, outdoor theater, heated pool and courtyard spaces.
“It does seem like we’re seeing more mixed-use popping up in the last three or four years than we did prior to the recession. I don’t know if it’s a trend per se,” Stater said, referring to Southern Nevada.
As property values and home building continue to increase and the market keeps strengthening, those factors will support mixed-use projects, Garcia said.
Additionally, the City of Las Vegas, for one, aims to get more mixed-use projects built around ten identified transportation corridors in downtown, a goal that’s outlined in the Vision 2045 Downtown Las Vegas Masterplan. It calls for providing more than 2,500 affordable housing units close to public transportation, significantly increasing learning and cultural facilities and retail and service amenities.
The Pros and Cons
Mixed-use properties offer people the ability to have all aspects of their lives—home, work, play and everyday needs—and numerous amenities all in a close environment, Garcia said, and they create a sense of community.
“They’re exciting,” he added “They’re very hip, cool places oftentimes.”
Mixed-use offers retailers a built-in clientele that’s always there. For developers, the blend of residential and retail/commercial is critical as they feed off of one another and ultimately drive a development’s success, Bowlby said. When a project is designed well and the market supports it, developers are rewarded, Garcia added.
However, projects of this type are more challenging than single use ones, particularly in terms of design. They must be well thought out and analyzed to ensure success. Insufficient parking, for example, could ruin a project.
Greater complexity, Garcia said, generally means they take more time, cost more money and are riskier.
“You’re all in when you break ground on a mixed-use,” Smith concluded.
Down the Line
Nevada can expect to see more experimentation and creativity with mixed-use projects as developers work to determine the best fit for changes in demographics and the ways people shop and work in office spaces, Garcia said.
The projects underway today will serve as litmus tests for the industry in the Silver State. If they’re successful, then more will likely be proposed and ultimately developed.
“Mixed-use, at least at this point, is not yet back to being a strong piece of the development economy, but my sense from what we see is there’s more interest and more exploration into those kind of projects,” Garcia said, referring to Southern Nevada.
As for Northern Nevada, mixed-use remains a relatively new concept. Other than a wave of hotel-casino conversions pre-recession, the region hasn’t seen much of it. Many eyes are on the current projects.
“It needs to be proven out a little bit that [mixed-use projects] will be successful,” Bland said.