— By Patti Dillon, Executive Vice President, Colliers —
Las Vegas’ office market is at a critical juncture as shifting dynamics could shape its future for years to come. New developments like the anticipated 30-acre studios development project in discussion with Howard Hughes Corporation present opportunities, though second-generation office space is expected to dominate over the next three to five years.
This shift is driven by cost efficiency, evolving tenant demands and the higher expenses tied to new construction. Though new builds offer state-of-the-art facilities, the adaptability and affordability of second-generation spaces make them a practical solution for many businesses.
Las Vegas continues to attract high-profile corporate tenants from out of state. These companies are drawn to flexible office spaces that feature modern technology and proximity to mixed-use developments that support the evolving hybrid work model. The increasing demand for live-work-play environments has placed a premium on mixed-use developments that combine residential, office and retail spaces.
Despite ongoing demand, the market faces significant challenges. Investor confidence has been impacted by broader economic factors, including the U.S. elections, geopolitical tensions and inflationary pressures. Supply chain disruptions, rising construction costs and higher interest rates also create barriers for developers and limit financing options for both new and existing projects. As a result, economic uncertainty has slowed dealmaking, with many decision-makers adopting a more cautious approach.
One of the most pressing challenges is land scarcity. More than 90 percent of Clark County’s land is government owned. This forces developers to rely on public-private partnerships to secure new projects. Key parcels, such as those controlled by Howard Hughes Corporation and the UNLV Harry Reid Research & Technology Park, have received consideration for new developments, especially among studio developers. This could constrain future office construction to build-to-suit or specialized-use projects.
Despite uncertainties, interest from large-scale tenants remains strong. The average tenant size in Las Vegas ranges from 5,000 square feet to 8,000 square feet, but we’ve also noted recent activity from tenants seeking more than 25,000 square feet. This is especially pronounced in newly constructed, amenity-rich developments. It makes sense, as these tenants are drawn to modern spaces with easy access to mixed-use areas, reflecting the broader demand for integrated office environments.
Emerging demand drivers — particularly the financial, healthcare and business services sectors — are expected to play key roles in shaping the future of the Las Vegas office market. Suburban areas like the Southwest and Summerlin are especially attractive to these industries due to their high quality of life, safety, access to talent and robust amenities.
In light of land scarcity, rising costs and economic uncertainty, those who adopt smart growth strategies and invest in flexible, high-quality spaces will be best positioned to thrive in the evolving Las Vegas office market. While cities like San Francisco and New York grapple with high vacancy rates and office-to-residential conversions, Las Vegas continues to offer a business-friendly environment that appeals to both investors and tenants.
Though the Las Vegas office market faces its share of challenges, it remains a resilient and competitive landscape with significant opportunities for landlords, developers and investors who are willing to adapt to the changing market conditions.
This article was originally published in the November 2024 issue of Western Real Estate Business.