The commercial real estate market — including office, retail and industrial sectors — all made steady progress at the end of 2015, according to a report released by Commercial Alliance Las Vegas, the commercial real estate division of the Greater Las Vegas Association of Realtors, and Xceligent, a provider of commercial real estate information.
“Like other aspects of our local real estate industry and our local economy, 2015 was a year of continued progress for our commercial real estate markets,” said 2016 CALV President Soozi Jones Walker, a longtime local commercial real estate broker. “In most categories, it’s safe to say that we’re not quite back to the peak occupancy and leasing levels we saw before the recession, but we’re getting there.”
The leader of the recovery last year was industrial with the absorption of 500,000 square feet during the fourth quarter of 2015, with a total of 3.4 million square feet absorbed for the year. The vacancy rate in total was 6.7 percent for the fourth quarter of 2015. Vacancy rates dropped 1.5 percent for the year. It’s also telling to see developers building speculative industrial buildings for the first time in years, added Walker.
Retail had many ups and downs in 2015. The valley welcomed such projects as IKEA, which is expected to be the largest single store of any kind in Nevada when it opens this year. Several restaurant chains — including Cracker Barrel, White Castle, PDQ and Chick-fil-A — also entered the Las Vegas market. But there were some shake-ups with Anna’s Linens, Fresh & Easy and Haggen all closing stores in Las Vegas last year.
The retail market saw less than a 1 percent decline in vacancy in the fourth quarter, though lease rates rose slightly. The market absorbed 375,000 square feet in the fourth quarter.
The office market saw improved vacancy rates in the fourth quarter but remained higher than historic norms at 18.6 percent, said Walker. The market absorbed more than 35,000 square feet in the fourth quarter with the airport and west side leading the charge. For the year, office absorbed more than 650,000 square feet and vacancy fell 1.2 percent.
A common term industry leaders refer to in the office world is the “flight to quality,” which is when office tenants move to newer spaces with more modern amenities and in more desirable locations. These tenants usually leave behind older, and often lower-priced spaces, raising the vacancy rate in that area.
“But the flight to quality is only half of the picture,” Walker said. “With lease rates stabilizing and in some cases increasing, concessions have been reduced. Therefore, areas that have been long ignored are receiving more attention due not only to location, but also price. Location is still important, as shown by these reports. Older areas have less stable rents. However, central locations have picked up desirability due to lower rates and their proximity to the central core.”
Joint venture adding industrial space
A joint venture between Jackson Shaw, a national real estate developer, and Las Vegas-based LaPour Partners is set to bring more options to the industrial space market in the southwest valley.
The team is developing Parc Post, a 165,235-square-foot industrial project along the southwest part of the 215 Beltway on Post Road between Jones and Rainbow boulevards. The four-building, Class-A park broke ground in December and is expected to welcome tenants this summer.
“Aside from the great access and visibility, Parc Post will be developed to be flexible for any number of potential tenant profiles,” said Michele Wheeler, president and chief operating officer of Jackson-Shaw. “Jackson-Shaw identified this as a compelling investment opportunity to deliver a quality industrial asset in partnership with LaPour Partners, a well-known local firm that has delivered more than 1 million square feet of similar product in the neighborhood over the past 15 years.”
The project will also include a 28-foot clear height and divisibility down to 11,000 square feet. There are also single-tenant building options of more than 53,000 square feet.
IREM Las Vegas selects directors
The Institute of Real Estate Management Chapter 99 Las Vegas recently selected its board of directors for 2016. Dwayne Alexander, CEO of Stronghold Properties, was installed as the organization’s 32nd president. He serves on several national IREM boards, along with holding a position on the National IREM Governing Council, a three-year term ending in 2018.
Four other IREM members were elected to positions of power: Kathy Stubbs, vice president of property management at Transwestern Commercial Realty LLC, was named president-elect; Susie Clinger, CPM, assistant real estate manager for CBRE, Las Vegas division, was named secretary/treasurer; Christopher Jackson, director of commercial leasing and management at Berkshire Hathaway Home Services’ commercial division-McGarey Group, was elected vice president of education; and Katie Mullay, senior property manager at The Equity Group, was elected vice president of membership.