We had a fun filled first ever Oktoberfest Virtual Trivia Tournament in September.  Thank you again to our sponsors GCW, Inc, The Korte Company, NDL Group, RCG Economics, Stork Technology Solutions and Sun Commercial Real Estate & Property Management.

Congratulations to our winners:

1st: Matthew Weinberger, Martin-Harris Construction
2nd: Nate Cartwright, Helix Electric
3rd: Sallie Doebler, Vegas Chamber

1st Place – Team #2
Jim Altobell, NOVA Geotechnical & Inspection Services
Nate Cartwright, Helix Electric
Sallie Doebler, Vegas Chamber
Mike Shohet, Compass Development
Matthew Weinberger, Martin-Harris Construction

2nd Place – Team #4
Samantha Flaherty
Dylan Heroy, Sun Commercial Real Estate, Inc
Ashley Jager, AEC Industry Pro, LLC
Greg Korte, The Korte Company

3rd Place – Team #3
Cassie Catania-Hsu, CBRE
Julie Cleaver, The Howard Hughes Corporation
Nikki Dadlani, Nevada State Bank
Shawn Danoski, DC Building Group

Some things just have to be done up close.  This is one of them.

On the other hand, it’s surprising how we’ve learned to do so many things remotely that were previously thought to require in-person attention.

Will jobs like hair stylist or flight attendant ever be done remotely?  You never know.

Click here for more cartoons.

September marked the end of the 2020 Developing Leaders Institute (DLI) Program. The graduation was the perfect opportunity to celebrate the year‐long commitment and accomplishments of all its members although limited number of attendees due to COVID.

For those who are unfamiliar with the DLI Program – every other year, NAIOP Southern Nevada hosts a year‐long program that fosters an environment for young professionals to learn, grow, network and flourish. In this year’s class, 19 promising leaders of Las Vegas’ real estate industry met once a month for a 3‐4 hour class on various real estate topics. Led by prominent leaders of our industry, these classes covered subjects such as Market Analysis, Finance, Construction, Marketing, Real Estate Operations, Investment Analysis, Architecture and Economic Development.

In addition to these monthly meetings, the class was assigned a group project, which took over 6 months to complete. There were four total groups that, given the same project guidelines, were responsible for selecting a site and creating an office, industrial or retail development that would be viable in the real world. Prior to the graduation, each group presented its complete project to a panel of NAIOP’s finest judges, with the winning team to be announced at graduation.

Hosted at Lawry’s, the Prime Rib, graduation night started off with a casual mixer sponsored by CapRock Partners and an opportunity for the 19 graduates to mingle with class sponsors, the DLI Committee, former DLI graduates and NAIOP’s Board of Directors. It was also an opportunity to feel out the competition as all the students anxiously anticipated the announcement of who this year’s DLI Class Project Winner would be. After some drinks, everyone was seated for dinner. Samantha Flaherty, the DLI Committee Chair, welcomed everyone and Julie Cleaver, NAIOP Southern Nevada’s chapter president, gave a quick overview of the program. Next, each team gave a 3‐minute overview of the projects they had been working on all year. This was the first time the students were able to hear what the other groups chose to do for their projects, and it was very interesting hearing striking similarities as well as vast differences between groups. At the end of each group’s presentation, each graduate was presented with a Graduation Certificate and ‘Class of 2020’ crystal paperweight.

After all the presentations were complete, one of our judges shared feedback from the judge’s panel that this year’s presentations were extremely competitive. Kudos were given to each team, as they all significantly raised the bar for future classes. But, ultimately, there was only one winning team, which Samantha then announced as Team 3, comprised of Emily Dobbins,  Brendan Leake, Jordan Leavitt, Anna Saravia, and Gabriel Skerlich. Congrats to Team 3!  Congrats to all the 2020 DLI graduates – you should all be so proud of this year’s hard work, accomplishments and the life‐long friendships that were formed.

Thank you to the committee members, Board of Directors, class instructors and sponsors for making this program possible. Each student walked away with invaluable knowledge and opportunities because of this program.

DLI Committee Chair
Samantha Flaherty
C: 602.931.9134 | Email: samanthajflaherty@gmail.com

Board Liaison
Jennifer Turchin, Coda Group Inc
702-336-7596 x 306 | jennifer@codagroupinc.com

 

DLI Class # 8 – Economic Development
This 8th class for DLI was held via Zoom meeting on June 29th, 2020. Covering all topics related to Economic Development, the class was presented with an array of knowledgeable speakers in the industry. Introducing the speakers and moderating this class was Sabrina Borghoff, Senior Director of Business Development for Martin Harris Construction.

Chris Zunis, Vice President of Economic Development for the Las Vegas Global Economic Alliance was the first speaker up. Chris discussed the overall view of economic development, and its dedication and effort to create and retain jobs, grow the tax base, and increase the standard of living for our Las Vegas community.  The Las Vegas Global Economic Alliance (LVGEA) is dedicated to developing the economies of Las Vegas, Clark County, Henderson, North Las Vegas, Boulder City, and Mesquite through regional cooperation, global trade, and global connectivity. Since 2012, the LVGEA has helped create 26,000 jobs!

Chris also discussed lead generation and project pipelines, giving the class a full overview of the efforts and dedication that the LVGEA provides to our community.

Next up, Gina Gavan, the Chief Innovation Officer & Director of Economic Development for the City of North Las Vegas. Gina led the discussion with North Las Vegas’ demographics, parks, recreational areas and libraries, and schools in “North Town.” This information led to the answer of “why” North Town. With the speed of business and transportation and logistics, North Town is providing economic development and growth to its partners and communities.

Shani Coleman, Director Community & Economic Development for Clark County discussed the importance of strategic community partnerships and public private partnerships. Identifying and understanding community priorities, defining goals and preferred outcomes, considering the type of partnerships that fit the needs, creating consensus and buy-in with all participants and evaluating and rethinking are all steps that are to be looked at when considering strategic community partnerships. Shani further led the class into case studies of public private partnerships, and discussed the importance amongst all partnerships.

Discussing economic development from a redevelopment perspective was Thomas Welch, Economic Development Manager for the City of Henderson. Thomas discussed the five redevelopment areas located in Downtown, Cornerstone, Eastside, Lakemoor Canyon and Tuscany. From the governing documents and investment strategies related to the master planning, Thomas offered a lot of insight to the class. The class enjoyed the case studies that were provided, along with the before and after photos of projects in redevelopment areas, as well as learning about the overall vision for select locations.

Finally, Ryan Smith, Business Development Manager for the City of Las Vegas discussed the “why” behind economic development. From job creation and economic diversification to improved quality of life and increased tax revenue, the class learned all about the importance of what goes in to each of the roles mentioned above. Ryan shared information on how he proves to be successful in his position through outreach, trade shows and BRE visits. While economic development is important, Ryan stressed that is equally as important to do your due diligence for each client to ensure that their specific needs would be met. Ryan further discussed the future of becoming a “smart city” and discussed the many benefits associated with what exactly that entails.

The class was followed up with virtual questions and answers, and concluded with a much better understanding of everything related to economic development.

Thank you to Bob Potter at Affordable Concepts, Inc. for sponsoring this class.

DLI Class # 9 – Real Estate Operations
This 9th class for DLI was held via Zoom meeting on July 13th, 2020. Covering all topics related to Real Estate Operations, the class welcomed Reed Gottesman, Senior Vice President of Harsch Investment Properties. Reed led the discussion for the class and offered a very interactive and discussion based class.

To begin, Reed discussed our current situation, due to the pandemic. No Shirt. No Shoes. No Mask. No Service. This seems to be the current theme for Nevadans. This led the discussion towards “Operating a Large Real Estate Portfolio Through the Storm” and Reed was able to offer insight and statistics, based on his own portfolio. The class was happy to learn that the impact on rents was much less severe than originally thought.

Reed went on to discuss REIT’s, Private Equity, and Family or Privately Held assets. This portion of the class was very interactive, as the students were eager to learn, and Reed was great about initiating engagement among the students.

The class was followed up with virtual questions and answers, and concluded with a much better understanding of everything related to Real Estate Operations.

Thank you to Justin Wallin of Wallin Construction for sponsoring this class.


DLI Class # 10 – Public Speaking
The final class for DLI was held via Zoom meeting on August 13th, 2020. Who better to lead the class on public speaking, than former mayor of North Las Vegas, Mike Montandon. Mike engaged the class fully and offered up quite the acronym to assist them on their future endeavors of public speaking: LEAPS.

Logos: “Information”- Mike explained to the class that while information is important during a speech, it is only one part of it. Interestingly, he went on to explain that you should only touch on about four points to keep engagement. Another great tip that he offered was that no story should be told without a statistic, and no statistic should be given without telling a story. Relaying your information isn’t enough. It is how you relay your information that makes for a great public speaking moment.

Ethos: “Ethics” – While information is extremely important during a speech, your presence is equally important. Knowing your audience and the occasion, and showing up for that. Never lose the ability to present your ethos.

Agora: “Environment” – Especially in today’s challenges with meetings and speaking for audiences, knowing your environment is critical. Outside of your physical environment speaking at a conference, and knowing your sound, number of attendees, etc., Mike was able to get the class thinking about how to apply this to current times. One of the best take aways here, was knowing your “remote” environment. Many of our meetings are virtual, and it is important to understand small things such as your background and your ability to make “eye” contact – hint, it isn’t looking down while ready or event looking at another screen!

Pathos: “Empathy” – Know your audience. Understand the individuals that you will be speaking to, and ensure that you are speaking to them.

Syzygy (yes… it is a word!): “align” – It is only when you align all of the above elements, that you will set yourself up for success. It is not enough to go in with great “logos” while having terrible “ethos”, or allowing the environment to fall apart. They must all come together holistically to maximize the value of the speech.  This acronym will be easily remembered and prove to be a useful reminder to the class for many years to come.

Thank you to David Salter and Geotechnical & Environmental Services, Inc. for sponsoring this class.

 

2020 DLI Class Vice President
Christina Stanfill, Director of Project Development
WORTHGROUP Architects & Designers
Cell 702.575.8024 | cstanfill@worthgroup.com

During the past quarter a few broker members from various brokerage firms provided highlights on the local retail, office & industrial markets for our Event Highlights. We have compiled the highlights here for an informative Q2 Las Vegas Market Update.

Industrial Market Update Provided by Garrett Toft, SIOR with CBRE
Demand Remains Strong as Market Conditions Continue to Improve

The Las Vegas industrial market continued to show resiliency in the second quarter of 2020 even amidst the economic uncertainty related to the COVID-19 pandemic. Robust tenant demand for new and larger industrial space contributed to 1.7 million sq. ft. of net absorption, slightly outpacing Q1 absorption. The vacancy rate decreased for the third straight quarter to 3.4% which is encouraging given the current state of the world economy. Although demand from e-commerce companies drove absorption, other tenant industries such as third-party logistics, food and beverage, and manufacturing companies were active. Sublease space is rising but not drastically and at the moment there seems to be enough demand from winning areas of the economy to offset weakness in the resort and convention services industries.
Notable transactions in the quarter include Camco Marine leasing 203,884 sq. ft. at Northgate Distribution Center and Ruby Has leasing 373,000 sq. ft. at the recently completed North 15 Logistics project. Based on the current tenant demand in the market, Q3 is shaping up to be another great quarter.

Despite the uncertainty, Preylock Real Estate Holdings purchased 855,000 sq. ft. Tropical Distribution Center, leased to Amazon, at a record ±4.50% cap rate. VanTrust Real Estate developed and sold the project.
If current activity continues there is a good chance that that it will be hard to recognize in the year end 2020 statistics that a major macro event took place. It’s been a wild ride over the last few months, but we are optimistic about the future of industrial and the ultimate economic rebound for our City.

Office Market Update Provided by Patti Dillon with Colliers International

Nevada experienced a sharp decline and disruption in real estate activity after a stay-at-home order for the State of Nevada was issued due to the spread of the Coronavirus. All non-essential businesses were shut down while the virus continued to spread throughout country. Commercial office demand for lease and purchase came to a halt with the exception of critical service providers (insurance, finance, legal, real estate, healthcare) who were willing to commit to the typical 3-7 year lease terms.

To date, Nevada has seen little to no compression on lease rates thus far, and only a minimal number of subleases hit the market. Sales volume has fallen significantly, but cap rates held firm for those transactions that did close during this period. There were eight (8) significant commercial office sale trades in the month of May. All were investment sales of high occupancy multi-tenant buildings. Building sales with closings set for June/July were either cancelled outright, stalled or resulted in re-negotiations of 5-10% reductions in price.

While construction was considered “essential”, many planned office projects were forced to reassess their viability and timing. It is anticipated that only 40-60% of the projects planned in Las Vegas pre-COVID will actually deliver in the next 18-24 months.

The majority of lease transactions that were in active negotiation prior to and during the pandemic were signed at market asking rates. A lag in permitting/construction/inspections, furniture delivery and phone/data install lead times contributed to tenants experiencing some delays in taking possession of their office space during the pandemic. There were some tenants that put their real estate decisions on hold temporarily, and a minimal number that canceled altogether. Typically, negotiation terminations were smaller lesser credit tenants, and some back office and call center tenants that were unsure of the long-term impacts of social distancing and health protocols on their overall operations. These groups appear to be gravitating towards shorter lease commitments that reduce their overhead and directly impact their bottom line.
During the shutdown, many tenants qualified for assistance under the CARES ACT and PPP loans. Those tenants immediately caught up on their temporary delinquencies. Other tenants that did not qualify or qualified for limited amounts continued to seek rent relief to help offset business losses and keep them from shutting their doors. Most landlords have been willing to work with these tenants to come up with mutually agreeable plans and effective solutions to assist and retain them. These solutions vary from rent relief, rent reduction, term amortizations, and rent deferrals with term added on the back end and partial payments to at least cover operating expenses.

Social distancing, online virtual meetings and a remote work force, initially thought to be temporary, are starting to emerge as the next “new norm” as the pandemic lingers. It will take at least a few more quarters to fully assess what the real estate landscape will look like as companies take a hard look at their long-term space needs, and what percentage of their workforce will continue to work from home. A recent Colliers International survey of 4,000+ office professionals in 25 countries found that 80% of employees preferred to continue to work remotely at least one day per week, and 76% indicated that their work/life balance was improved by working from home. Many experts evaluating the effects of the pandemic are predicting that working remotely is here to stay. To this end, companies will be forced to invest more heavily in technologies including cybersecurity as data privacy becomes a major concern in many industries as employees’ personal devices do not have the appropriate measure of protections in place.

Companies looking at full and partial re-entry of their workforce, will need to be extremely cautious. Appropriate health and safety protocols driven by the CDC, OSHA and local governing bodies will need to be implemented. These protocols include social distancing, sanitization, ventilation, provision of PPE for their employees and visitors, clear on site messaging and training regarding new policies, sage points of entry, non-sharing of equipment, staggered work shifts, travel policies, responsiveness to reporting of symptoms and diagnosis’, limited occupancy and in-person meetings, protection of visitors, contact-less interactions, and providing trusted sources of information. The well-being of their employees also needs to be taken into consideration. Employees are faced with making arrangements for at-home distance learning having extremely limited access to childcare, caring for at-risk family members and senior parents, and an employee’s own fears or returning to the workplace due to underlying medical conditions.

Mark Nevins of Forbes said recently, there is no “playbook” for what to do in the face of a pandemic or any “silver bullet solutions”. However, surrendering is not an option, and most industry leaders have taken advantage of the downtime to reinvent themselves and create new effective ways to conduct business and thrive. Our industry faces many unknowns over the next 6-18 months, but no doubt in my mind we are up to the challenge, and the market will recover as it always does through every cycle and economic crisis, and what tests us ALWAYS makes us stronger.

Retail Market Update Provided by Jason Otter with Logic Commercial Real Estate
As states continue to reopen in phases following the Covid-19 pandemic, there is much uncertainty in the local Las Vegas marketplace as well as the overall US economy. Specifically in the retail sector of commercial real estate, it seems that most businesses that are reopening are implementing inconsistent procedures and observing constant changing guidelines in hopes of generating some sort of income but its still to be determined if that income generated will be enough to support expenses and allow retailers to stay in business.

Any retail business that was deemed non-essential during the government shut down and wasn’t allowed to operate is now actively looking to adjust their business model to hopefully remain open during any potential future shutdown. Examples of this would be soft goods retailers looking to expand into carrying food items in their stores in hopes of being deemed an essential business. Businesses that were allowed to operate during the shutdown are reviewing their business model to ensure they are able to operate in a more efficient and safe manner while attempting to maximize sales. Going forward, brands like Café Rio will continue to expand in Las Vegas but will modify their design to include a drive thru on future restaurant locations.

Landlords and Property Managers sure took on a burden during the shutdown. EVERY tenant was looking for and expecting some sort of concession from landlords even though the majority of landlords weren’t receiving concessions from their lenders. Some of the common requests our teams at Logic dealt with were requests for rent abatement, rent deferment or partial payment of rent and occupancy costs. Strategic landlords were proactive in working with tenants and commonly pushing towards awarding their tenants deferred rental payments and extending the term of the tenant’s lease. Some landlords were also successful in negating release of tenant exclusives or restricted uses in exchange for rental concessions to the tenant.

Most investors have been focused on actively sourcing capital and waiting to deploy funds in the marketplace if/when there is a decline in values. Other investors are using this time and low interest rates to upgrade the quality of assets they own and are aggressively chasing well located shopping centers with long term, credit worthy tenants. Single tenant NNN deals such as Starbucks, Chic-Fil-A, McDonalds and others are trading at historically low capitalization rates and sellers have multiple offers to choose from.

2020 is continuing to be a roller coaster ride for us all, regardless of what sector of commercial real estate you focus on. When forecasting ahead, I recommend you keep your seat belt on as this roller coaster ride of a year isn’t over yet.

 

Cassie Catania-Hsu | Managing Director
CBRE | Mountain-Northwest Division
T +1 702 369 4921 | F +1 702 794 0144 | C +1 702 556 7100
cassie.hsu@cbre.com | www.cbre.com

 

“We have to find a way to finance infrastructure that gets it done fast and creates a return.” – Gordon Brown, Chair, World Economic Forum, Global Strategic Infrastructure Initiative

As all NAIOP Southern Nevada members are aware, the Infrastructure Bank has sat atop of our issues list for years.  In 2017, we worked with RTC to pass AB 399, which created the infrastructure bank.  Since that time, it has sat dormant, waiting for an appropriation from any source which would serve as seed-funding to get the bank up and running. Enter Nevada State Treasurer, Zach Conine.

Treasurer Conine approached NAIOP in August to discuss a plan he has which would breathe life into the infrastructure bank. Using a small portion of the CARES Act funding the state received, the Treasurer’s Office along with the Governor’s Office of Economic Development (“GOED”), will commission feasibility studies on infrastructure needs they’ve identified as key to sustainable and continued job growth. These studies will include broadband, telecommunications, and e-commerce expansion to respond to public health, distance learning, and economic pressures created by COVID-19; supply chain and last-mile delivery enhancements to improve delivery services impacted by COVID-19; assessing Nevada’s behavioral health care delivery systems to ensure capacity to respond to the impacts of COVID-19, negative economic pressures, and related government stay-at-home orders; retraining Nevada’s workers who have been displaced during the COVID-19 public health emergency; strengthening state systems and processes to respond to the COVID-19 public health emergency. The feasibility studies will then culminate into one final study: the COVID-19 Comprehensive Economic Response Plan. Upon completion of all the studies, the Treasurer’s Office along with GOED will use this information to find private donors to seed the infrastructure bank and get these projects out of the ground. The point of these studies is to be able to cull information in order to sustain our job growth, grow our ability to attract new development, diversify our economy, and use forward thinking to move our state in the right direction, should we encounter another economic downturn. While it does not produce immediate jobs and infrastructure, it does put the ball in motion for Nevada to be a job creator for many years to come and build something that will lead to even more job creation, as businesses who will benefit from the infrastructure, move into Nevada.

This item was taken up during the Interim Finance Committee’s (“IFC”) September 28, 2020 meeting.  The committee discussed the studies in depth and debated how the use of CARES funding would be beneficial, if there was not an immediate benefit. To that, the Treasurer’s Office, GOED, and Senator Chris Brooks explained the dire need for infrastructure and “shovel ready dirt” in Nevada. It was explained that while this doesn’t immediately produce construction jobs, it will going forward and it will create a pipeline for job creation as the funding comes in, the infrastructure bank continues its function, and more and more projects are implemented. The goal is to create sustainable job growth for the future in Nevada, while also putting in the much needed infrastructure to attract, build, and bolster business for continued job creation and diversification in the state.  One of the most fundamental pieces of this is the study on retraining Nevada workers who have been displaced by the pandemic. Workforce development is a crucial piece of CRE and creating a pipeline where individuals can learn a new trade and get back to work in an industry where they can see continued personal growth, and Nevada realizes diversification of industry, promotes a healthy path forward for our state and keeps people employed. Taking all of this into consideration the IFC approved the money for the studies which will start immediately and be finished around November 30, 2020.

This type of forward thinking and investment into our state is something we have been lacking for a long time. In a year where nothing seems to be moving forward, Nevada seems to be moving full-steam ahead. Let us hope that this project, started 4 years ago now, is the catalyst that brings Nevada out of this pandemic on top and sets us up for a bright and diversified future.

Click here fore the meeting packet from the IFC meeting.

Stay safe –

Jon & Kerrie

Jonathan Leleu, Director
Kerrie Kramer, Government Affairs Analyst
Argentum Partners
jleleu@argentumnv.comm | kerrie@argentumnv.com | T: (702) 692-8037

Name: Thomas Godbout
DLI Class President
Title: Vice President – Commercial Lending
Company: First Savings Bank
Years in the Industry: 7

Where are you originally from?  I’m originally from Bristol, CT and have lived in Las Vegas for the last 7 years.

What has NAIOP provided you that has helped you grow professionally or personally? NAIOP has provided me with the resources to become successful in the Commercial Real Estate Industry. The connections I have made over the years has allowed me to grow both personally and professionally.  As the President of the current DLI class, I have been able to gain more valuable connections that will allow me to continue to grow both personally and professionally.

What has been your favorite experience? I always enjoy the annual NAIOP Golf Outing. This event is one of the best events that NAIOP puts on.  I have to say another great experience was our DLI retreat we had last year.  I was able to get close to 20 other young leaders in the Commercial Real Estate Industry.  These relationships will last for a lifetime.  I also have to say being elected the Class President was a pretty cool experience.

Who Have I met or become closer friends with at NAIOP: Someone that has influenced me through NAIOP is Kyle Nagy. The level of professionalism and knowledge he has showed has influenced me both professionally and personally.

Another person that has greatly influenced me is my boss and mentor, Robert Sandhu. Robert has taken me under his wing and has taught me how to conduct business the right way and has influenced me personally as well.

What do you want your legacy to be in the Southern Nevada community? The legacy I want to have in the Southern Nevada Community is that Thomas was someone who was hard working, professional, did business the right way, and was a great friend all at the same time.

 

 Click here if you’d like to submit a member highlight and return the completed questions and submit your headshot to newsletter@naiopnv.org.

 

Name: Matthew Weinberger
Communications Committee Chair
Title:
Director of Business Development
Company:
Martin-Harris Construction
Years in the Industry: 14

Where are you originally from? I was born in Cleveland, Ohio and my family moved to Las Vegas in 1978. So, while I wasn’t born in Las Vegas, I do feel like a native.

What has NAIOP provided you that has helped you grow professionally or personally? Along with a huge network of contemporaries and multiple educational programs that have been incredibly useful to my career, NAIOP has provided me the opportunity to become a more effective leader through participating in and now Chairing one of the committees. This experience has allowed me to push myself to be a better leader and find new ways to work with people from different markets and communication styles.

What has been your favorite experience? When I first was a member and very new to the industry, I attended a NAIOP lunch event that had Mayor Oscar Goodman as the key speaker. Growing up in Las Vegas is different than just about anywhere else I would think, and it just so happened that Mayor Goodman was my first little league coach. When I went up him to say hello at the event, he pulled me aside and told a story to the entire room of about 200 people that during our first game he told me to go play left field and I spent 5 minutes running around the field before coming back to him to ask, “Where is left field?”. He has never let me live that one down. The positive thing that came out of it though was he had introduced me to every single person in the room and several contacts I made that day are still close friends of mine.

Who Have I met or become closer friends with at NAIOP: There have been several people that I have heard speak or met that have been major influences in my life. Most recently, I was at an event were Frank Martin was speaking about his history with the construction community and I never forgot about how much he spoke about his commitment to his family and how he saw the people who worked for him at Martin-Harris as a part of that family. About a year later, I had the opportunity to be a part of that family and what he said played a major role in why I decided to join the Martin-Harris family.

What do you want your legacy to be in the Southern Nevada community? I want to be someone that has made an impact by educating or mentoring the next generation both inside of NAIOP and in the Southern Nevada community. I have been very fortunate to have had several people that I still refer to or meet with regularly that have been major influences in both my personal and professional life. If I am able to do the same and then they continue to do so with future generations then I will feel that I have accomplished something great for the next generation and beyond.

 Click here if you’d like to submit a member highlight and return the completed questions and submit your headshot to newsletter@naiopnv.org.

Nevada State Treasurer Zach Conine has extended the Commercial Rental Assistant Grant program, making grant funds available to aid commercial landlords and tenants, as they work together to survive the current economic downturn. Should a landlord agree to the terms (generally, a 90-day forbearance of eviction action), grant funding up to $10,000 (per tenant applicant) will be paid directly to the landlord, as payment for past rent. To qualify, a tenant needs to show a 30% or greater reduction in revenue.

Treasurer Conine has now eased some of the restrictions on the program. Tenants who received PPP loans are no longer disqualified. In addition, the tenants can now apply the funds to future rent in the event they have stayed current.

Application deadline is Tuesday, September 8, 2020 at 5:00 pm

Please contact Jon or Kerrie for further details.

Jon Leleu
jleleu@argentumnv.com

Kerrie Kramer
kerrie@argentumnv.com

Nevada experienced a sharp decline and disruption in real estate activity after a stay-at-home order for the State of Nevada was issued due to the spread of the Coronavirus.  All non-essential businesses were shut down while the virus continued to spread throughout country.  Commercial office demand for lease and purchase came to a halt with the exception of critical service providers (insurance, finance, legal, real estate, healthcare) who were willing to commit to the typical 3-7 year lease terms.

To date, Nevada has seen little to no compression on lease rates thus far, and only a minimal number of subleases hit the market.  Sales volume have fallen significantly, but cap rates held firm for those transactions that did close during this period.  There were eight (8) significant commercial office sale trades in the month of May.  All were investment sales of high occupancy multi-tenant buildings.  Building sales with closings set for June/July were either cancelled outright, stalled or resulted in re-negotiations of 5-10% reductions in price.

While construction was considered “essential”, many planned office projects were forced to reassess their viability and timing.  It is anticipated that only 40-60% of the projects planned in Las Vegas pre-COVID will actually deliver in the next 18-24 months.

The majority of lease transactions that were in active negotiation prior to and during the pandemic were signed at market asking rates.  A lag in permitting/construction/inspections, furniture delivery and phone/data install lead times contributed to tenants experiencing some delays in taking possession of their office space during the pandemic.   There were some tenants that put their real estate decisions on hold temporarily, and a minimal number that canceled altogether.  Typically, negotiation terminations were smaller lesser credit tenants, and some back office and call center tenants that were unsure of the long-term impacts of social distancing and health protocols on their overall operations.  These groups appear to be gravitating towards shorter lease commitments that reduce their overhead and directly impact their bottom line.

During the shutdown, many tenants qualified for assistance under the CARES ACT and PPP loans.  Those tenants immediately caught up on their temporary delinquencies.  Other tenants that did not qualify or qualified for limited amounts continued to seek rent relief to help offset business losses and keep them from shutting their doors.  Most landlords have been willing to work with these tenants to come up with mutually agreeable plans and effective solutions to assist and retain them.  These solutions vary from rent relief, rent reduction, term amortizations, and rent deferrals with term added on the back end and partial payments to at least cover operating expenses.

Social distancing, online virtual meetings and a remote work force, initially thought to be temporary, are starting to emerge as the next “new norm” as the pandemic lingers.  It will take at least a few more quarters to fully assess what the real estate landscape will look like as companies take a hard look at their long-term space needs, and what percentage of their workforce will continue to work from home.  A recent Colliers International survey of 4,000+ office professionals in 25 countries found that 80% of employees preferred to continue to work remotely at least one day per week, and 76% indicated that their work/life balance was improved by working from home.  Many experts evaluating the effects of the pandemic are predicting that working remotely is here to stay.  To this end, companies will be forced to invest more heavily in technologies including cybersecurity as data privacy becomes a major concern in many industries as employees’ personal devices do not have the appropriate measure of protections in place.

Companies looking at full and partial re-entry of their workforce, will need to be extremely cautious.  Appropriate health and safety protocols driven by the CDC, OSHA and local governing bodies will need to be implemented.  These protocols include social distancing, sanitization, ventilation, provision of PPE for their employees and visitors, clear on site messaging and training regarding new policies, sage points of entry, non-sharing of equipment, staggered work shifts, travel policies, responsiveness to reporting of symptoms and diagnosis’, limited occupancy and in-person meetings, protection of visitors, contactless interactions, and providing trusted sources of information.  The well-being of their employees also needs to be taken into consideration.  Employees are faced with making arrangements for at-home distance learning having extremely limited access to childcare, caring for at-risk family members and senior parents, and an employee’s own fears or returning to the workplace due to underlying medical conditions.

Mark Nevins of Forbes said recently, there is no “playbook” for what to do in the face of a pandemic or any “silver bullet solutions”.  However, surrendering is not an option, and most industry leaders have taken advantage of the downtime to reinvent themselves and create new effective ways to conduct business and thrive.  Our industry faces many unknowns over the next 6-18 months, but no doubt in my mind we are up to the challenge, and the market will recover as it always does through every cycle and economic crisis, and what tests us ALWAYS makes us stronger.

 

 

August 12, 2020
Patti Dillon, SIOR
Sr. Vice President
Colliers International
patti.dillon@colliers.com