The overall vacancy rate for the Las Vegas Valley industrial market in Q1, 2015 was 6.9 percent, a drop of 0.3 points, from 7.2 percent in Q4, 2014. The first quarter’s decline equates to nine straight quarters of declining industrial vacancies. The strong growth in the demand for industrial space, paired with resurgent construction, shows that the Valley’s industrial sector is once again going strong.
Completions were 51,500 square feet, in one project. The completed project is the MMC Contractors West Light Industrial building in the southwest submarket. This nudged the Valley’s industrial-base up to 108.3 million square feet. Net absorption remained positive for the quarter with 356,000 square feet of space.
Space under construction in the quarter grew to 3.5 million square feet. Thirteen projects comprised this space, including several large warehouse/distribution projects of more than 400,000 square feet: Pauls Corporation Industrial Buildings near Lone Mountain Road in the northwest submarket (443,000 square feet), Las Vegas Corporate Center #19 in North Las Vegas (464,200 square feet), Jones Corporate Park at Sunset and Jones in the southwest (416,000 square feet), Blue Diamond Business Center Buildings #6 and #10 (430,000 and 495,000 square feet, respectively) and Switch’s Supernap #9 on Jones Boulevard (575,000 square feet).
After a great year for the industrial market in Northern Nevada, 2015 started slowly. Many companies looking to relocate or expand in the fourth quarter of 2014 have paused and are targeting the second to third quarter of this year. Interest remained strong as the market continues to ready itself for the demand coming in 2015.
Several large transactions were completed in the first quarter including Battery Systems, Almo Corp and Cascade Design. Although activity was strong the vacancy rose slightly as Zulily vacated its former facility for a larger one and Conco finished up its speculative 300,000 square foot building in the Tahoe Reno Industrial Center.
New development continues in the North Valley submarket with Panattoni developing 770,000 square feet for Petco and Dermody adding 400,000 square feet near the newly completed Amazon facility. Approximately two million square feet of additional space is expected to be added to the market.
Smaller transactions were active in the first quarter pushing rates up in the smaller industrial sector as well. Demand increased for small industrial space with yards as contractors are busy again with new projects.
Overall the industrial outlook for 2015 is very positive. First quarter net absorption was positive and the trend is anticipated to continue.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group, Q1 statistics were not available for Northern Nevada.