Barings Provides $114M in Financing for Reno Industrial Asset

Real estate investment manager Barings has provided a $114 million loan to finance Airway Commerce Center, a recently completed warehouse/distribution property in Reno, Nev. Tolles Development and its equity partners developed the approximately 900,000-square-foot asset.

Customers Bank provided the property’s construction loan, which was originated in 2022, according to CommercialEdge. That loan totaled $106.5 million and had a maturity date in October 2025.

The new Tolles property has four buildings, the largest one being 435,500 square feet, with the other three between 150,000 square feet and 200,000 square feet. All of the buildings are one story, and together they occupy about 52 acres near Reno-Tahoe International Airport.

The developer included 440 new trees and 1,500 new shrubs and perennials as part of the property. The plants are all Federal Aviation Administration-compliant whose presence is designed to mitigate the impact of air operations in the surrounding area.

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Institutional-quality industrial remains a bright spot in the debt capital market, according to CBRE’s Michael Walker; CBRE advised on the financing. Jack Cheng, managing director at Barings, echoed that assessment, noting that industrial assets in strong markets—those with solid supply-demand metrics—will continue to do well.

Barings’ $24.2 billion real estate debt platform, which invests in loans secured by institutional-quality commercial real estate, is part of the firm’s $409 billion in assets under management. The company is a subsidiary of insurance giant MassMutual.

In another recent major deal, Barings provided a $244 million refinancing loan for a 10-property warehouse and distribution portfolio totaling 6.4 million square feet in Logistics Park Kansas City in Edgerton, Kan.

Reno industrial chills in ’24

The Reno industrial market saw negative net absorption for the first time in more than four years—a negative 964,800 square feet—during the first quarter of 2024, according to Colliers. A year earlier, the market enjoyed positive absorption of 262.8 million square feet.

A history of aggressive development and a slowdown in demand (but not a stoppage) pushed vacancy to 7.3 percent in the first quarter of 2024, compared with an exceedingly tight 2.3 percent during the first quarter of 2023, Colliers reported. Development has thus slowed recently, with only 1.3 million square feet underway in the first quarter of 2024, compared with more than 7 million square feet a year earlier.

Tenants are also returning space to the Reno industrial market, with sublet space now accounting for 11.8 percent of all available space, up from 6.1 percent a year ago, Colliers noted. Direct lease rates are holding relatively flat, but sublease space can be had at discounts of as much as 50 percent of comparable direct space.

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