Northern Nevada
By CBRE Reno
The northern Nevada industrial market continued to build off its momentum from the previous year by posting strong market fundamentals again in Q1 2021. Gross absorption for the quarter reached 1.9 million square feet (SF). Net absorption was also robust, posting a positive 1.3 million SF. Low vacancy rates have allowed for sizable increases in asking lease rates as both bulk and flex asking rates experienced an increase.
Leasing activity is booming across the region with 2.9 million SF of leases being signed. Large transactions remain a staple of the industrial market as the largest lease of the quarter was a pre-lease on new construction signed with an undisclosed company at Reno Logistics Center (795,926 SF). The market is still seeing significant investment capital flow into the region as the largest sale transactions for the quarter were investment trades. The largest sale of Q1 2021 (447,122 SF) was in the North Valleys submarket when Industrial Realty Group purchased the property from LSC Communications in a bankruptcy sale.
The construction pipeline swelled during the quarter with 1.3 million SF of new projects commencing construction in Q1 2021. This pushes the total square footage of properties currently under construction to 4.2 million SF, the highest mark ever recorded in the northern Nevada industrial market. Consistent tenant demand is expected to continue to produce strong market fundamentals throughout the year.
Southern Nevada
Through the first quarter of 2021, the Las Vegas industrial market continued its positive momentum posting more than 2.4 million SF of net absorption, the highest quarterly level since the fourth quarter of 2017. Las Vegas is within a one-days truck drive to most major markets on the west coast and southwest and so continued to attract a number of e-commerce and other logistics companies setting up regional distribution facilities. Additionally, manufacturing companies have been active. Since April 2020 manufacturing employment increased by 10 percent.
A couple of the significant transactions that occurred during the first quarter include DHL Express leasing 385,251 SF at the Raceway Industrial Park. Winco also leased 189,785 SF at the Marion Logistics Center.
At the end of the first quarter, 8.5 million SF of industrial space was under construction with nearly half of that space preleased. The North Las Vegas and Henderson submarkets account for nearly 90 percent of the total space under construction. New construction completions in the first quarter totaled nearly 700,000 SF. The Las Vegas industrial market has been among the fastest growing market in the country and based on the amount of activity CBRE brokers report, there are no signs of the expansion slowing.
