Las Vegas, NV – Avison Young recently released its First Quarter 2023 Las Vegas Office Market Report.
Las Vegas’ total office vacancy rate shows an increase in the first quarter following five consecutive quarters of decreases. The direct vacancy rate increased from 12.2% in Q4 2022 to 13.0% in Q1 2023. The sublet vacancy rate showed a slight increase of 10 basis points over the past quarter; however, the sublet vacancy rate is currently 185% higher than the decade average of 0.7%.
“The Las Vegas office market has fared well and continues to look up as we saw a return to office rate higher than most markets. Office space remains crucial to service-based tenants such as law firms, accounting, and other collaborative companies. Las Vegas has also seen an influx in industrial product demand, and this carries over into office demand. These factors leverage the Las Vegas office market for continued resilience,” said Scott Donaghe, Avison Young Principal – Las Vegas.
Rents have remained stable from Q4 2022 to Q1 2023 posting a slight $0.10 increase from quarter to quarter, ending the period at $27.80. Though rents increased in the first quarter, it should be noted that the rate at which rents increased slowed in comparison to recent years – the first quarter posted a 0.4% increase, while the average increase in rents over the past two years has been 1.2%.
“Although vacancy has increased, office developers remain bullish on the Southwest and Summerlin submarkets with two three-story class A office buildings totaling 146,000 square feet (sf) under construction in north Summerlin and two four-story class A office buildings, totaling 182,000 sf, under construction in the Southwest submarket. Gross rental rates range from $43.20 to $48.00 per sf/year for both developments,” said Barton Hyde, Avison Young Principal – Las Vegas.
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