The Las Vegas Valley’s overall industrial vacancy rate in Q3, 2017 was 5.5 percent, down 0.5 percentage points from the second quarter. Vacancies were down all product types except for light industrial. The quarter also saw a large amount of completions. The Valley’s industrial market remains healthy and continues to grow.
Q3, 2017 saw 2.3 million square feet completed in six projects, all of it in the warehouse/distribution product type. This was another strong quarter for completions after a slow start in Q1. With over 3.5 million square feet currently under construction and another 5.4 million in the planning stages, there is plenty more space coming to satisfy the industrial market’s continuing needs.
Thanks to the completion, net absorption in Q3, 2017 was almost +2.8 million square feet. On a year-over-year basis, net absorption was almost +6.6 million square feet. By subtype, warehouse/distribution accounted for almost all of the absorption with +6.0 million square feet.
There were 3.5 million square feet of space under construction in Q3. Fifteen of the 17 projects comprising this space are of the warehouse/distribution variety and five of those projects are larger than 3 million square feet. Q3 ended with 5.4 million square feet of planned Industrial space. Nineteen of the 23 planned projects are warehouse/distribution space, as well.
The top notable lease transactions by size for the quarter were once again primarily concentrated in the North Valley submarket, with four out of the top five transactions inked within the top contending submarket.
Prologis filled two vacancies in Stead with Big Rock Sports leasing 96,000 square feet and National Business Furniture leasing 79,300 square feet. GLP signed 3PL provider Fulfillment Works to 88,000 square feet and, next door, local developer Mckenzie Properties leased the first of their two newly completed standalone buildings with ID Tech Camps taking 61,875 square feet. In Sparks, Monsoon Pacific expanded into a 77,696 square foot new facility.
The third quarter of 2017 had an interesting trend with no lease transactions that were over 100,000 square feet, this is one of the first quarters since 2015 that this has occurred. Northern Nevada’s industrial market has been red-hot and currently sits just above a 4 percent vacancy, with the quarter posting a small amount of negative net absorption. For new construction, McKenzie Properties completed two buildings totaling 140,000 square feet in the North Valley submarket.
The quarter’s largest investment transactions included a 50,585-square foot storage facility, which sold for $3,450,000 or $68.20 per square foot. In the Reno market, there was a multi-parcel sale, a total of 62,903 square feet, which sold for $3.8 million or $60.41 per square foot.