Las Vegas, NV – Marked by declining vacancy rates, rising rents, and a healthy volume of investment activity, the data provided in Avison Young’s recently released Third Quarter 2022 Las Vegas Office Market Report points to a turning of the tide for the Las Vegas office sector. Marking a significant milestone, Q3 had a direct office vacancy rate of 12.7% which is the lowest level in nearly 15 years.
In yet another promising milestone, the office market saw $234 million of investment volume in Q3, marking the highest level of activity since Q4 2019. The average transaction was priced at approximately $315 per square foot (psf), up from $299 psf in Q2 2022. In addition to the notable sales volume, the average transaction psf reached a new high of $315. Large multi-property sales are scarce, however, it is expected that there will be an increase in capital markets activity as the Las Vegas office sector experiences a revitalized tenant demand.
“The Summerlin and Southwest submarkets are on track to garner office sale prices starting in excess of $400 per square foot over the next few years,” said Barton Hyde, an Avison Young Principal specializing in the Las Vegas office sector. “Companies and employees alike want to live and work in these desirable suburban Vegas communities.”
Average asking rents increased by $0.46 psf on an annual basis from Q2 to Q3, a significant gain in rent pricing that the market has not seen since the end of 2020. North, Southwest, and West Las Vegas experienced the highest average rents in the Las Vegas region.
The declining availabilities and overall vacancies helped propel rent growth as the Las Vegas office market had one of its strongest quarters in recent years. Rent growth should continue, but concerns surrounding a potential recession and rising interest rates could act as potential headwinds.
Positive net absorption totaled 655,839 sf in Q3, which is the largest gain that Las Vegas has posted in a single quarter since the first quarter of 2020.