Commercial real estate experts are predicting continued growth across several sectors in the Las Vegas Valley: retail, office and industrial, which is on course to have a record year of construction activity in the area.
Sam Newman, an associate in the industrial division at Colliers International Las Vegas, said roughly 2.8 million square feet of industrial space was pegged for completion in the third quarter, with another 2 million square feet set to come online in the fourth quarter of 2017.
Overall, more than 8.5 million square feet of new space was being tracked for completion during 2017, with millions more already on the board for 2018, according to a second-quarter industrial report from Colliers.
The retail and office commercial real estate markets are expected to see improvements in things such as vacancy as the third quarter winds down, and experts also see the potential for more development in the office sector as 2018 progresses.
Newman said some of the largest projects in the valley have been in North Las Vegas.
One major spot is the Northgate Distribution Center, owned by Kansas City, Missouri-based developer VanTrust Real Estate, where more than 3 million square feet of industrial space is planned. To date, hundreds of thousands of square feet of space is already standing at its nearly 170-acre site at 4410-4490 Nexus Way, near North Lamb Boulevard and Interstate 15.
Northgate is pegged to have deliveries totaling more than 1.4 million square feet by the end of 2017, according to Colliers.
The other big player in North Las Vegas is Prologis who is planning raise industrial space equating to more than 1 million square feet across several projects by the end of 2017.
Panattoni Development Co. also completed a 482,000-square-foot building near Henderson Executive Airport during the third quarter.
Vacancy rates could go up slightly going forward for industrial space with the amount of building activity in Las Vegas.
“Vacancy’s low,” he said. “It’s been low. It will increase.”
Colliers is tracking roughly 8 million square feet of industrial space that is either completed, under construction or planned through the end of the year and 2018, according to a second-quarter report.
Newman said the amount of construction in industrial is making for a record year in the valley, though the area has seen rivaling numbers before the recession. According to data from Applied Analysis, 2007 brought 7.4 million square feet of industrial, which followed a year of 5.6 million square feet in 2006.
Newman sees room for this level of industrial development.
“I have to say that I’m not so sure that we are overbuilding — the activities there, and it’s been there,” he said. “I guess we really don’t have a reason to think that we should stop.”
Office and retail
The office real estate market also stayed positive during the third quarter, according to Ryan Martin, a senior vice president in Colliers International Las Vegas’ office division.
Martin predicted that net absorption was going to land at about 268,000 square feet for the third quarter, falling short of the 545,955 square feet of net absorption in the second quarter. This, however, was the 11th straight quarter of positive absorption, Martin said.
The smaller absorption rate also isn’t going to head off vacancy’s downward trajectory.
Martin projected that vacancy should reach 15.5 percent for office space in the third quarter, falling from the second quarter’s 16.1 vacancy rate. That rate is also down from the first quarter’s 17 percent rate, along with falling from 17.6 percent in the second quarter of 2016.
Martin also projected that average asking rents, which includes all classes of office space, would stay stable around $2 a square foot, full-service gross. The average sat at $2.02 a square foot, full-service gross, for the first two quarters of 2017. That was up from the second quarter of 2016 when average rates were $1.99, a second-quarter report from Colliers showed.
The office sector didn’t see that many completions during the third quarter, with little building happening in the space overall, Martin said.
There was just over 72,000 square feet of office space pegged for completion in the third quarter, with an additional 100,000 square feet of space that’s supposed to come online in the fourth quarter of 2017, according to a second-quarter report from Colliers.
Credit One Bank is also planning to finish its four-story, 152,000-square-foot headquarters, by the end of 2017. That project sits just south of the 215 Beltway, between Buffalo and Durango drives.
Martin said the market could see some 850,000 square feet of office development planned or under consideration for development in 2018.
One of those larger projects is Aristocrat Technologies Inc.’s planned 180,000-square-foot campus in Summerlin, which is set to be completed by the end of 2018.
Al Twainy, a vice president at Colliers International Las Vegas, said he has a positive outlook on the market and has seen it steadily improving.
Twainy expects vacancy to be about the same as it was in the second quarter, 8.3 percent, through the rest of 2017, with a positive net absorption at the end of the third quarter.
Twainy is also predicting that net absorption to be higher than the second quarter’s 75,578 square feet.