A report released today by Xceligent and the Commercial Alliance Las Vegas (CALV) shows the commercial real estate market in Southern Nevada to be a bit of a mixed bag, with the retail market leveling off in the first quarter of 2017 and the office and industrial markets absorbing space almost as fast as it’s being built.
CALV President Jennifer Ott, CCIM, and a longtime local commercial real estate broker, said most aspects of the industry in Southern Nevada continued to gain ground through the first quarter of 2017. One possible exception, at least during the first three months of 2017, may be the local retail market, which is her specialty.
“The retail market was showing good growth through 2016, and I still think it’s in good shape overall,” Ott said. “But these statistics for the first quarter suggest that growth has started to slow down a bit.”
According to the report, total vacancy for the local retail market dropped from 9.8 percent during the first quarter of 2016 to 9.6 percent in the first quarter of 2017. Total retail vacancy was also at 9.6 percent in the fourth quarter of 2016.
Tina Reith, director of analytics for Xceligent for the Las Vegas market, said the amount of retail space being absorbed in Southern Nevada “is expected to remain positive throughout the year, especially in the Southwest market, where over 180,000 square feet of space remains under construction.”
For instance, Reith said, “many of the junior anchor and anchor spaces that were vacated a year ago from Fresh and Easy stores leaving the market have become occupied with new tenants.” Major retail occupancies this quarter include Ace Hardware, Party USA, and The Butcher Block, she added.
As Ott pointed out, this follows a wave of new restaurants and retailers that entered the market in 2016, including new-to-market restaurants like Cracker Barrel, Chick-fil-A and PizzaRev, along with the Burkes Outlet department store and buybuy BABY children’s furniture store. Through 2016, these and other new tenants helped the retail market fill vacancies created by the closures of chain stores like Sports Authority, Sport Chalet and Haggen supermarkets.
Meanwhile, the local office market continues to gain ground and absorb more space. One reason for that, Ott and Reith agreed, is Southern Nevada’s job growth. Citing the U.S. Bureau of Labor Statistics, Reith noted the local unemployment rate dropped from 6.5 percent in January 2016 to 5 percent in January 2017. The Las Vegas metropolitan area added 44,400 jobs over the past year, with “office-using jobs,” such as information, professional, financial and business services, accounting for about 7,900 of those new jobs.
Reith said more than 100,000 square feet of office space is currently under construction in the Las Vegas metro area, with most of that construction occurring in what Xceligent defines as the “Henderson South” market.
“This is the most construction activity we’ve seen in the office market since the last quarter of 2014,” Ott added.
The total office vacancy rate declined from one year ago, dropping from 17.1 percent during the first quarter of 2016 to 15.1 percent during the first quarter of 2017.
Reith added that “office absorption is expected to remain positive during 2017, but the diminishing activity trend line sparks a sense of curiosity as to when negative activity will be seen again.” The state Real Estate Division, David O. McKay Academy, Machine Zone and Jet leased significant amounts of office space during the first quarter.
As for the industrial market, Xceligent counted 21 industrial structures under construction in the Las Vegas metro area, accounting for a combined total of more than 4.7 million square feet. That compares to all of 2016, when Reith said 15 industrial buildings came to market adding just over 3 million square feet. That trend continued during the first quarter of 2017, with four more industrial buildings being completed to add another 1.2 million square feet of space to the market.
Even with more space being added to the market, total industrial vacancy rates remained the same year over year, at 5.7 percent in both the first quarter of 2016 and 2017.
Ott and Reith expect the industrial market to continue filling more space during 2017, as more companies consider expanding or establishing a presence in Las Vegas and as more pre-leased spaces come to market and vacant spaces continue to fill at a rapid rate. Large industrial tenants entering the market and occupying newly constructed space during early 2017 include the Honest Company, buybuy BABY and Amazon.
Xceligent, a rapidly growing provider of commercial real estate information locally and nationally, partners with CALV and local commercial real estate professionals through their Quarterly Advisory Boards to produce quarterly reports on market trends and conditions in the office, industrial and retail markets in Southern Nevada. The report released this week covers activity through the first quarter of 2017.
Ott, whose professional designations include being a Certified Commercial Investment Member (CCIM), is one of dozens of leading local brokers who serve on advisory boards that help verify and produce these reports. Ott thanked her fellow brokers and industry professionals for sharing their time and expertise to help verify this data and to ensure these reports are the most accurate overview possible of the commercial real estate market in Southern Nevada.
About the Commercial Alliance Las Vegas
The Commercial Alliance Las Vegas (CALV) is the commercial real estate division of the Greater Las Vegas Association of REALTORS®. It organizes and empowers the industry in Southern Nevada through education, networking, promoting professionalism and shaping public policy. Membership in CALV is open to REALTORS® and non-REALTORS® alike. For more information, and to access the full reports on the commercial real estate market, visit www.calv.org.
About Xceligent
Xceligent is a leading provider of verified commercial real estate information across the United States. Its professional research team pro-actively collects: a comprehensive inventory of commercial properties, buildings available for lease and sale, tenant information, sales comparables, historical trends on lease rates and building occupancy, market analytics, and demographics. This information assists the real estate professionals, appraisers, owners, investors, and developers that make strategic decisions to lease, sell, and develop commercial properties. Xceligent, backed by dmg information, has launched an aggressive national expansion that will provide researched information in the 100 largest United States markets. For more information on Xceligent, please visit xceligent.com.