Southern Nevada Suburban Office Market Demand Improves
By Wes Drown, Broker Associate, REMAX Commercial
The Las Vegas Valley continues to see growth in the demand, velocity, rates and a decline in incentives as Vegas bounces back. This is led by the return of our entertainment industries, which are almost to pre-COVID levels, in addition to the massive demand for housing and commercial construction. All you have to do is take a drive around the 215-Beltway to see that activity is everywhere.
The news-grabbing projects that are seemingly announced weekly are once again turning heads. They’re attracting young college graduates and stimulating the needs for goods and services, almost to a pre-COVID level.
Office construction is underway in earnest, with expansion in Summerlin, the SW “Curve” and West Henderson. High- and mid-rise office with parking structures are being leased up in the Westside areas, with predominantly single-story popping up in Henderson.
Rates for suburban office products are pushing over $2.10 per square foot, per month, including operating costs. The spread between asking price and closed deals is shrinking significantly. Incentives are back to “normal” with landlords offering new carpet and paint, or maybe a partial month early occupancy rather than the free rent or step-up rents we’ve seen in the past.
Healthcare continues to be a predominant leasing need across the Valley, with mental health being a big component in the post-COVID world.
Office property sales are pushing $300 per square foot for second-generation, small buildings, with new office shell floating around $275. Office tenant improvements have come down a bit in the past three months as building materials have stabilized only a little higher than pre-COVID pricing. These are 10 percent to 15 percent higher in most categories of dimensional lumber and steel, with some sheet material still at a premium. Expected improvement costs for professional offices are at $85 to $100 per square foot, with medical or high-level finished product at $100 $150 per square foot.
The next 12 months look really good for office developers, owners and deals as the market pushes up and over the mental barrier of $300 to $400 per square foot for sales and into the $2.25 to $2.50 per square foot monthly rates as the suburban standard.