The Las Vegas commercial real estate market has seen significant activity in the second quarter of 2023. Here's a deep dive into the key insights from the recent market research report:
- Sectors Leading the Way: The retail sector took the lead with 22.8% of leasing activity, followed by wholesale at 16.1%. Other active sectors include professional and business services, manufacturing, and logistics.
- Local vs. External Companies: Local companies in Las Vegas have been particularly active, accounting for 27.9% of the leased square footage over the past four quarters. Companies from states like Nevada, Colorado, California, Florida, and Utah have also shown significant interest, with foreign firms leasing 464,834 square feet of space.
- Vacancy Trends: The year began with an industrial vacancy rate of 1.5%, which saw a slight increase, settling at 1.6% by midyear.
- Rental Rates: The weighted average asking rate for industrial products in Southern Nevada saw a minor dip from $1.24 psf NNN to $1.22 psf NNN this quarter. However, on a positive note, rents have shown an 8.0% growth year-over-year.
Several notable sales transactions took place this quarter:
- A property at 5785 N Hollywood Blvd sold for $8.8 MM covering 38,164 SF.
- 3975 W Quail Ave, a light industrial property, went for $7.6 MM for 46,000 SF.
- A significant sale was at 6065 Polaris Ave, a warehouse/distribution space, which sold for a whopping $79.8 MM for 349,912 SF.
The employment landscape has been positive for the industrial sector:
- Southern Nevada added a commendable 5,700 industrial jobs between May 2022 and May 2023.
- The construction sector saw the most significant boost, adding 5,400 jobs.
- The unemployment rate in the Las Vegas-Paradise MSA was recorded at 5.6% in May 2023.
- The quarter witnessed new industrial completions totaling 3.23 million square feet, with a majority (83.3%) being warehouse/distribution products.
- An impressive 19.9 million square feet of industrial space is currently under active development, predominantly in the North Las Vegas submarket.
- The market recorded a net absorption of 3.1 million square feet in Q2 2023, marking the highest in almost two years. This indicates a healthy demand for industrial spaces in the region.
Conclusion: The Las Vegas commercial real estate market, especially the industrial sector, has shown resilience and growth in Q2 2023. With increasing leasing activities, positive employment numbers, and significant construction developments, the future looks promising for investors and businesses alike.
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