The Las Vegas Valley’s overall industrial vacancy rate in Q4, 2015 was 4.7 percent, a rise of 0.3 points, from 4.4 percent in Q3, 2015. Q4’s increase was the first quarter that the vacancy rose in three years. Additionally, between November 2014 and November 2015, the number of industrial-space using jobs in the Valley jumped by 6.9 percent. The strong growth in demand for industrial space, along with a resurgent economy, and construction and industrial employment, shows that the Valley’s industrial sector is strong.
There were 958,684 square feet in completions in Q4 with four projects. These projects were the LogistiCenter Cheyenne Warehouse/Distribution, the Lone Mountain Corporate Center, Republic Services’ Recycling expansion and Southern Tire Mart’s expansion. These brought the Valley’s industrial base up to 111.1 million square feet.
Net absorption remained positive for the quarter at 647,900 square feet, despite the slight increase in vacancy due to the four projects. On a year-over-year basis, net absorption was 5.5 million square feet in 2015. By subtype, warehouse/distribution led the way with 4.0 million square feet. Light distribution posted 768,300 square feet, followed by light industrial with 614,500 square feet.
Space under-construction in Q4 was at 1.5 million square feet. Six projects comprised this space, including one large Warehouse/Distribution project of more than 400,000 square feet: Jones Corporate Park at Sunset and Jones in the Southwest (416,000 square feet. Finally, Q4, ended with nearly 7 million square feet of planned industrial space.
The fourth quarter industrial market saw a few larger transactions, including Marmot Mountain relocating from Sparks to North Reno taking down 271,832 square feet in Dermody Properties new Logisticenter. Better World Books leased 128,000 square feet and Allstate Warehousing leased 84,000 square feet. There were 9 transactions in the mid-size range totaling 380,000 square feet, which is affirmation that even the small to mid-size businesses are showing signs of recovery, not just the big box national tenants.
Looking forward, the market should expect to see a continuation of expansion with approximately 1.5 million square feet currently under construction with delivery dates in the first half of 2016. Developer Avenue 55 has a 410,000 square foot project. Panattoni is building a 707,000 square foot project and Dermody Properties has 704,000 square feet under construction. Other owner-user companies such as AquaMetals and AZZ Galvanizing have buildings near completion in the Tahoe-Reno Industrial Center that will add to the total market size.
One notable purchase transaction in the fourth quarter of 2015 was the rapidly expanding Cascade Designs, a manufacturer of outdoor adventure gear, who bought an 86,800 sf. building located at 11500 Production Drive for $5,678,000, or $65 psf. This was an expansion to their other current 87,500 square foot facility in North Valleys on Lear Blvd, which they had leased Q1, 2015. Fourth quarter absorption totaled 985,610 square feet, putting vacancy at 9.7% to finish off the year.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.