Reno shipping boom: Area ranks 3rd in global logistics index.

Surging demand from e-commerce combined with Northern Nevada’s ideal location puts the region among the top markets for shipping and distribution in 2021.

The pandemic has only bolstered Northern Nevada’s shipping and distribution industry as Reno claimed the third spot in a global ranking for logistics last year.

The greater Reno area ranked No. 3 in the latest Prologis Logistics Rent Index, not just for the North American market but in the report’s global index as well.

The index measures market rental growth based on local and global market pricing data. It was started in 2015 by logistics solutions company Prologis.
A 70-year delivery - That law really gave Nevada a leg up on warehousing.

As the Second World War was coming to a close, Edwin Bender was busy starting a new chapter in his life. Armed with a 60,000-square-foot warehouse and a few trucks, the Reno-Sparks entrepreneur launched his own company, Bender Moving and Warehouse, in 1945.

Just four years later, Bender was one of the driving forces in the creation and passage of a law that would change Nevada’s warehousing industry.

The 1949 Freeport Law allowed the state’s warehouses to store goods tax-free if they were going to be shipped or sold outside of Nevada. Legislators doubled down two years later by passing another law — one that allowed goods that were assembled in certain areas of the state and eventually sent out of Nevada to be tax-free as well.
While COVID-19 hit the overall economy hard, logistics was one sector that actually saw growth as more people stayed home and started ordering a wide range of consumer products.

“Structural drivers such as the upsurge of e-commerce and the need for robust inventories that can accommodate consumer demand for swift delivery of goods have prompted intense demand for modern logistics facilities,” said Mathias Hughes, vice president and investment officer at Prologis.

Reno’s logistics sector proved to be a hedge against the pandemic.

The growth of the region’s logistics sector is the culmination of longtime efforts that started gaining momentum with the arrival of warehousing operations from companies such as JC Penney, Walmart and Amazon. For such companies, Northern Nevada’s proximity to California and other western markets made the perfect site for a shipping and distribution hub.
The advantages were not lost on Prologis and its clients.

“For Prologis logistics customers, Nevada is a lower-cost alternative to, say, California,” Hughes said. “Of note, the state is able to serve approximately 18% of the U.S. population in a matter of days.”The area’s natural affinity for logistics became even more important after the Great Recession decimated the area’s housing and construction industry while also adversely impacting hotel-casinos and the travel sector.

The sector would also prove to be one of the key pillars in Northern Nevada’s more successful efforts to diversify its economy compared to Southern Nevada.

The Reno area saw less economic damage from COVID-19 and was also able to bounce back faster from the pandemic compared to the Las Vegas area, which continues to rely more heavily on gaming and tourism.
Logistics also helped bolster other key sectors that were on the radar of Northern Nevada’s economic development proponents.

One is advanced manufacturing, with the joint Tesla-Panasonic venture, Gigafactory 1, being the most popular example. This ultimately led to a snowball effect, with operations such as the Gigafactory ultimately attracting other companies.

“What we did was we promoted the strength of our region for logistics in an effort to attract advanced manufacturing that looks for logistics to be nearby,” said Mike Kazmierski, president and CEO of the Economic Development Authority of Western Nevada. “The strength of that logistics piece helped us build the advanced manufacturing base significantly, which led to bringing even more companies to our region.”

The success of logistics is also causing the same surge in pricing for industrial real estate that is being seen in housing,

“The inventory we have (for logistics) is short, much like the housing sector, so it’s truly a supply and demand issue,” Kazmierski said. “We just can’t seem to build them fast enough.”

With the continued increase in demand for e-commerce combined with other trends such as onshoring as more companies look to bring back manufacturing in the United States, demand for logistics in the Reno area should only go up, Kazmierski added.