A lack of land in Las Vegas is pushing more industrial developers to the outlying area where more land is available for their projects.
“Development in the Outskirts” was the focus of the most recent breakfast panel of NAIOP Southern Nevada where participants expressed concerns about higher interest rates having on the sector.
Land availability has been a major concern as Southern Nevada has become increasingly land-constrained. With limited infill options and lack of utility infrastructure servicing the outer reaches of the valley, many developers are left wondering what’s next, said Marianna Hunnicutt, practice builder at Kimley-Horn who moderated the presentation.
This program highlighted three developers in outer submarkets at the Apex industrial park in far North Las Vegas, the Eldorado Valley in the southeast valley and Jean.
“There are some cool initiatives happening right now, and I hope it inspires others,” Hunnicutt said.
In a state where 70 percent of the land is owned and controlled by the Bureau of Land Management, there are few infill areas left in the valley. Many lack the utility services and infrastructure or deal with fissures or environmental issues, Hunnicutt said.
“I know as an engineer we were one of the first looped in on a lot of these projects and increasingly over the years it seems we’re delivering bad news or relaying realities to the owners and developers that they don’t particularly want to hear,” Hunnicutt said.
Doug Roberts, a partner at Panattoni Development Co., said building an industrial project in the Eldorado Valley is a natural transition from the lack of land in Henderson. Panattoni has a big presence in West Henderson, but the city won’t allow any more industrial projects in that area, he said.
“I have been doing this since 1989, and this is the best market we have been in the last two years until July or August of last year,” Roberts said of the rising interest rate environment that ended “the greatest industrial boom I have ever seen. The pendulum has swung, and the capital is running for the hills. The country should be worried right now. Interest rate hikes have a detrimental effect on our business.”
NORTH LAS VEGAS
Keith Earnest, executive vice president of VanTrust Real Estate, said with water and sewer lines extended by the city of North Las Vegas to Apex, they’re seeing more projects underway, especially since the area around the Speedway has been developed.
They bought 350 acres in Apex in April 2021 and kicked off a 450,000-square-foot and 600,000-square-foot industrial project in November. Earnest said they have the ability to do 4.5 million square feet of development.
“We’re excited because we’re finally seeing the fruits of the labor of 16 months of work getting that site prepped for development,” Earnest said.
Apex hadn’t proved itself at that point, but Earnest said they thought it was worth it to “roll the dice” since they had the capital.
“You can go ahead and take a chance when we have 1 percent vacancy and rising interest rates,” Earnest said. “I don’t want to call it a no-brainer because there’s always risk, but it’s a good bet that Southern Nevada continues to be land-constrained.”
Like Roberts, Earnest called these “chilling times” because of the economy and higher interest rates but there’s still a lot of activity. He said there’s greater demand in Las Vegas than there is in Phoenix or Denver, but Las Vegas is down in demand.
“We’re bullish, but you have got to be more careful than a year ago when there was more craziness,” Earnest said.
JEAN
Tolles Development of Reno purchased more than 140 acres that included the shuttered 811-room Terrible’s hotel casino for $44.7 million from Terrible Herbst in order to build a warehouse project south of Las Vegas next to the I-15. Tolles has another 60 acres that it plans to close on later this year, according to Cory Hunt, chief strategy officer of Tolles.
“We thought an industrial park at the southern end of Las Vegas would be compelling,” said Hunt, who added the project will ultimately be 3 million square feet. “We loved the Las Vegas market and always wanted to be in business here.”
The project will access the water supply that served the former Nevada Landing Hotel and Casino. Tolles alsobought a wastewater treatment plant and access to power as well.
Hunt said the average drive time from Harry Reid International Airport to Jean is 25 minutes and they weren’t concerned with those who said Jean was too far out of town. They have experience with an industrial project that’s 30 minutes from downtown Reno, and that worked, he said.
The advantages of the site is it’s a one-day turnaround for people to drive from the port at Long Beach to the industrial park and drivers wouldn’t have to stay overnight because they are within their federal driving limits, he said.
“It sets up to be competitive with the Inland Empire and Southern California market,” said Hunt, who cited how rents are increasing there.
Their move fits in with long-term proposals to add 38,000 acres of federal land between Henderson and Jeans on the east side of the I-15, Hunt said.
“It’s a bit of a long-term play, and we’re trying to skate to where the puck is going to be,” Hunt said. “We will start with 455,000 square feet at the old Nevada Landing site and 1 million square feet across I-15.”
Hunt said the expectation is e-commerce tenants will fill most of the space.
“We bash on California but 1 percent of the leakage from the fourth largest economy in the world is not a bad thing for Nevada,” Hunt said. “We’re excited we were able to get over the finish line. Other people saw the vision and a lot of other people thought we were crazy.”