Las Vegas Commercial Market on the Rise
The Marketbeat Snapshot reports were released for the 1st quarter of 2015. These reports give a detailed look at the office, industrial, and retail sectors of commercial real estate in Las Vegas. Gains were seen in commercial real estate in the southern part of Nevada and this gives a hint that Las Vegas may be recovering at a faster pace than the economy in the United States. This is a helpful sign that businesses are moving into the area and that the economy may be changing.
Las Vegas Recovery Gaining Momentum
Michael Dunn, Market Leader of the Cushman & Wakefield | Commerce Las Vegas office said, “A positive job market and an increase in investor confidence translated into gains in commercial real estate in Southern Nevada. Las Vegas continued its recovery at a faster pace than the overall U.S. economy with momentum continuing to slowly build across all product types. Jobs were added at 2.7 percent over last year. Demand for retail space is on the rise, the office sector saw the highest net absorption in years and the industrial market is in a solid growth mode.”
Las Vegas Office Market Snapshot
The beginning of 2015 began with just over 130,000 square feet of positive absorption. The vacancy rate in the office market was 25.7 percent. These strong numbers continue to push the vacancy rate down, even though rental rates will not increase significantly until the vacancy rate moves down below the 15 percent market. In the first quarter, 33 office sales were made for a total volume of just over 1.21 million dollars.
As Baby Boomers retire and more Millennials start to enter the workforce, the way that office space is used is changing. While the square footage of office space for each employee continues to become less, the emphasis has moved to offering amenities to their employees, including collaborative space, gyms, and social interactive environments.
Las Vegas Industrial Market Snapshot
The industrial market of Las Vegas had its 13th quarter of positive absorption. The vacancy rate in the 1st quarter of 2015 was 7.3 percent and this rate continues to plummet, which increases the rental rates. Strong growth in this market has pushed rental rates to a level that supports new construction. With over 1.5 million square feet of industrial space being developed for larger users, the smaller user is being neglected. None of the smaller, around 20-80K square feet buildings, will be developed until there is an increase in rental rates.
Las Vegas Retail Market Snapshot
From prior quarters, the retail market is continuing to improve. With a little over 87,000 square feet of positive absorption and a 9.4 percent retail vacancy rate in the 1st quarter of 2015, it is slowly getting better. Job growth is continuing to rise and with the new residents, there will be an increase in visitors, conventions, taxes, residential development, and entertainment, which will continue to push the retail market into positive growth.
All of these factors come together to show that the commercial real estate market is slowly continuing its upward climb, which is good news for Las Vegas as a whole.