In 2013, the Las Vegas industrial market reported the highest net absorption since 2007. The vacancy rate at the end of 2013 was 13.8 percent, which represents a decline of 0.4 percent from the prior quarter. Compared to a year ago (Q4 2012), the vacancy rate reported an even more substantial decline of 2.6 percent. With no completions during the fourth quarter, inventory remained flat at 107.5 million square feet when compared to the third quarter of 2013. However, during the year, approximately 934,000 square feet was added to the market, which is more than 2010, 2011 and 2012 combined.
The industrial sector reported approximately 398,200 square feet of positive net absorption during the fourth quarter of 2013. Net absorption for the year was over 3.6 million square feet, which is significantly higher than the roughly 897,100 square feet of net move-ins reported in 2012.
The amount of industrial space actively under construction reached 1.2 million by the close of the fourth quarter of 2013, which is the highest it has been since the third quarter of 2008. A number of projects continued to make progress during the quarter, including FedEx at South 15 Airport Center (296,000 square feet), Konami Gaming’s expansion (193,400 square feet), Nicholas & Company (182,900 square feet), VadaTech (70,000 square feet) and the Shetakis Wholesalers addition (65,600 square feet).
The industrial sector is now reporting over one million square feet of development activity for the first time since the third quarter of 2008. There are relatively few large properties left on the market, which is proving to be a challenge for selected companies considering large investments in the area.
After a record breaking third quarter, vibrant activity carried into the fourth quarter resulting in very strong numbers and another significant drop in vacancy. The year began with vacancy above 13.5 percent and again this quarter, landlord’s prayers were answered and the vacancy rate dropped below 10 percent for the first time since the 1st quarter of 2008. The market is squarely in the healthy range at 8.11 percent excluding sublease space. Neverless, it will be difficult to carry this momentum due to low availability however, all signs are bullish.
For the year, fifteen transactions were completed with users in excess of 100,000 square feet. This number is significantly higher than prior years. A total 48 transactions were completed in Q4 2013 with a gross absorption of 1,638,272 square feet almost 150 percent of the five year average and almost double last year. The average transaction size was down slightly from Q3 but a respectable 40,000 square feet.
Net absorption for the quarter was a robust 1,607,714 square feet, 5 times higher than 2012. Rental rates are beginning to see upward pressure rising an average $.01 per square foot per month in the last quarter. This has certainly been an impressive year overall with a return to respectability and prosperity.
Barring any economic blindside, the year should see continued strong activity, lower vacancy, higher rents and more construction than has been seen since 2007. With an abundant pool of investors now looking at Reno as an alternative to higher priced markets the time is now to dispose of assets should one want to place their assets in other areas.