By CBRE Reno
The northern Nevada industrial market turned in healthy market fundamentals in Q2 2021, posting the seventh quarter in a row of positive net absorption. Net absorption for the quarter totaled 1.1 million square feet while gross absorption finished at 1.7 million square feet which helped push the market wide vacancy rate down 50 basis points (bps) to 2.8 percent, representing the lowest vacancy rate in the market since Q3 2018.
Leasing activity in the region remains strong as each quarter continues to produce multiple leases in excess of 100,000 square feet. Sales activity in Q2 2021 was robust, soaring past 4.3 million square feet in overall industrial product trading hands.
The development pipeline continued its active run in the northern Nevada market, setting another record for construction with 4.6 million square feet of active industrial developments currently underway. The second half of 2021 looks to see robust construction activity as several projects are expected to deliver and 2.1 million square feet of new developments are slated to break ground. Developers are looking for land to build on in a geographically larger area than before.
Looking ahead, the forecast calls for the continuance of robust leasing activity, institutional investment sales, and new construction for the balance of the year. As active tenant and purchase requirements are at an all-time high this will allow the northern Nevada industrial market to continue to produce strong market fundamentals.
As was the case with many industrial markets across the country, the Las Vegas market experienced robust activity during Q2 2021. Net absorption was 3.1 million square feet for the quarter, and 5.5 million square feet year-to-date.
The overall vacancy rate decreased 100 basis points quarter-over-quarter, due to both continued tenant demand and a significant amount of preleased space in projects delivered during the quarter. In addition, the average asking lease rate increased during Q2 2021, with a 9 percent quarter-over-quarter increase, and a 15 percent year-over-year increase.
The market has 10.1 million square feet of properties under construction as of Q2 2021, about 50 percent of which is preleased. Although larger bulk deals continued to drive the market, leasing activity below 100,000 square feet began to pick up pace, especially in the Airport, Henderson, and Southwest submarkets.
With over 2.2 million square feet of projects delivered during the first half of 2021, combined with 10.3 million square feet of planned projects and 10.1 million square feet already underway in several submarkets, the Las Vegas industrial sector will continue to grow and thrive. Positive absorption and low vacancy rates are expected to continue throughout the rest of 2021 and into 2022.