The CBRE Las Vegas office announces the release of the firm’s 2015 yearly and fourth quarter market statistics for the industrial, office and retail sectors in southern Nevada.
Highlights:
- Industrial – In 2015, the Las Vegas Industrial market posted 4.9 million sq. ft. of positive net absorption, which is a record level for the market. New construction in 2015 was at the highest level since 2008, with about 2.8 million sq. ft. of new space completed.
- Office – 2015 net absorption totaled 913,870 sq. ft., marking the 16th consecutive quarter of positive absorption.
- Retail – The vacancy rate at 9.8% reached its lowest level since 2008.
More detail for each sector appears below.
Industrial
According to Kevin Higgins, executive vice president, the record-level positive net absorption in 2015 was driven by demand for new product type. “As we enter 2016 and vacancy rates continue to decrease, the challenge for the Las Vegas market is supplying the appropriate space to meet the demand.”
- In 2015, the Las Vegas Industrial market posted 4.9 million sq. ft. of positive net absorption, a record level for the market.
- For Q4 2015 the vacancy rate was 5.08%, representing the lowest fourth quarter level since Q4 2006.
- Construction activity in 2015 was relatively strong, with about 2.8 million sq. ft. of new space completed, which is the highest level since 2008. Three buildings comprising 986,235 sq. ft. were completed during Q4 2015:
o ProLogis completed a ±153,700 sq. ft. distribution building that was preleased to Western Group Packaging
o Dermody Properties completed a ±381,804 sq. ft. building preleased to Priority Wire & Cable, and Southern Enterprises
o The Pauls Corporation completed phase I of the Lone Mountain Corporate Center, which totaled ±450,731 sq. ft.
- About 2.7 million sq. ft. of projects is planned to break ground over the next 12 months. Speculative development comprises nearly 86% of the total space under construction. These projects include:
o Panattoni has two projects under construction: Henderson Freeway Crossing and Jones Corporate Park
o ProLogis’ Black Mountain Distribution Center in Henderson
o SunCap Property Group’s SunPoint Business Center in North Las Vegas
o Juliet’s Blue Diamond Business Center in the Southwest
o A joint project between LaPour and Jackson Shaw, Parc Post, broke ground during Q4 2015
Office
According to Randy Broadhead, senior vice president, 70% of the Las Vegas market office absorption was along the 215 beltway near Summerlin and Summerlin South. “As the remaining office space in this area continues to be filled in 2016, other submarkets should see growth.”
- 2015 Net Absorption totaled 913,870 sq. ft.
o 16th consecutive quarter of positive absorption
o All submarkets, other than Downtown, saw positive absorption in 2015
o The West submarket saw the most demand, accounting for about 40% of the overall absorption for the year at 368,119 sq. ft., followed by the Southeast submarket with 191,359 sq. ft., and the Southwest submarket at 146,910 sq. ft.
- Fourth Quarter the Vacancy Rate was 19.52%
o This is 167 basis points lower than the fourth quarter of 2014
o The Central East submarket saw the highest vacancy rate at 27.64%, followed by the Northwest at 26.32%, then Central West at 22.64%, Downtown at 20.43%, Southeast at 19.59%, Airport at 19.08%, Southwest at 16.74%, North Las Vegas at 15.20%, and the West submarket at 12.32%
- Total new space completed in 2015 was 242,772 sq. ft.
o Currently there is 348,379 sq. ft. of space under construction
Retail
According to Matt Bear, vice president, brokerage services, Global Gaming Group Retail, the outlook for 2016 is for occupancy levels to continue to increase for all retail classes. “Rental rates also will continue to rise for most properties and more retail is expected to be added to the Strip corridor.”
- The vacancy rate, at 9.8%, is at its lowest level since 2008
- The Southeast/Henderson submarket saw the strongest demand in 2015, comprising about 48% of the total net absorption in the market
- Some of the tenants that were most active in 2015 include:
o Planet Fitness
o Goodwill of Southern Nevada
o Hobby Lobby
o Conn’s
o Lee’s Liquor
o Save-A-Lot
o IKEA
- In 2016, new construction will likely start to pick up again, though not to the extent of historical averages, and will likely be concentrated in areas of new home developments. Additionally, IKEA is expected to open in June and will generate significant interest in the surrounding area.
- Retail owners are looking at creative ways to drive traffic to their centers. We are seeing an emerging trend of medical tenants (quick cares, dentist offices, general practitioners, etc.) actively leasing within retail centers.
- “Big box” retail space is being repurposed into office space:
o A former Dillard’s at the Boulevard Mall is being repurposed as a possible call center
o A former Target located at Decatur and Meadows Lane was purchased by the Southern Nevada Health District and will be its new headquarters