The overall vacancy rate for the Las Vegas Valley Industrial market in Q3, 2015 was 5 percent, a drop of 1.2 points, from 6.2 percent in Q3, 2015. The decline equates to 11 straight quarters of declining industrial vacancies. Additionally, between August 2014 and August 2015, the number of industrial-space using jobs in the Valley increased by 4.9 percent.
Completions for Q3 were 1,431,700 square feet in five projects. The completed projects were the Las Vegas Corporate Center No. 20 Warehouse/Distribution in the North Las Vegas submarket, the Marmaxx Distribution Center expansion in North Las Vegas, Switch’s Supernap #9 in the Southwest, the Catamaran warehouse in the Southwest and the Konami Gaming expansion in the Airport submarket. This brought the Valley’s industrial base up to 110.2 million square feet.
Net absorption remained positive for the quarter at 2.6 million square feet of space. On a year-over-year basis, net absorption was 5.8 million square feet. Every product type in the Valley’s industrial market posted year-over-year gains in net absorption.
Space under construction in Q3 was at 2.3 million square feet. Nine projects comprised this space, including two large Warehouse/Distribution projects of more than 400,000 square feet: Pauls Corporation’s Lone Mountain Corporate Center in the North Las Vegas submarket (446,880 square feet) and Jones Corporate Park at Sunset and Jones in the Southwest (416,000 square feet. There are over 5.5 million square feet of space in planning.
There was a significant increase of leasing activity in the third quarter of 2015 than the relatively quiet first and second quarters of 2015. There were several large lease transactions completed in the Northern Nevada market, including Bi Nutraceuticals, which signed a lease for 140,000 square feet in the Tahoe Reno Industrial Center, Tag Logistics leasing 153,000 square feet on Lear Boulevard in the North Valley submarket and US Cabinets leased 126,268 square feet at 1381 Capital Court in the Airport Submarket in Reno.
Also, several new deliveries came to market, including the completions of speculative buildings by Dermody Properties and Pannatoni. Both buildings were in the North Valley submarket and were over 200,000 square feet. There was over 300,000 square feet of positive net absorption in the third quarter as compared to the second quarter, which had negative absorption. The direct vacancy rate for the third quarter is 8.5 percent, however there has been a sub-lease brought to market of the former K-Mart distribution center in the Sparks submarket, which has a significant impact on available square footage. The building, 1,374,664 square feet in size, will become completely vacant in 2016. Taking this space into consideration, the vacancy rate is over 11 percent.
Overall the market sentiment is good and rates on smaller space continue to rise. The sales for the third quarter were relatively slow with most sales transactions being smaller, owner-user facilities.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.