VEGAS INC Coverage
If there’s anything that recent times have taught us, it’s that when you sit down with someone who’s in real estate, you probably shouldn’t open a conversation with a traditional question.
Such as, “How’s business?”
A few years back, that phrase helped inspire chatter over a business lunch. In the past couple of years, though, not so much. These days, it’s wise to be more prudent in how you break the ice. One way is to ask what strategies are working. So I did.
“I don’t think we’re any different than other real estate companies that have tried to weather the storm,” Jim Tainter said, as we sat down at Brio recently. “You have to do what you do well, trim the fat, take care of the customer.”
Since August, Tainter has been senior vice president and regional manager of the Las Vegas region for Harsch Investment Properties, which has about 1,300 units and an 8-million-square-foot portfolio locally. He knows his stuff. Tainter previously was principal and senior vice president of Balke Brown Associates in St. Louis, a real estate development-brokerage-management company that more than tripled its portfolio during his tenure.
Now, he’s with Harsch, owners and operators of more than 130 properties here and in the Bay Area, San Diego, Seattle, Sacramento, Calif., and Portland, Ore. Its portfolio reflects more than
21 million square feet of office, industrial flex and retail commercial properties, along with more than a thousand multifamily housing units.
That’s diverse, but Harsch’s target customer is the small-business owner. Its “sweet spot” is multitenanted industrial space, and its average tenant occupies about 6,500 square feet — although it welcomes much smaller tenants with growth potential, and is adept at developing and changing existing space.
Tainter’s perspective was that the real estate market here could only improve, since “it’s been bumping along the bottom for a long time.”
One bright side is that Harsch occupancy levels went up 5 percent this year.
“We’ve had good absorption this year,” Tainter said. “That’s a piece of positive news the real estate industry may not know about.”
True enough. And actually, it was the second straight year that Harsch had positive net absorption locally. On the other hand, a downside has been the rental market, where rates have fallen from 25 to 40 percent.
“The lack of construction-related occupancy has been the No. 1 drain,” Tainter noted, adding that materials suppliers and subcontractors are “just gone.”
One of the projects he wanted to talk about was the Consolidated Patient Account Center. I had to confess not knowing much about it, at least not until we sat down. Now I’m wondering how I missed it.
The ribbon-cutting was Nov. 8 for the 51,936-square-foot center, which was built for the Department of Veterans Affairs — the nation’s largest government entity — within Harsch’s redeveloped Paradise Airport Center complex.
The center is intended to handle West Coast services for Veterans Affairs. Once fully staffed and operating, it will service an estimated 15 million claims a year from the region, and is expected to save the federal government millions in processing costs.
Harsch landed the project after 16 months of serious negotiating with the feds, working through the mandatory and complex solicitation-for-offer process. After successfully traversing the paperwork, the company came away with a 20-year lease valued at $21 million. The redevelopment cost has been estimated at $7.6 million, with more than 600 people employed in the construction.
The center’s “anchor” lease enabled Harsch to move forward with a major redevelopment of the two-story, 100,000 square-foot building.
One challenge was the requirement of a “design build” process, as opposed to a more traditional bid process. This required a number of firms, including a general contractor, architects and engineers, to initially collaborate as a team and to develop a plan that would not only serve the needs of the VA and its employees, but which would also meet the stiff requirements of a LEED equivalent building.
The construction project meant demolishing most of the second floor and transforming the building into an environmentally sensitive structure. The building’s remaining 49,000 square feet will be home for up to four more companies.
The benefits to our community, Tainter said, are “brand new jobs.” Somewhere around 500 of them. Government jobs, with an average wage of $35 an hour. Big stuff.
With a project like that in the portfolio, no wonder Jim Tainter comes across as an optimist. Maybe I could have gone ahead and asked him how business was after all.