By CBRE Reno
The northern Nevada industrial market finished off a strong year by recording the largest year-to-date net absorption total since 2016. The fourth quarter of 2020 recorded 1.2 million square feet of positive net absorption, pushing the year-end total to 4.3 million square feet. Overall, the market had strong leasing activity throughout the year; 7.9 million square feet of leases were signed in 2020. Activity in the market helped drop market wide vacancy and availability rates by 120 basis points (bps) and 160 bps, respectively. This represents the largest quarter-over-quarter drop in vacancy in three years.
This quarter continued to yield several large leases over 100,000 square feet. One of the largest leases the Reno industrial market has ever seen was signed in Q4 2020 as a build-to-suit project was inked for an undisclosed company under the name “Project Zephyr”. This future 997,004 square feet Class A distribution facility will be a part of Dermody Properties and Reno Land Company’s new development, The Park at McCarran. 3PL tenants remained active in the market as Geodis Logistics signed the next three largest leases of the quarter. The global logistics company signed two renewals for 276,660 square feet and 176,308 square feet in Sparks while also signing a new lease for 255,000 square feet in McCarran. Strong market fundamentals, significant new construction, and increased leasing activity suggest that the northern Nevada industrial market is poised to exceed pre-pandemic expectations in 2021.
The Las Vegas industrial market closed out 2020 on a positive note. The COVID-19 pandemic accelerated e-commerce growth and Las Vegas was a net beneficiary with companies expanding their industrial footprint and new companies establishing their regional distribution centers in southern Nevada. Net absorption for Q4 2020 totaled more than 1.6 million square feet, bringing the year-end total to nearly 6.4 million square feet, the second highest net absorption in the market’s history. With 2.8 million square feet completed during Q4 2020, the 2020 total for new development was more than 6.3 million square feet. A few of the sizable projects that completed construction include Matter Logistics Center at Cheyenne totaling 727,926 square feet, CapRock’s Interchange Industrial at 683,436 square feet and Becknell Industrial’s North Las Vegas Business Park totaling 297,258 square feet.
Developer confidence continued to be positive as evident by the nearly 2.3 million square feet of space that broke ground during Q4 2020, bringing the total space under construction to 6.4 million square feet. With more than 70 percent of the new completions being speculative and due to the timing of leases executed, the vacancy rate increased by 120 basis points to 4.6 percent. CBRE industrial brokers report that with the number of tenants currently looking in the market, 2021 is shaping up to be another strong year for the Las Vegas industrial market.