A recent survey from Johnson Perkins Griffin Real Estate Appraisers and Consultants finds that the vacancy rate in Reno-Sparks apartment complexes stood at 2.67 percent this spring, compared with 3.06 percent last winter. Rents, meanwhile, rose by an average of $28 a month, and apartment renters now pay an average of $1,344 a month.
Northern Nevada's multifamily housing market, once limited to western-region investors, is firmly on the national radar.
Historically, investors in the Reno-Sparks apartment market were mostly located west of the Rockies, says Ken Blomsterberg, senior vice president of investments with Marcus and Millichap. However, in
recent years the booming regional economy and national exposure from key businesses such as Tesla, Google, Switch and Apple has spurred investment interest from all parts of the country.
"It is amazing
how Reno has gone viral - people who used to have no interest in Reno are calling me now asking what we've got," Blomsterberg says. "All the good news is bringing a lot of investors to the market, and we are getting offers from Boston, New York, Chicago and St. Louis."
"Everyone wants to talk about Reno," Blomsterberg says. "Even people a year ago who had no interest are all over it."
That interest, combined with northern Nevada's historic low vacancy and high rents in the multifamily market, has led to both a shortage in available properties and a record high sales price.
Available properties continue to generate unprecedented interest. Blomsterberg recently shared details of a sale property to 26 key investors across the country rather than listing it openly. He received 16 offers.
"Many sellers are looking for a 1031 tax-deferred exchange, but you have to have another property to trade into; that's the challenge for sellers," he says. "They can't find a place better than Reno."
Reno continues to be a hotbed for apartment construction as well. According to a report by Johnson Perkins Griffin, there were more than 3,487 new apartment units under construction, with another 6,255 waiting in the wings.
The huge influx of additional units to the regional apartment
supply still isn't expected to significantly ease vacancy rates.
The market has been extremely tight over the last couple of years, but especially this past year. We have so much new construction going on,
but demand is exceeding the rate they are able to build new apartments.