IRR-Las Vegas Mid-Year Viewpoint 2015 Local Market Report - Industrial
2014-2015 witnessed continuing absorption in Industrial Space with positive absorption in all markets with large divisibility Distribution and Manufacturing space seeing the largest improvements. Industrial using employment had a YOY increase of 7.10% which spurred the stronger performance in the industrial sector. Increasing rental rates and positive absorption coupled with accelerating new project construction justifies the classification of Industrial as beginning an expansionary phase in the local market cycle. Industrial is the healthiest space type compared to the office and retail markets in Las Vegas which are still in the later recovery stage. Industrial should continue to absorb at a brisk pace - especially the scarce larger divisibility tenant spaces. Additional large divisibility space is in demand. Smaller divisibility spaces are over-supplied and will likely be in oversupply for an extended period of time. Peripheral market area locations outside of the core / centralized Airport, I-15 South, and North Las Vegas industrial markets are softer and are anticipated to be the sub-market locations taking a longer time to achieve stabilized occupancy. The market is in overall balance at the present time.
Flex space should take about two years to achieve stabilized vacancy of 10% or less. New supply is accelerating and given stronger market conditions, proposed projects are much more likely to be built.
Major Under Construction facilities in the North Las Vegas include the ProLogis larger divisibility space at 3700 Bay Lake Trail (464,203 sq. ft.) and 3330 Gowan Road (153,456 sq. ft.). Additional planned space of a larger divisibility in North Las Vegas is planned for the SEC at Lone Mountain and Berg (446,880 sq. ft.) with the Pauls Corporation buildings (243,760 sq. ft.). Northeast Las Vegas is also picking up with 1,843,664 sq. ft. planned and likely to be constructed. Given the high divisible space size of the facilities, the ProLogis buildings that aren't already under construction are likely to be built due to continued demand. The Southwest is dominated by the large Tier 4 Data Center Switch SuperNAP facility (815,000 sq. ft.) that is under construction. (Super NAP #9 / #10) There is an additional 465,111 sq. ft. under construction in the Southwest submarket with an additional 583,280 sq. ft. planned. An additional planned 694,576 sq. ft. space in the Henderson (Southeast) submarket rounds out most of the new projects. Industrial has a very positive outlook as it has one of the strongest increases in the industrial using employment categories. As long as industrial based employment continues to increase, the industrial space category will continue to show improving rents and space absorption. Price and rental increases in this product category have as much to do with improving economic metrics as it does with significantly declining levels of distressed sales. New construction and project proposals are expected as market conditions continue to improve.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.