The Las Vegas Valley’s overall industrial vacancy rate in Q4, 2016 was 4.8 percent. Since Q3, 2015 the Valley’s industrial market rate has been at full occupancy and has been absorbing new space while remaking the existing inventory to accommodate larger space demand.
Q4 saw 2,045,634 square feet of completed space, all of it in the warehouse/distribution product type. These projects were the 452,170 square-foot Henderson Freeway Crossing, the 410,640 square-foot North 15 Freeway Distribution Center 1-2, the 248,126 square-foot Building 1 and the 558,276 square-foot Building 2 of the Northgate Distribution Center, the 211,188 square-foot Beltway Distribution Center and the 165,065 square-foot Parc Post warehouse/distribution center also located in the Southwest submarket. This brought the Valley’s industrial-base up to 114.3 million square feet.
Net absorption was positive for the third quarter in a row after negative absorption in Q1, 2016. For Q4, absorption picked up steam, more than doubling from the previous quarter with 2,357,286 square feet. On a year-over-year basis, net absorption was +3.3 million square feet.
There were 4.4 million square feet of space under construction in Q4. Fourteen of the fifteen projects comprising this space are of the warehouse/distribution variety and four of those projects are more than 400,000 square feet: The market ended Q4 with almost 7.4 million square feet of industrial space in the planning stages with all of it of the warehouse/distribution type.
A combination of large multi-property acquisitions from institutional investors, homegrown investment and owner-user purchases and positive net absorption stemming from several large, big-box lease transactions is giving Northern Nevada exciting momentum heading into the new year.
Unlike the previous quarter where the North Valleys submarket led the charge in gross absorption, this quarter it was the I-80 East Corridor with three transactions accounting for 43 percent of the gross absorption.
Top notable lease transactions included Fedex Ground who leased 343,447 square feet in a new distribution facility and auto parts supplier, Daehan Solutions America, occupied 323,520 square feet of the 589,520 sq. ft. former Amazon building in Fernley. At the Tahoe Reno Industrial Center, Tesla leased the balance of 201 Ireland Drive (304,500 sq. ft.) for additional indoor storage during construction of the gigafactory.
The thriving quarter wrapped up with 2,259,746 square feet of gross absorption, 1,011,271 square feet. of new deliveries, concluding 1,248,475 square feet of net absorption and a 5.74 percent vacancy rate.
The fourth quarter of 2016 saw another large disposition by Global Logistic Properties, who sold 1,170,000 square feet in the Sparks submarket to Westcore Properties. Second to that sale was another multi-building deal in the Sparks submarket. Mancini Properties Inc purchased four buildings on Dunn Circle for $3,550,000 ($57 p/sf).