Colliers | Las Vegas Releases Q1 Market Report


LAS VEGAS (April 22, 2021) – Southern Nevada’s pandemic-battered economy started to recover in June of 2020 when business restrictions were eased, especially in the hospitality sector. While we have seen an improvement in the expansion on non-hospitality companies in Southern Nevada, the hospitality sector remains the area’s key sector. Growth there is essential to the health of the local economy. Fortunately, February job numbers showed that the Valley’s recovery was back on track, and hospitality numbers look like they are again heading in the right direction. We think that the economy will continue to improve through 2021, and that the return of conventions and other events to the Valley will accelerate the recovery.


Southern Nevada’s industrial market posted more than 1.9 million square feet of net absorption in the first quarter of 2021, bringing vacancy down to 5.6%. E-commerce drove Southern Nevada’s industrial demand throughout the business closures of 2020, and this has continued into 2021. Nearly all of the Valley’s net absorption took place in warehouse/distribution buildings, primarily in the North Las Vegas submarket. Outside the logistics sector, the industrial market continued to struggle. The gradual return of visitors to Southern Nevada’s resorts and the continued high demand for housing in the Valley should help rectify this situation and spark a stronger recovery in those subtypes as 2021 proceeds.


The retail market looked like it was on pause this quarter, with relatively low net absorption, stable vacancy rate of 7.1% and an asking rental rate that increased by only $0.01 psf. Without a precipitous drop in the retail market in 2020, an equally impressive recovery in 2021 was unlikely. More to the point, the retail market’s troubles are not over yet. Taxable sales have shown little real recovery yet, especially in the eating and drinking places subsector, and employment losses in that subsector persist. We think 2021 will show improvement as the year proceeds, but a sluggish employment recovery may complicate things.


Southern Nevada’s multifamily market weathered 2020 well, with vacancy lower at the end of the year than the beginning, and net absorption generally positive. The backwards step experienced in the first quarter of 2021 is not necessarily significant, as most signs point to strong future demand for multifamily in Southern Nevada. Multifamily is currently 4.4%, and average rental rates increased this quarter to $1,170 per unit.


After dipping into negative net absorption territory at the end of 2020 office demand rebounded this quarter, with net absorption totaling 52,240 square feet. This brought vacancy down to 15.0% from 15.1% last quarter. The Valley’s office market is being hit from two sides – fewer tenants in the market and reduced demand for office space by those tenants. This accelerates the trend of less office square footage per employee caused by the impact of computers on office productivity that began in the 1990’s. We worried last year that negative net absorption, which was recorded through much of 2020, would continue into the first half of 2021. So far, that worry seems to be unfounded. We think demand for office space will continue to improve through 2021. Recovery will likely be sluggish as businesses re-evaluate their office needs and experiment with new working schemes.

Medical Office

Medical office outside of hospitals had a rough time in 2020, as government restrictions kept people away from dentists and doctors for anything other than infection by the COVID-19 virus. Entering 2021, the medical office market is showing signs of recovery. Net absorption in the first quarter was positive, but not especially strong, and was outpaced by deliveries, sending vacancy up to 11.4%. We think that demand for medical office space will improve as 2021 proceeds, and we should see vacancy rates decreasing by the end of the year. Investment sales of medical office buildings were strong in 2020 and remained strong in the first quarter of 2021, suggesting that investors are bullish on the medical office market’s chances moving forward.


Land sales are driven by development, and development in Southern Nevada is now a mixed bag. Residential development is healthy, with strong residential sales perhaps driven by the “California exodus”. Industrial development is also healthy, driven by demand by e-commerce companies. That strong residential and industrial development has stimulated land sales in the Valley, but demand cannot be fulfilled without supply, and as the old joke goes about land, “they aren’t making any more of it”. Large blocks of developable land are running low in Southern Nevada, and this lack of supply will curtail land sales as we proceed through the decade of the 2020’s. Smart investors are already looking just beyond the Valley limits for future development.


Southern Nevada’s hospitality market may be in for a rocky recovery from the pandemic business closures of 2020. When restrictions were eased in June 2020, Southern Nevada’s hospitality industry saw a rapid jump in visitor volume, room occupancy and leisure & hospitality employment from the lows of April and May. These gains peaked in October and November, and receded in December and January, before showing improvement in February. What this all likely means is that a rapid recovery is, for now, unlikely. The Valley’s convention business remains shuttered, although conventions will return to Las Vegas with World of Concrete in June 2021. With the return of convention business, and reductions in anxiety over the COVID-19 virus due to vaccinations, we think Southern Nevada’s hospitality recovery will accelerate in the second half of 2021.

The full report is available for download here:


For further information please contact:

Maddie Skains | MassMedia

702-433-4331 |

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