Juy 25, 2019, Rob Sabo, Northern Nevada Business - Lewis Apartment Communities remains bullish on multifamily development in South Reno, just as institutional investors remain bullish on multifamily investment properties throughout the region.
Lewis recently broke ground on its Esprit townhome development at the corners of Veterans Parkway and Geiger Grade. The community follows the company’s flagship Harvest at Damonte Ranch development on Steamboat Parkway and its smaller Latitude 39 boutique apartment community on Double R Boulevard.
Gigi Chisel, Vice President of Lewis Management Corp., says Esprit features 126 three-story luxury townhomes and expects first occupancy roughly this time next year.
Esprit also expands Lewis’ multifamily lineup in South Reno with a long-term option that’s suited to a variety of renters.
“We have been refining our permanent floor plans for some time,” Chisel says. “We really think about the spaces and the people that live in those space and try to provide options for as many people as possible.”
“What we are seeing nationwide and in Northern Nevada is that people are choosing renting versus owning for many different reasons, including flexibility and mobility,” she adds. “People expect to be transferring in and out of jobs or want to retire soon and go on the road — there all sorts of reasons why people choose a luxury townhome over home ownership.”
‘Damonte Ranch is in our DNA’
While Lewis Apartment Communities has multifamily developments across Northern and Southern California, the Damonte Ranch and South Meadows areas continue to be its focus in Northern Nevada. Lewis was one of the original single-family home developers in the Damonte Ranch area, Chisel says.
“Damonte Ranch is in our DNA,” she says. “We have been working there literally for 30 years to carefully and respectfully develop a quality community. It’s really our legacy here in Northern Nevada.”
South Reno remains a popular area for new development, she adds. Along with Spanish Springs, southeast Reno has the excellent potential for additional growth due to available land. Lewis still has land in its development portfolio and will consider additional options for high-quality residential properties to add to its portfolio, Chisel says.
“We are not institutional investors,” she says. “We are not constrained because we own and manage and keep the majority of our assets. We make choices that are counter-intuitive to what other developers might do because we are willing to trade a lower financial return for a good long-term investment.”
Institutional investors, meanwhile, continue to scour the regional market for strong multifamily investment properties to purchase.
Investment focus fully on Truckee Meadows
Aiman Noursoultanova, senior vice president of investment properties with CBRE, says robust interest from the investment community has changed the local playing field.
Investment groups that formerly glossed over Reno because of their inability to assemble a large portfolio of Northern Nevada properties now focus much of their attention on the Truckee Meadows. The region’s strong job growth, which subsequently drives rent growth, is fueling much of the investment interest in the Truckee Meadows, Noursoultanova notes.
“They all are looking for deals in our market,” she says. “Professional investors, that’s what they track. They are looking for the next market that offers sustainable and strong growth. You are starting to see some cooldown in certain markets, and returns aren’t as strong. If you are in the business of investing, you have to supplement those lower returns with something stronger, and that’s what our market offers.”
Additionally, Noursoultanova adds, Reno offers investors lower operating costs and fewer regulatory hassles than comparable markets, which can shore up certainty in returns. It’s these same factors that have led to dozens of new companies planting their flags in the Truckee Meadows in recent years.
“It’s easier to operate, and it’s easier to predict and control operating expenses while rents continue to grow,” she says.
Still, Reno remains a small market
Rent growth also escalates prices for investment properties. Noursoultanova says there have been many new names in the multifamily investment arena, and those groups have been buying up larger properties to assemble a bigger portfolio and create operational efficiencies across their holdings.
Other investors, meanwhile, are snapping up smaller investment properties in Northern Nevada to defer income from taxation.
Investors seeking deals under $5 million and over $30 have more capital at the ready than there are available properties — but that’s the nature of the Reno market, Noursoultanova says.
“We are a small market,” she says. “Once investment groups discover us they want to invest more and more, but we just don’t have that velocity of deals (to offer). That is the only limiting factor for us.”
Notable recent multifamily sales include 1100 15th St. in Sparks, a 230-unit property that sold for $$25.2 million, or roughly $109,565 per unit; and Skyline Canyon at 3300 Skyline Blvd., a 204-unit property that sold for $37.5 million, or approximately $184,000 per unit. Both properties were built in the 1970s and were purchased by Elan Management of San Jose.