By Jordan Lehman, Colliers | RENO
Reno’s office market began 2022 with incredible momentum. The region saw robust investment activity, sizeable rent growth and shrinking vacancy. Office sales volume of $76.1 million was the highest first-quarter total on record. Pricing continued to climb this quarter as average sales price grew 65.9 percent year-over-year to $292 per square foot. New deliveries in West Reno helped to boost Reno’s rising rents this quarter, which are up 4.3 percent year-over-year to $1.91 per square foot on a fullservice basis.
While some sublease space hit the market this quarter, net absorption still remained positive. Quarterly net absorption of 24,799 square feet signaled the ongoing positive demand throughout the Reno market. Occupancy gains this quarter have pushed market-wide vacancy rate to 11 percent, down 180 basis points year-over-year.
Reno’s reputation as a great place to live in the West has grown in recent years. GoodHire’s analysis of 155 US cities ranked “The Biggest Little City” as the second most affordable place to live and work in 2022, with some of the largest factors being wage growth, job growth and renter and homeowner affordability. These accelerating demographic trends will continue to aid in the office sector’s growth and success in the years ahead.
By John Stater, Colliers | Las Vegas
Southern Nevada’s office vacancy decreased in the first quarter of 2022 to 12.5 percent, the lowest vacancy rate the Valley has seen since before the Great Recession. Asking rental rates increased to $2.32 per square foot on a full-service basis. The impact of the COVID lockdowns is not completely in the rearview mirror for Las Vegas’ office market, but it is receding at a fast pace. The office market now appears to be returning to the expansion evident in the first quarter of 2020, and was derailed, or at least put on pause, by the lockdowns.
Net absorption has hovered around 300,000 square feet per quarter for the past four quarters, the most impressive expansion of occupied office space since 2017/2018. Much of this expansion has occurred without the benefit of new development; this will change this year as the Valley is set to add 735,000 square feet to inventory. Pre-leasing in these projects is strong. The trend of high demand for smaller office spaces in class B and C product continued in the first quarter, and demand for class A space improved dramatically. Most of the product scheduled for completion this year is class A.
At the moment, it looks as though Southern Nevada’s office market is in for a strong 2022. While such positive prediction is vulnerable to unforeseen problems in the national or global economies, at this point potential risks to the economy are a given.