COLLIERS LAS VEGAS RELEASES Q2 MARKET RESEARCH REPORT
Las Vegas is Coming Back to Life in 2021 with Significant Progress Across Multiple Sectors in Southern Nevada Including Employment, Hospitality and Land Development
LAS VEGAS – Southern Nevada’s economy is in full recovery mode. As employment is back above 1 million jobs and taxable sales in the first three months of 2021 exceeded taxable sales over the same period in 2019, the market looks strong and the future bright. Investment in commercial properties is at a three-year high and Southern Nevada’s industrial market had an exceptionally strong performance in Q2, posting more than 3.3 million square feet of net absorption – a new record. Market research indicates that from a hospitality and sales perspective, Las Vegas continues to have the confidence of tourists and investors alike.
Industrial
Logistics, driven by e-commerce, continued to dominate the industrial story in Southern Nevada, but sectors outside large warehouse buildings started their own recovery in the second quarter. Renewed broad demand for industrial space boosted net absorption to over 3.3 million square feet, a new record. Industrial development now looks set for a fourth major wave of completions over the next four quarters, indicating confidence in the market’s future.
Land
The development situation in Southern Nevada looks strong, with high levels of industrial, multifamily, and single-family residential development continuing at midyear 2021, and stronger office development than we have seen for several years, including two large mixed-use projects. Real estate development consumes land, so land sales now point to confidence in the Valley’s future. While land sales are generally strongest within the Valley, waves of development coming further down the line may well stimulate interest in land just outside the Valley, in such areas as Apex, Boulder City, Jean and Nye County. Opportunities for redevelopment and infill should keep sales of smaller parcels brisk within the Valley.
Office
The office market saw improved performance in the second quarter of 2021, with demand driving net absorption to its highest level since before the governor’s business closures of 2020. Garden-office complexes saw stronger demand than mid- and high-rise office properties, possibly due to cost-consciousness on the part of tenants, who may be exploring new post-pandemic work paradigms.
Retail
Southern Nevada’s retail market appears to be back on track after a strange 2020. At midyear 2021, the retail market is on pace to exceed 2020’s net absorption, almost all of which occurred in the first quarter of 2020. We think that, with business closures and restrictions largely ended, and with the return of largely unrestricted visitation and conventions to the resort industry, that Southern Nevada’s retail market should continue to improve in 2021.
Medical Office
In the first two quarters of 2021, the medical office market has absorbed 86,882 square feet, putting the market on pace for a better 2021 than 2020. The key for medical office demand moving forward is demographics. Where do future patients live? How far are they willing to travel? The west side of the Valley benefits from continued population growth, while the east side benefits from an aging population and thus greater demand for medical care. We think that the medical office market in Southern Nevada will grow right along with the Valley’s population.
Hospitality
One year after the closure of Las Vegas hospitality in April 2020, Southern Nevada’s hospitality market has made serious progress in recovery. Data points that receded slightly a quarter ago pushed ahead, perhaps most importantly room occupancy. Conventions are returning in June, and this should further bolster the post-pandemic recovery. One key recovery metric from this point on is how the current market compares to the first quarter of 2020 – how close are we to getting back to pre-pandemic normalcy? As it stands, the market is probably at least another six months away from normalcy. The other key metric is hospitality property sales. Sales are a sign of investor confidence in the future of Las Vegas’ hospitality industry. So far, it looks like Las Vegas is still an attractive bet to those in the know.
The full report is available for download here: https://www.colliers.com/en/research/las-vegas/2021-q2-las-vegas-lvqr-market-research-report
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Stephanie Ceccarelli | MassMedia
