Nevada

Developer Reno welcomes the return of office culture and advertises business hotels

 

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Nevada Gov. Joe Lombardo may have been at the height of the trend when he recently directed state agencies to develop a plan for employees to “return to pre-pandemic, normal and normal office conditions” by July 1.

“Starting next fiscal year, we expect everyone to return to work during normal physical office hours,” Lombardo chief of staff Ben Kiekhefer was quoted as saying in the Las Vegas Review-Journal.

This was good news for Par Tolles of Reno’s Tolles Development Co. and other business leaders who have built a corporate culture based on personal communication.

“Look, I work in the office all day, old school,” Tolls told host Sam Shad during a January 11 interview with Nevada Newsmakers.

The trend seems to be nationwide. In August, Apple told employees they must return to the office at least three days a week to re-establish “personal collaboration,” CEO Tim Cook told Business Insider.

According to Insider, Disney executives want employees to return to the office four days a week, while Goldman Sachs wants employees to return to the office five days a week.

Tolles said “I like it” when asked about the Lombardo mandate. He would like other business leaders to also advocate for a return to pre-pandemic office conditions.

“Some of these leaders, governors, Jamie Dimon of JP Morgan, they need to lead by example and just start saying, ‘You’re going back to the office. It’s part of who we are. It’s part of our culture and it’s not a choice,” Tolles said.

Dimon has already turned down remote work, telling Yahoo Finance that remote work is not good for an apprenticeship program or “spontaneous stuff.”

According to Insider, about half of JP Morgan employees were asked to return to the office five days a week, and about 40 percent were asked to return a few days a week.

However, Tolles noticed a new trend in office layouts.

“I think there is a shift towards suburban offices,” he said. “If we were talking about this five years ago, then there would be central business districts in large cities. This has changed during the pandemic and now you are seeing suburban offices become more and more popular.”

The Damonte Ranch area in Reno and the Summerlin area in Las Vegas have been cited as suburban office districts.

“I think suburban offices have more of a future than central business districts right now, and things will continue to change and move,” Tolles said. “I don’t think high-rise office buildings are gone forever, I mean they are part of our human experience.”

He sees a future where office space is being repurposed for other uses.

“Eighty percent of the office stock in the US was built in the 1980s or earlier,” Tolles said. “There will be a transformation in what these buildings are used for.”

Tolles sees no decline in demand for office space in Reno.

“We haven’t lost anyone in our portfolio,” he said. “We have what they call a suburban portfolio in downtown Reno, and we have tenants that are expanding, not shrinking.

“And I would say that our office space still had a pretty active environment during COVID because Reno and I would say that Las Vegas didn’t have the same crowded experience as other (cities) like Portland, Seattle, San Francisco, Los Angeles, yes. But, as they say, technology is leading the way in leaving the office (use).”

He noted that a hybrid work schedule is being introduced in large cities.

“The New York City subway is cutting back on the use of the subway on Mondays and Fridays because it looks like there are now two days that people are allowed to work from home,” he said. “And I think it’s pretty common in some of the big cities.”

BUSINESS HOTEL

Business hotels are springing up in the Reno/Sparks area, although they cost more than the cost of a hotel-casino-resort.

Tolles Development has built the Courtyard by Marriott hotel across from the home of the Reno Aces baseball team in downtown Reno and is planning a similar project in south Reno.

Mike Pegram, head of the group that owns the Tamarack casino in South Reno, also plans to build the 128-room Residence Inn by Marriott by the Tamarack and a similar business hotel at the Carson Valley Inn in Minden.

Hyatt, Hilton and Marriott business hotels have strong rewards or points programs for travelers. The strength of these programs is driving the development of business hotels, Tolles said.

Rewards programs also make business hotels a great investment for developers, Tolles added.

“This is not our core business, but I understand the business very well and Marriott, Hilton and Hyatt have the most trusted points programs… and the travelers who use these hotels are completely points focused,” Tolles said. “So we’re buying a booking system and that’s the safest and least risky rate when developing a hotel product.”

Business hotels lack the excitement of a major Nevada resort, Tolles says, but they have perks that business travelers appreciate.

“In my own experience, I have traveled to Las Vegas a lot and stayed in most hotels,” he said. “And it’s very exciting to go to Las Vegas and stay at the casino because it’s fun. But when you have to walk the distance you have to walk from the reservation desk to your hotel room, where you have to walk through the smoke, it just becomes less convenient on a business trip.

“You really come back to these small hotels with 130-170 rooms where I can be in my room very quickly and know exactly what I’m getting. I can get to my car in five minutes and a business traveler will appreciate that a lot.

“And I would say that families who might not like the gaming orientation would come to a Hyatt or Marriott, especially one like the one we’re building in a mall where we have a movie theater and a few restaurants. It’s just a fabulous place to find a hotel.”

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