According to the Nevada Department of Employment, Training and Rehabilitation, 183,600 industrial-related jobs were recorded in December 2007, a net decrease of 5,300, or 2.8 percent, from December 2006. Construction lost 6,500 jobs, while manufacturing lost 700 jobs.
The Las Vegas Valley’s speculative industrial vacancy rate increased to 6.1 percent in the fourth quarter. This increase in vacancy was accompanied by a substantial drop in the average monthly asking rent, from $0.77 per square foot in the third quarter to $0.66 NNN in the fourth quarter.
Direct net absorption was 830,970 square feet and completions totaled 2,226,819 square feet, resulting in an absorption-to-completion ratio of 0.37:1 for each square-foot of new supply. The North Las Vegas submarket led the Valley in completions with 1,183,292 square feet. By product type, 71 percent of completions in the fourth quarter were in warehouse distribution space.
Warehouse distribution industrial space had the highest net absorption with 333,574 square feet, followed by light distribution, R&D Flex and light industrial. If all of the industrial space presently under construction or planned is completed, it would represent a 7.3 percent increase in the Valley’s industrial inventory. Additionally, if all available space in existing buildings were added to this forward-supply, it would take approximately 12.4 quarters (3.1 years) to absorb it all, using the past four quarters’ average absorption of 1,075,820 square feet.
The fourth quarter of 2007 saw another large amount of newly constructed industrial space added to the Northern Nevada Market. This quarter added 1.4 million square feet bringing the year end total to more than 4.3 million square feet. The vacancy rate increased from 6.8 percent in the third quarter to 8.9 percent at year’s end, primarily due to the projects coming online. Some may view the increase in vacancy as negative, however, 8.9 percent overall is healthy.
Net absorption for the fourth quarter registered a meager 132,759 square feet, bringing the 2007 total to 1.65 million square feet, slightly lower than the absorption levels of 2004 and 2005 and about 53 percent of the demand we experienced in 2006.
The majority of the development projects in Northern Nevada are located in the Tahoe Reno Industrial Center (TRIC), 8 miles east of Sparks on US 80. In the fourth quarter, a total of 606,000 square feet was completed in TRIC. This list of new industrial space includes 491,400 square feet at 201 Ireland, 95,000 square feet at 500 Pittsburg Ave, and 20,000 square feet at 2999 Waltham Way. Stead saw the completion of the last Lear Industrial building adding 390,000 square feet.
As stated in the past, land within Reno and Sparks remains scarce with pricing remaining in the $8 to $16 per square foot range. Industrial zoned land in the outlying areas remains abundant.
Southern Nevada analysis and statistics compiled by Colliers International and Restrepo Consulting Group
Northern Nevada analysis and statistics compiled by Colliers International Reno