Google buys industrial land near Tesla Gigafactory east of Reno

Tesla’s Gigafactory has a new neighbor that also hails from Silicon Valley.

Google, Inc. purchased 1,210 acres of land at the Tahoe Reno Industrial Center for nearly $29.1 million, according to documents filed with Storey County last Friday. Documents list Wilmington, Del.-based Silver State LLC as the buyer but multiple sources familiar with the transaction confirmed that the purchaser is Google.

Gov. Brian Sandoval welcomed the news of another high-profile technology company expanding into the state.

"Google is an internationally recognized and respected brand and one of the premier technology companies on the planet," Sandoval said. "As with all businesses, the state stands ready as a willing and friendly partner in the development of this site."

The transaction involves several parcels of vacant land at the industrial park just east of Reno-Sparks. One parcel measures 662 acres and another comes in at 548 acres, according to documents from the Storey County Assessor’s office. Records from the Storey County Recorder’s office show a total sales price of $29,096,190.95 as well as a real property transfer tax of nearly $113,500.

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The question now is what will Google build on the site.

A representative with Google declined to comment about the transaction on Monday morning. Lance Gilman, a principal with the Tahoe Reno Industrial Center, also declined comment and referred to county records for information, citing a non-disclosure agreement. Steve Hill, director of the Governor's Office of Economic Development, referred to similar agreements when asked about any incentives that Google might be negotiating for with the state. Google has not yet publicly applied for incentives from Nevada.

"We're in a position where until Google does something publicly, then we're subject to confidentiality," Hill said. "We look forward to working with them through the rest of the process if they determine what to do with the land."

Records obtained from Storey County about the purchase did not indicate a use for the property. Typically, commercial transactions that involve such a large amount of acreage end up involving a multiple-use project.

A source familiar with the transaction says there are no immediate plans for development on the site, at least for the near term. The most likely use pitched for the site would be for building a new data center, which would be familiar territory at the industrial park. Switch, for example, just finished construction of the world’s largest data center building, the first of many at the Tahoe Reno Industrial Center as part of its plans to build the largest data center campus in the world at the same location. Just a few miles away is Apple’s growing data center campus, which is located at rival Reno Technology Park just across Interstate 80. In 2015, San Antonio-based cloud company Rackspace US also applied for incentives from the state to build a facility near the Apple data center.

Another use that has been floated for the property is to serve as a test track for Google parent company Alphabet’s Waymo driverless car initiative. In 2011, Nevada became the first state to pass a law authorizing self-driving vehicles, which was followed by Gov. Brian Sandoval test driving a Google robot car at the state capital of Carson City a month later in July. Nevada is also pushing for legislation at the ongoing session of the Nevada Legislature to make it easier for companies to test and set up driverless fleets in the state. A source familiar with the transaction, however, described talk about testing self-driving cars at the site as just baseless speculation at this point.

Google’s addition would be another feather in the cap of Northern Nevada, which has seen an influx of technology companies entering the area after the state placed increased focus on economic development after the recession. The arrival of several data centers, as well as Tesla and Panasonic's joint battery manufacturing facility, is further diversifying a region that used to be primarily known for distribution and logistics outside of gaming and tourism. The greater Reno area, for example, hosts distribution facilities for Amazon, Walmart, Petsmart and Zulily. Adding Google to the mix helps bolster Nevada's attractiveness for business, Sandoval said.

"Nevada is rapidly becoming a technology and innovation hub by attracting exciting new startups and some of the world's best names," Sandoval said. "I am excited by the prospects that come with this size of purchase from this type of company."

At the same time, the increased economic activity is also raising concerns about growth and housing affordability. Home prices have already hit post-recession highs and could reach an all-time record this summer at the current pace of appreciation. The Reno area also posted the sixth highest annual increase in rent nationwide in 2017 at 9.5 percent, according to RentCafe. This follows the third-highest rent increase early last year.

Asked about other projects in the pipeline at the Tahoe Reno Industrial Center, Gilman says there are several, including one that could potentially eclipse the Gigafactory, but he’s not at liberty to talk about them for fear of scuttling the deals and running afoul of non-disclosure agreements. Regardless, the arrival of high-profile companies is already spurring growth at Storey County, which is expected to increase further once transportation projects such as the USA Parkway extension and interstate connectors are completed, Gilman added.

“The best thing happening (from all these projects) is the increase in services,” Gilman said. “When you start getting a Starbucks in the middle of the community, you know retail is coming.”