A significant amount of bank-owned for-sale industrial properties have had a delayed effect increasing overall vacancy, said Grubb & Ellis research manager Dave Dworkin. As a result, positive leasing and sales activity in the first half of the year has been overshadowed by the increase of reported vacancy thereby giving the false appearance of a stagnant market. While landlords may see the increase of vacant industrial buildings on the market as a negative, tenants and investors have many opportunities to lease or purchase warehouse space in highly desirable parts of town at favorable rates.There was a strong amount of leasing activity in the Las Vegas industrial market in the first half of the year, Dworkin said. In fact, there were almost twice as many leases signed in the first half of 2011 as there were in the first half of last year. While asking rents continue to drop, most noticeably in the Henderson submarket, desperate landlords can only lower their rates so much before they can no longer afford to maintain their property. Lease rates, as a result, are expected to flatten in the first quarter next year, setting a new benchmark for true market rental rates going forward.
Overall, activity in the local industrial market remains insufficient to reduce vacancies and stabilize rents. Some tenants are hesitant to relocate or renew until after the next presidential election, while others have taken advantage of the vulnerable market and are attempting to lock into long-term leases.
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