The Las Vegas Valley’s overall industrial vacancy rate in Q3, 2016 was 5.2 percent, unchanged from Q2, 2016. As of Q3, it now appears that the industrial market rate is at full occupancy, as the market absorbs new space and the existing inventory is remade to fit the new demand for larger space.
There were 565,340 square feet of industrial completions in Q3 in three projects. These projects were the 232,826-square-foot Black Mountain Distribution Center #3, the 167,280-square-foot Blue Diamond Business Center #3 and the 165,234-square-foot Parc Post warehouse/distribution center. This brought the Valley’s Industrial-base up to 112 million square feet.
Net absorption was back in positive territory for the second quarter in a row after an off quarter in Q1. For Q3, absorption was +611,100 square feet. On a year-over-year basis, net absorption was +3.3 million square feet. By subtype, warehouse/distribution led the way with +3.0 million square feet. Light industrial posted +448,400 square feet, followed by R&D/flex (+79,100 square feet) and Incubator (+45,700 square feet). Every product type in the Valley’s industrial market posted year-over-year gains in net absorption except for light distribution, which posted -265,600 square feet in losses.
Space under-construction in Q3 was at 5.3 million square feet. Fifteen projects comprised this space, including six large warehouse/distribution projects of more than 400,000 square feet. The market ended Q3 with over 6 million square feet of planned Industrial space.
The industrial market in Northern Nevada posted yet another healthy and balanced quarter for the third quarter with over 2,622,301 square feet of gross absorption, 923,766 square feet of new vacancy and 1,698,535 square feet of positive net absorption.
The largest leasing transaction of the quarter was from Jet.com. The e-commerce company expanded into a 672,000 square foot space in the Tahoe Reno Industrial Center (TRIC). However, it was the North Valley’s submarket that took the spotlight landing five of the six top leasing transactions of the quarter. The organic cracker company Mary’s Gone Crackers relocated their US headquarters from Gridley, CA to a new 423,001 square foot build-to-suit in Panattoni’s North Valley’s Commerce Center (NVCC). Also at NVCC, high end outdoor gear manufacturer Kelty leased 217,863 square foot for distribution, absorbing 31 percent of the new 707,000 square foot building B. Sears Outlet leased 179,027 square feet at 400-500 Parr Blvd and a large chunk of 9250 Red Rock Rd. was absorbed. Alltrade Tools took 93,500 square feet and the custom web-to-print company Cimpress leased 72,750 square feet at the location. This concluded 83 percent occupancy of the 200,000 square foot speculative project.
With the addition of the new facilties for Jet.com, Mary’s Gone Crackers and Aqua Metals finishing their new 138,000 SF building in TRIC, market expansion continued to thrive during the quarter with 1,233,001 SF of new deliveries. Market growth will carry on over the next few quarters with several new speculative developments underway.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis and statistics compiled by Dickson Commercial Group.
*Does not include S. Lyon County, Douglas County, or Carson City