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MULTI-FAMILY REVIEW NEWSLETTER                         
ISSUE NUMBER 88 - FIRST QUARTER 2015              
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Multi Family Review Newsletter
Fourth Quarter Numbers Are In   
   There are two aspects to the market; one the actual closings and vacancy rates/rents, the other the perceived market.  The fourth quarter of 2014 saw a little over $7M in multifamily sales in the MLS, this is a downturn from the 3rd quarter sales of $9M, and is statistically what we expect to see year over year.  The market did not feel as if it had slowed down because inbound calls have increased in number and scope of geographic boundaries.  The Tesla effect seems to have kicked in.  One offshoot of the Tesla effect has been sellers expecting a higher sales price when rents have not gone up to substantiate the higher price.  Another effect is sellers waiting for the market to go up further in coming months and holding off marketing their properties.  I believe this has contributed to the downturn in sales volume in addition to the seasonal swing.
   Vacancy rates per Johnson and Perkins have gone up to a market average of 3.31%.  This is still historically low for our region as well as the nation as a whole.  The surprising swing in vacancy rates has been in studio apartments, which are reported to have a vacancy rate of 1.35%!  With EDAWN predicting 50,000 new jobs in the market by 2019 we will see the need for more units in the market.  At the present rate there are not enough units being built to keep up with demand.  This may change with national builders looking at the Reno market as a growth area.  As with residential single family homes let’s hope this growth will be at a manageable level and not cause overbuilding and an exodus by tenants into newer projects. If you would like to have your property evaluated to optimize income and possibly sales price, contact us.
   If you use Facebook you can follow Danielle Young’s travels in Mexico.  We wish her the best in her travels.

Change
   I have always been one to renovate.  Whether it is an auto or a home, fixing-up is in my genes.  It came as a shock to me when I saw a perfectly good fast food restaurant being torn down only to be rebuilt with the same franchise.  I have learned that fast food restaurants have a life less than 20 years at which time it is more economical to tear down a structure and build new, around a new business model that may have one less step to the French fryer or soda machine.  The cost of a new building will be saved over time by being just a little more efficient.
   Businesses other than fast food are more directly affected by building design.  Modern warehouse businesses with their inventory picked by robots will not function in older buildings.  Inventory is not segregated by category anymore, i.e. socks here and tooth brushes there, but by when the product is coming in when it is going out and how to best utilize the resources of the robots.  The computer is constantly changing where inventory is placed in the building.  Modern manufacturing is also changing making building new purpose-built buildings a smart investment.  
   What does that have to do with living and running a business in the Reno Sparks area?  
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