The Las Vegas Valley’s overall industrial vacancy rate in Q2, 2016 was 4.6 percent, a decline of 0.4 points from 5.0 percent in Q1, 2016. Q2’s decrease ended two quarters of increases in the industrial vacancy rate. However, with vacancies at low levels and positive economic trends, rate increases are currently more likely due to simple statistical variations.
There were 416,000 square feet of industrial completions in Q2 in a single project. This project was the Jones Corporate Park warehouse/distribution center. This brought the Valley’s industrial-base up to 111.4 million square feet.
Net absorption was back into positive territory after a poor quarter in Q1. For Q2, absorption was +525,300 square feet. On a year-over-year basis, net absorption was +3.4 million square feet. By subtype, warehouse/distribution led the way with +2.6 million square feet. Light industrial posted +451,200 square feet, followed by R&D/flex (+156,700) and incubator (+155,700 square feet).
Space under-construction in Q2 was at 4.4 million square feet. Twelve projects comprised this space, including five large warehouse/distribution projects of more than 400,000 square feet: Henderson Freeway Crossing (452,000 square feet), North 15 Freeway Distribution Center (411,000 square feet), Northgate Distribution Center (806,000 square feet), South 15 Airport Center (479,000 square feet) and Sunrise Industrial Park (788,000 square feet). The market ended Q2 with over 3.6 million square feet of planned industrial space.
Another strong quarter for the Northern Nevada industrial market resulted in 2,091,000 square feet of gross absorption concluding Q2 2016. There were two completed developments during the quarter including Panattoni’s 707,660 square feet building at North Valleys Commerce Center and Dermody’s 722,512 square feet LogistiCenter, 270,000 square feet of which is occupied by Marmot Mountain leaving 450,660 square feet vacant.
The notable lease transactions for the quarter were online grocery retailer Thrive Market leasing 328,285 square feet, LASCO Fittings leased 224,640 square feet and Tagg Logistics leased 181,455 square feet. Market growth will continue with over 1.2 million square feet under construction, 50 percent of which is preleased, proving a steady balance of absorption which will carry through 2016.
The second quarter of 2016 saw 21 sales transactions. The largest building sale was the 589,560 square feet former Amazon fulfillment center in Fernley which sold for $16.4 million ($28 PSF). Asking rent at the time of sale was $.33 per sf.
Another notable deal was the building and land transaction at 795 Trademark. The building was situated on 4.782 acres of land and also sold with an additional 2.762 acres of expansion land to Prothera Inc for $9,150,000. Outside of that sale, there was a 56,200 square foot building that sold for $2,650,000 ($47 PSF) and a 84,523 square foot building that sold to Brennan Investment Group for $6,930,000 ($82 PSF).
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.