The Year Ahead in Business in Carson City: From Doom to Boom

Carson City’s steady economic recovery will continue and possibly take off in 2017.

Unemployment is down to 5.3 percent, less than half what it was five years ago.

Taxable sales are up 9 percent to $239.2 million in the first three months of the fiscal year.

Home prices reached highs not seen since 2008, rising 14 percent from the third quarter in 2015 to the same quarter 2016, according to U.S. Federal Housing Finance Agency. Zillow estimates house prices will climb 5 percent in the coming year.

Building permit valuations in fiscal year 2017 should hit a mark not seen in at least a decade.

More than half the building permits issued in the first five months of the fiscal year, ending June 30, have been for multifamily residential construction, which should bring much needed more affordable housing options to the city.

“We have quite a few housing starts and that is what is going to make Carson City grow,” said Ronni Hannaman, executive director, Carson City Chamber of Commerce. “That brings demand for more shopping, and restaurants and spurs the economy.”

The capital, longtime considered a place to work rather than live, may even start to become home to commuters, especially once the I-580 bypass is complete in mid-2017.

“We’re hearing from people that with the interstate you can drive to south Reno faster from Carson City than you can from north Reno,” said Hope Sullivan, planning manager, Carson City Community Development department.

All this comes five years after doomsayers said Carson City had the worst job outlook in the country based on a 2012 IHS Global Insight report commissioned by the U.S. Conference of Mayors.

Carson City’s turnaround may be just the start of a long-term transformation, some claim.

“By 2030, Carson City will be known as the jewel of the west,” said Steve Neighbors, one of three trustees for the Hop & Mae Adams Foundation, one of the city’s largest landowners.

Downtown development

Neighbors and the foundation have several irons in the fire in downtown Carson City.

The mixed-used project known as 308 Curry Street should be completed in mid-2017, although Neighbors said a shortage of construction workers and some issues with the razed Citibank building have delayed the schedule.

The project will feature one building with 10,300 square feet of retail space on the street level, 11,400 square feet of Class A office space on the second floor, and a total of 10 apartments varying in size from 1,000 square feet to 2,100 square feet on the third floor and in a separate building with garages.

A large restaurant taking up as much as 5,000 square feet is expected to anchor the first floor.

Neighbors expects the project to still be completed by the summer with tenants occupying it by fall.

The foundation is now considering three proposals for the vacant brewery building at the northwest corner of Proctor and Carson streets.

A team of six including the three foundation trustees and Bruce Robertson, senior advisor, NAI Alliance, the broker on the property, are evaluating the proposals.

Neighbors said one business interested in it had already been turned down.

“They were from California and we think it needs someone who really understands the Carson City market,” said Neighbors. “Just because you’re successful in California in high population sites doesn’t mean you will be successful here.”

In 2017, design will start on what Neighbors calls 808 Curry Street, the currently vacant block bordered by Ann, Nevada and Washington streets owned by the foundation.

Neighbors said it won’t be another mixed-used project like 308 Curry, but will fill a void in the type of space now available in the city.

The foundation’s biggest project — the Capitol Mall hotel project on Stewart Street, which received its needed special use permit from the city in 2015 and was expected to start construction in 2017 — appears to be on hold.

“Right now, we are focused on 308 N. Curry project. We are also working on the brewery,” said Neighbors when asked about the Capitol Mall project. “We have a few ideas after those two are complete, but those are still out a year or so.”

The rest of downtown is filling in, too, now that the downtown road construction is complete.

“A lot of the dominoes have been set up, the first couple are starting to teeter and fall into place,” said Brad Bonkowski, principal, NAI Alliance, and Carson City supervisor.

Scoups, a soup bar and ice cream parlor, is scheduled to open on McFadden Plaza in early 2017, filling in all the retail space there.

The former Horseshoe Club is getting an overhaul and being readied for retail, office and residential tenants.

The building at 410 N. Carson St. sold in November and the new owner is rehabbing it to include two apartments on the second floor and space for up to three retailers on the first floor.

The building at 402 N. Carson St. is being remodeled for a restaurant tenant on the first floor and offices on the second floor while 408 N. Carson St. is being redone for retailers on the first floor and apartments on the second floor by long-time owner Jeanette Kelley.

If and when all that fills up, there will be nearly no vacant space downtown.

“We haven’t completed our updated vacancy study but in the downtown core we believe the rate is below 5 percent,” said Andie Wilson, principal, NAI Alliance.

Meanwhile, north of downtown, a new Bodines Casino could revitalize the NorthTown Plaza if it secures the needed location transfer of the Horseshoe Club gaming license.

Near there, the Sizzler restaurant, which has been vacant for seven years, is in the midst of being gutted and will house an optometrist office once the remodel is complete.

South of downtown, the Carson Mall will continue to change in 2017.

A 5,000 square-foot building at the southwest corner of Stewart and Carson streets should start construction and a Chipotle restaurant is the rumored tenant.

And in between, the long-vacant Ormsby House is for sale.

“I truly believe the Ormsby House is the heart of Carson City,” said the Chamber’s Hannaman. “It could take our tourism efforts to a whole new level.”

Tourism

“We’re looking at 2017, with the legislative session, to increase our growing occupancy and room tax,” said Joel Dunn, executive director, Carson City Visitors Bureau. “Right now, for 2016, we’re roughly 10 percent above 2015. We’re up $2 million from 2015 and expect about the same for 2017, but I’m conservative on estimates.”

In addition, per diem rates for federal and state visitors went up to $91, said Dunn, and daily average rates at the city’s hotels and motels climbed.

The Epic Rides Carson City Off-Road mountain bike race, which held its inaugural event in 2016, returns in June and has expanded the race to 1,000 riders.

Several new running races are coming on some of the same trails.

“We have a trail race every single month in 2017,” said Dunn.

And a wrestling tournament with 1,000 wrestlers returns to the Multi-Purpose Athletic Center and the west coast junior Olympic swim meet comes back to the Carson Aquatic Facility after a few absent years.

The last weekend in June will host several car and motorcycle events, including Rockabilly Riot held in conjunction with the Carson City Sheriff’s Extreme Motor Officer Training Challenge event, a T-Bucket event and Karson Kruzers, said Dunn.

Manufacturing

One major economic sector, however, faces continuing challenges, although a lot is being done in the new year to tackle them.

“The election year was pretty bad, but now that everything is settled we’re seeing new product launches, old products coming back. We’re getting a lot more requests for quotes,” said Gordon Gagnon, vice president, Redco, a manufacturer of custom rubber products. “This has been one of the busiest Decembers in 10 years.”

Redco employs 50 workers and operates out of a 40,000 square-foot facility on Arrowhead Drive the 69 year-old company moved to from Hayward, Calif., in 1990.

Gagnon is active in the local industry, serving on the Chamber of Commerce board, the Western Nevada College manufacturing advisory board and the newly formed Western Manufacturing Alliance.

“The biggest issue is getting the qualified workforce,” said Gagnon, echoing what a Northern Nevada Development Authority (NNDA) survey of local manufacturers found. “I see slow improvement but we’ve got a ways to go.”

WNC plays a big role in workforce development and has a lot on its plate in 2017.

In April, the school will break ground on a 4,500 square-foot expansion of its Reynolds building to house a manufacturing floor that can be flexibly configured, said Georgia Kenyon White, director, Career and Technical Programs, WNC.

The school offers career certificate in about a dozen areas, which in the case of manufacturing can add $10,000 to a graduate’s entry-level income.

The college is working to create a skills matrix so employers can rely on WNC to help train employees, a kind of class catalog geared to manufacturers and other businesses.

The school is partnering with Vineburg Machining Inc., a Carson City manufacturer, to develop it but plans are to roll it out for use by any business.

WNC may also eventually roll out to other employers a new finance training program it’s launching for state employees in the fall of 2017.

The school is partnering with Truckee Meadows Community College on a federally-funded apprenticeship program.

The first apprentice, from Click Bond Inc. in Carson City, will start in January.

And WNC is awaiting the test results for the first 10 students who finished its Siemens Mechatronics program in the fall.

The extensive program awards a certificate that’s a step above all other manufacturing diplomas, says White.

Siemens has certified only a few schools to offer it so WNC hopes to start marketing it to students across the west.

The first class included local employees from Click Bond and General Electric, said White.

In 2017, NNDA is launching a new tax exempt program that would let local manufacturers borrow up to $10 million at discounted rates to expand.

“Over the life of the loan, they’ll save about $2.1 million in fees and interest,” said Rob Hooper, executive director, NNDA.

Helping local companies expand is one of NNDA’s main tasks.

“Eighty percent of new jobs come from existing companies, 16 percent comes from startups and 4 percent from relocations,” said Hooper.

Most of the outside attention on economic development, though, is focused on relocations, which are hampered these days by a continuing shortage of industrial space here.

Carson City has only a smattering of small spaces available and while land is plentiful, construction costs remain higher than leasing costs so businesses are reluctant to build.

NNDA and others are doing what they can to reduce those costs and the time to build through a certified site program that gets much of the preliminary permit process done for the buyer before the sale.

But only one site has so far been certified, in Carson City, and another two, outside Carson City, should come online in 2017.

“Industrial inventory will continue to be a problem until we reach lease rates about 65 cents per square foot before a developer would break even,” on new construction, said NAI Alliance’s Wilson. “Right now we’re between 40 to 45 cents.”

With inventory low and land abundant, lease rates would be expected to climb, but so far they’ve remained stagnant, a sign financing is tight and the market is strong.

“We don’t want to see another boom,” said Wilson, referring to the over development that happened prior to the recession. “The market is slow, steady, sustainable and that’s exactly what we want.”