Northern Nevada By CBRE Reno
The Northern Nevada industrial real estate market showed strong performance in Q4 2017. With approximately 1.4 million square feet of positive net absorption recorded this quarter, the region’s 2017 positive absorption total grew to 3.9 million square feet.
The completion of two new Class A speculative projects in Q4 added much-needed space to the market. Panattoni Development delivered 352,957 square feet at their North Valley Commerce Center and Prologis completed 240,500 square feet in north Reno. Both properties were 100 percent pre-leased prior to receipt of a certificate of completion. An additional 2 million square feet of new projects are expected to break ground in 2018.
Leasing activity was healthy in Q4 and the industrial vacancy rate in Northern Nevada stands at 2.7 percent, a level not seen since 2006 and one that declined from 3.9 percent at the end of Q3. Sales activity has been equally robust with two major sales totaling more than 2 million square feet taking place in Q4.
The Northern Nevada industrial market remains active and strong. With high levels of net absorption, historically low vacancy, and a sizable construction pipeline, 2018 is expected to feature healthy fundamentals, significant demand and an increase in average overall rental rates.
Southern Nevada By CBRE Las Vegas
Through Q4 2017 the Las Vegas industrial market continued to perform at historical levels, with major indicators such as net absorption and construction reaching record highs. Net absorption totaled 2.5 million square feet for the fourth quarter, which helped propel the year-to-date net absorption to 8.2 million square feet, the highest level in the market’s history.
New construction, during the quarter, was 1.9 million square feet, with the year-to-date total at nearly 8 million square feet. Despite adding a record amount of new space in 2017, the vacancy rate at the end of the fourth quarter was 3.7 percent. This is the lowest rate since 2006 and 40 basis points lower than Q4 2016. Of the new space added during the quarter, more than 77 percent of that space was pre-leased.
Several significant pre-leased projects completed construction during the quarter. Those include 621,857 square feet at Prologis’ I-15 Speedway as well as a 570,810 square foot build-to-suit at the Northgate Distribution Center. At the end of the fourth quarter there was 2.9 million square feet under construction, 35.3 percent of which is pre-leased.
Las Vegas’ one-day proximity to three deep water ports and the city’s central location for easy distribution to several states, has led tenants to open regional distribution centers in the area. E-commerce related companies have been the most active users.