By CBRE Reno
The Northern Nevada industrial real estate market remains healthy with strong fundamentals. Net absorption for the first quarter of 2018 totaled 76,799 square feet. While this is less than in previous quarters, overall activity is robust and an increase in transaction volume is expected as the area moves into the second quarter, and throughout the year.
There were several notable investment transactions this quarter, including the sale of 64,000 acres in the Tahoe Reno Industrial Center (TRIC) to Blockchains. In addition, Alexander and Baldwin sold a four-building, multi-tenant industrial project to Dermody Properties. Investment activity in the region has been muted due to a limited supply of properties for sale rather than demand, which is still strong.
Three projects totaling nearly 1.9 million square feet began construction this quarter and are expected to be completed by Q4. Panattoni’s 802,113 square feet in North Valleys Commerce Center, Phase II; Dermody Properties’ 436,368 square feet in LogistiCenter at 395, Phase II; and Conco Companies’ 630,240 square feet being developed in TRIC.
The Northern Nevada industrial market continues to demonstrate growth and stability. Through the first quarter of 2018, the overall vacancy rate stands at 2.7 percent and total availability is 7.4 percent. Moving forward, strong fundamentals and consistent demand are expected to drive a healthy market.
Last year, the Las Vegas industrial market saw a record year in both new construction and demand. Through the end of the first quarter, early indicators are pointing to another strong year—although not at the same level as last year.
During the first quarter of 2018 new completions outpaced demand, causing the vacancy rate to increase from 3.5 percent in the fourth quarter of 2017 to 3.9 percent in the first quarter. The increase in vacancy is largely a result of 1 million square feet of vacant space within the 1.3 million square feet of new completions. The new vacant space will provide standing inventory for tenants looking to expand into Las Vegas.
Several notable completions include: Van Trust’s Northgate Distribution Center, building 9, a 731,561-distribution building; Prologis’ 262,265 square feet completed at the Las Vegas Corporate Center and Harsch’s 186,000 square feet completed at the Henderson Commerce Center.
At the end of the first quarter there was about 1.9 million square feet of space under construction with another 6.1 million square feet expected to break ground in the next 12 to 18 months. With the evolution of the logistics industry, Las Vegas is increasing being looked at as an optimum location for large scale regional distribution facilities.