There is roughly 61 million square feet of office space in the Las Vegas Valley. About 22 percent of that is vacant. That being said, leasing activity is picking up. Tenants nearing the end of their leases are looking for better deals elsewhere – and they’re finding them. Then there are the new players in the market, who are are kicking the tires, too. The tenant’s market has been a mainstay for the past few years in Las Vegas. But over the past 12 to 18 months, banks have shifted their philosophies in regards to how they handle their office portfolios and it’s definitely making an impact on the market. Lenders today are no longer dumping foreclosed properties back on the market at fire sale prices. Instead, they are choosing to add value to their assets by leasing space in the hopes of a better future return for investors. In general, banks are very aggressive with their terms and generous with tenant improvement allowances. Private owners have needed to follow suit in order to stay competitive. Some tenants that have considered buying are frequently steered back into leases. This is because rates and terms are far too attractive. Leasing offers …
Market Reports
The retail market in Southern Nevada in mid-2013 continues to mirror the broader economy, with some bright spots and some declines in performance. There appears to be a belief (or maybe a hope) by many market observers that if there hasn’t been enough improvement in Las Vegas to date, then it has to be occurring in the near future. It seems the effects of the Great Recession are still lingering and the economy hasn’t yet built up a sustainable head of steam as measured by true objective metrics. A good measure of the local economic health is unemployment statistics. The unemployment rate in Las Vegas has dropped from 9.8 percent to 9.7 percent from February to July of this year, according to the Bureau of Labor Statistics. On another bright note, an additional 1.83 million square feet of retail space was under construction at the end of the second quarter of 2013. More than 70.1 percent of this total space was preleased. General Growth Properties’ The Shops at Summerlin comprises 1.5 million square feet of current construction. It is expected to open in late 2014 and is already more than 85 percent leased to tenants like Dillard’s and Nordstrom Rack. …
The Las Vegas market, one of the hardest hit by the recession in the nation, is showing continued signs of economic recovery. Visitor volume is exceeding peak levels, hotel occupancy rates are averaging ±90 percent, unemployment levels continue their decline (9.5 percent in June 2013) and numerous renovations and new resort development projects continue to be announced. As recently as a year ago, experts were predicting that there would not be another major resort project in Las Vegas for at least 10 years. Then came the announcement by Malaysia-based Genting Group of its plans to construct a $7-billion, 3,500-room, Chinese-themed resort project on the Strip, and suddenly that prediction was put to rest. In similar fashion, the industrial market, which currently contains 103 million square feet, continues to show consistent signs of recovery. More than 1.6 million square feet of positive net absorption was reported as of the second quarter of 2013. This is more than we’ve seen in the past five years combined. Vacancy rates stand at 14 percent, a 1 percent decrease from the second quarter of 2012. Average asking rates for warehouse distribution product across the MSA are $4.68 per square foot, down about 50 percent from …
Economic conditions in Clark County and Las Vegas continue to improve with evidence of a slow and steady recovery finally emerging. Analysts from the UNLV Center for Business and Economic Research’s late summer survey noted respondents remained optimistic about general economic conditions in southern Nevada, with 82 percent expecting to see no change or improvement. Their Southern Nevada Business Confidence Index rose to its highest level in more than four years during the summer, echoing this positive sentiment. A couple of indicators highlight the emergence of a more favorable environment, with retail sales improving, McCarran Airport traffic on the rise and the gaming “take” on the rebound. Median existing home sale prices have jumped more than $12,000 compared to the same period a year ago. Furthermore, the labor market in Clark County has stabilized with more than 6,000 jobs added to non-farm payrolls since the spring. The overall county population has also increased to its highest level in five years, according to US Census estimates. In the multifamily market, the past two indicators carry the most weight for the region’s apartment market. A healthy apartment market requires significant population densities with a positive trend. This needs to be supported by …
Despite little commercial real estate development with the lowest rental rates in a decade, Las Vegas’ office leasing market has inched up in the positive direction. There are also indicators that the area’s commercial real estate market will continue to struggle, with vacancy rates remaining as high as 25 percent until the end of 2012. Las Vegas remains one of the most challenging real estate markets in the country with some submarkets showing vacancies as high as 32 percent, while others report vacancies as low as 16 percent. Still, there have been some significant developments recently impacting the office market. Zappos.com will occupy the former Las Vegas City Hall building in Downtown Las Vegas, which will house about 2,000 employees. This signals continued revitalization for the Downtown area. Those 2,000 employees will need housing and, with a younger workforce, will probably spend disposable income on entertainment, particularly in the area close to their place of employment. Along with Zappos, government-related entities occupying commercial space is on the rise, and traditionally those entities prefer to be centrally located. While there is noticeable activity taking place in certain Las Vegas submarkets like Downtown, other areas of Las Vegas are also improving — …
As all of us in the retail market know, the past few years have been downright tough. It’s safe to say that we all felt a slight shift in mid-2011 where it seemed that we may — just may — have stabilized. With Tivioli’s success, Sportsman’s Warehouse re-entering the market and Hobby Lobby taking the plunge into Las Vegas, it seems we may have overcome the black “X” looming over our market. Our asking rent numbers are hovering around $1.50 per square foot, and retailers like Nima Accessories, Firestone Tires, Children’s Place, Winco and Dollar General are taking advantage of these rents and expanding valley wide. More than half of the leases completed in the past year were local retailers either relocating or expanding. The retail vacancy rate valley wide is about 11 percent, up from the fourth quarter of 2010. The Southwest submarket shows the lowest vacancy rate, about 9 percent, with the West Central submarket at the highest, about 15 percent. The market absorbed more than 119,000 square feet of retail product throughout the year. Two new Winco stores add 195,000 square feet to our retail inventory, and to the net absorption for 2012. Retail sales also picked …
Multifamily development has come to a near halt in Las Vegas. In 2011, only two market rate properties finished their deliveries with a total of 682 units, most of which had already been completed in 2010. Only one market rate property was started in 2011. This 156-unit project was originally started as for-sale townhomes, but after a foreclosure, the development is being completed by Alliance Residential as a rental property. Other development is limited to affordable or senior housing. We are expecting a limited number of market rate starts this year, but at numbers that will not significantly impact existing inventory. The most active market rate developers in Las Vegas over the past years have been Picerne Real Estate Group, Alliance Residential, Fairfield Residential, Ovation Development, Trammel Crow Residential and Nevada West Development. Fore Property Company has been active in both the market rate and affordable sector, and Nevada Hand remains active in the affordable and senior sector. Between 2003 and 2007, 47 properties totaling 13,483 units were converted to condos. The combination of unsold units from these conversions, as well as the unsold units from properties built as condos during that time, has added 4,625 units to today’s rental …
The Las Vegas market has a total office inventory of 60.7 million square feet in 3,820 buildings. There were 13 buildings completed in 2011 totaling 724,535 square feet. An additional 550,000 square feet was still under construction at the end of the fourth quarter. Net absorption in 2011 was a positive 402,712 square feet, largely due to the Metropolitan Police Department moving into their new 390,000-square-foot facility during the third quarter. The total office vacancy rate valley wide was 19.4 percent at the end of the fourth quarter, which did not include shadow inventory. As this article was being submitted, Auction.com was completing another round of asset sales. Of the 25 property deed sales on the block in Las Vegas, four were office projects totaling about 204,000 square feet. Two of the14 non-performing notes were secured by office product totaling 103,000 square feet. The largest office project sold in the auction was the 124,082-square-foot Sahara Plazas. Sahara Plazas is located in the central portion of Las Vegas and consists of 10 individually parceled Class B buildings situated on 7.87 acres. The largest non-performing note secured by an office product was Charleston Valley View at 86,586 square feet. This property is …
While most of the country grows based on the birthrate, Las Vegas has grown at almost six percent per year based on the tremendous influx of new residents. That growth fueled retail development matching the pace until the growth suddenly stopped in 2008. But today, a different scenario is beginning to emerge. With many retail tenants going out of their spaces, beginning in 2008, the local retailers that had survived began a flight to quality. Key tenants in strip centers moved up to anchored centers. Other retailers that had been in the back of strip centers moved up onto pads. The addition of new space has been in waves, with the first starting in 2009, as the local retailers that survived the prior year and saw rents decreasing began adding second locations. The second wave of tenants began at the end of 2009, as strong regional retailers began seeking additional locations. The third wave, which has so far been quite small, is the national tenants. With so many choices around the nation, the national retailers are still trying to decide if Las Vegas, which was hit particularly hard, makes sense regarding expansion. The type of tenants that have been most …
The Las Vegas office market features a number of unique characteristics. For example, the Class A office market is not concentrated into a central business district. Office users in the downtown area consist almost exclusively of tenants that require proximity to the courts or government offices. Consequently, the tenant mix is limited to uses associated with litigation and government services. Other Class A tenants are spread around the valley at projects such as Hughes Center, a location favored by financial services, gaming interests and transactional law firms. The pool of Class A tenants is relatively shallow, measuring 6.2 million square feet or 13 percent of the overall office market. Reasons include a narrow economic focus — primarily gaming and tourism — and a lack of regional or national corporate headquarters. Consequently, speculative development and operation of Class A office space favors local players (i.e., developers, lenders and brokers). The speculative office pipeline for Las Vegas is dry except for one notable project. Tivoli Village, a 750,000-square-foot retail/office project, is anticipated to deliver its first phase in October. Despite office vacancy in excess of 20 percent, the developers, a partnership between IDB Group of Israel and local developer EHB Companies, have …