The Las Vegas office vacancy rate declined in the second quarter of 2014 after increasing in the first quarter of the year. During the latest period, the sector reported a vacancy rate of 25.2 percent, which is down 0.4 percentage points from the prior quarter. Compared to a year ago, vacancies have fallen 0.5 percentage points. The office market vacancy rate has declined 0.8 percentage points since reaching a high of 26 percent in the first quarter of 2013.
There were no office completions during the second quarter of the year, leaving inventory flat at 52.7 million square feet. The office sector reported roughly 235,900 square feet of positive net absorption during the second quarter of 2014, after witnessing 137,100 square feet of net move-outs in the first quarter of the year.
Construction activity increased to 792,700 square feet in the second quarter as six office projects are reportedly under development. A number of projects continue to make progress, including the second phase of Tivoli Village at Queensridge (68,000 square feet), Centennial Hills Center (150,000 square feet), Federal Justice Tower (129,000 square feet), the Gramercy (200,000 square feet) and Downtown Summerlin (200,000 square feet).
The abbreviated summer seemed to cut short activity as the market remained flat through mid-year. The emergence of possible large manufacturers continues to drive the hype; if it happens, the question remains whether Northern Nevada’s office market will prosper from positive trickle down.
Ending the second quarter of 2013 with a relatively healthy vacancy of 15.3 percent, the office market recessed year over year and stands at 17.46 percent year to date. Much of this was due to the first quarter of 2014’s former AT&T call center coming to market, Kinross Gold downsizing and the acknowledgement of sublease space reverting back to landlord direct.
The market has seen a reduction of sublease vacancy adding more square feet to the landlord direct category, hence the small uptick in the vacancy rate. Average lease rates are unchanged, as is new build-to-suit construction and speculative development. There are currently sixteen available spaces on the market greater than 15,000 square feet. This partially consists of two buildings in Downtown Reno, two in Central Reno, four in Meadowood and seven in South Meadows.