"In the booming years, we moved forward so quickly. We have now been knocked back," said Sparks Senior City Planner, Tim Thompson. "The area became so over-saturated with commercial businesses."
These commercial business real estate venues are separated into three groups: retail, office and industrial. While area office and industrial leases have remained dormant, the retail sector is slowly rising.
"The retail vacancy rate in our area is currently about 16 percent," said Ben Gregg, a commercial real estate appraiser. "A year ago, the retail vacancy rate was about 18 percent."
Judging by the retail vacancy rate (the empty storefronts), the economy is better than it was a year ago but still has a long way to go before it’s anywhere near as good as it was six or seven years ago.
Furthermore, commercial real estate falls into three categories: Classes A, B and C. Class A buildings are made with the best construction. These businesses are in ideal locations and are well managed, bringing in a good profit, which benefits the constant maintenance of the building. These buildings demand the highest amount of rent. Class B's buildings are older but have good management and tenants. Some improvements must be made on these class B buildings but they are not considered decrepit. Class C is the lowest ranking, with many of these buildings being 20 years and older. They are needing an abundance of repairs. This makes class C buildings the least desirable, causing them to have extremely low rental rates in order to bring business in.
"With our area still recovering, there are still some good deals to be had in both class A and class B spaces," said Justin Noin, a property assets manager at McKenzie Properties. "Until those are absorbed, the class C spaces will remain vacant."
In 2009, Legends at the Sparks Marina opened. The City of Sparks offered STAR (Sales Tax Anticipation Revenue) bonds to the companies that would occupy the store in the shopping mall; hoping to make the then-newly mall a booming tourist destination in the Reno/Sparks area. These STAR bonds allows these companies to keep up to 75 percent of their sales tax.
When the economy began to sink, Legends had commercial spaces open and invited non-designer merchants to fill their spaces, like Old Navy and Lowe's Home Improvement Store. Lowe's jumped at the chance to move, especially because the company was able to keep the majority of its sales tax revenue. The original Lowe's on Oddie Boulevard then moved to its Legend's location, as well as many other Sparks and Spanish Springs stores, leaving indefectible buildings behind.
"There are buildings out there that are obsolete and aren't needed," said Thompson. "Redevelopment is more feasible that leasing."
Thompson described the former Lowe's Home Improvement Store on Oddie Boulevard. The City of Sparks is in the process of figuring out what to do with the empty building and how to use its vast parking lot. Many buildings in Sparks suffer from the former the "Lowe's-like" flight, leaving an abundance of open space.
"These buildings were made for a specific purpose," Thompson. "We're trying to figure out how can we use these buildings for other projects, not just for its originally intended use."
As the economy slowly picks up, Thompson believes with time, the empty store fronts and strip malls will fill up.
"Sparks does have the opportunity to bounce back," said Thompson. "As people spend more money, the retail sector will pick up. For current business owners or future entrepreneurs, you have to know what Sparks wants. You have to find that niche in order to succeed."
"We are definitely seeing an increase in phone calls and interest over the last few months," said Noin. "We have seen both new and existing businesses looking to lease and we have seen a decrease in vacancy across all of our retail centers."
Such businesses like FiveGuys Burgers and H&M will enter the local market within the next couple months, bringing new business and exciting change to the area. However, some, Gregg said, are still skeptical about when the Truckee Meadows will finally land on its feet.
"Most of the brokers I’ve talked to say they optimistically expect things to be closer to stabilized in two to three years," said Gregg. "But based on the improvements we’ve seen in commercial vacancies over the past year, that could be closer to four to five years."