The Las Vegas Valley’s overall industrial vacancy rate in Q1, 2016 was 5.0 percent, a rise of 0.3 points, from 4.7 percent in Q4, 2015. Q1’s increase was the second quarter in a row with an increase in vacancy rate. Still, with the vacancy rate at such a low level, these rises are not a cause for concern. The strong growth in demand for industrial space, along with a resurgent economy, and construction and industrial employment, shows that the Valley’s industrial sector is strong.
There were 190,000 square feet in completions in Q1 in a single project. This project was the new Ainsworth Americas HQ Light Industrial building in the Southwest submarket. This brought the Valley’s industrial base up to 111.3 million square feet. Completions were light this quarter due to timing issues. There is still much new supply in the pipeline.
Net absorption dipped into negative territory for the first time since Q1, 2012. For the quarter, absorption was -131,100 square feet. This has more to do with the lack of quality of space than it does a decrease in demand.
Space under-construction in Q1 was at 3.4 million square feet. Ten projects comprised this space, including four large warehouse/distribution projects of more than 400,000 square feet: Henderson Freeway Crossing (452,000 square feet), Jones Corporate Park at Sunset and Jones in the Southwest submarket (416,000 square feet), North 15 Freeway Distribution Center (411,000 square feet) and Northgate Distribution Center (806,000 square feet). Finally, Q1, ended with nearly 5 million square feet of planned industrial space.
The first quarter of 2016 started off with a few larger lease transactions, but the majority of deals done were smaller in size, and under 30,000 square feet. Of the larger transactions, locally based, ITS logistics signed a new lease for 629,552 square feet at 555 Vista Boulevard, and plans to vacate their current facilities on Spice Islands Drive and Aircenter Circle. Additionally, online pet retailer Chewy.com leased 566,866 square feet at 385 Milan Drive in the Tahoe Reno Industrial Center from Prologis. One of the only other notable lease deals was at 995 McCarran Boulevard where the locally based packaging company, Momar Industries, leased 57,000 square feet. The vacancy rate was slightly down in Q1, finishing up at 9.3 percent with roughly 415,000 square feet of absorption.
There was one large completion brought online in the first quarter. Industrial developer Pannatoni completed the 202,000 speculative building at 9250 Red Rock Road in the North Valleys Submarket. More completions are scheduled for Q2. Pannatoni is under construction on a 707,000 square foot building at their North Valley’s Commerce Center and Dermody Properties is underway on construction with Building 1 in Phase 2 of the LogistiCenter at I-395, which will total 722,512 square feet and is expected to be complete this month. Marmot, the outdoor clothing and adventure gear company, has pre-leased 270,000 square feet of the facility.
A couple notable sales in the first quarter were the 631,580 square foot industrial portfolio on E. Greg Street that sold for $25.8 million, and the 589,560 square foot, former Amazon distribution center in Fernley, a sale which actually closed on the first day of Q2.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.