Las Vegas Office Market: Clearing the Air

As the world continues to navigate the ever-evolving landscape of the pandemic, one aspect of our daily lives that has undergone a significant shift is the way we work. The "new normal" of remote work has led many to question the future of the office market. However, to paint the office market with a broad brush is folly.

The office market in the Western United States, and specifically in Las Vegas, is a prime example of a market that is not only surviving but thriving. Economic, social, and lifestyle factors are all contributing to the robust demand for office space in the city.

Population growth, particularly an influx of residents from California, has been a major factor driving the increase in demand for commercial real estate in Las Vegas. As noted by leading economist Jeremy Aguero, the city has outpaced every other US city over the last 20 years with a 50% growth rate, making it the fastest growing city in the nation. Additionally, Las Vegas boasts more seats in entertainment venues than both New York City and Los Angeles combined, further solidifying the city's position as a major tourist destination and significant contributor to the local economy.

On the other hand, headline grabbing primary markets such as New York City and San Francisco have been hard-hit by the pandemic, leading to a decrease in demand for office space; thus the barrage of negative national press. However, many markets in the Western United States, particularly in technology and other industries that have thrived during the pandemic, are still growing, and hiring new employees. This has resulted in record rents being paid for high amenity, well located office buildings.

Social factors also play a role in this trend, as more people are moving out of urban areas and into the suburbs, driving up demand for office space in these areas. This is partly driven by a desire for a more balanced lifestyle, with many people seeking more space and sky in their daily lives. Additionally, many companies are choosing to move to or expand in these markets because of the high concentration of talent and other resources available.

Lifestyle factors also play a role in the trend, as many professionals may prefer to return to the office and take advantage of the high amenities and collaboration opportunities in new office buildings rather than working from home. They may miss the social interaction and connection with their colleagues, and the in-person collaboration and brainstorming opportunities that an office environment provides. Additionally, some people may find it hard to separate their work and personal life when working from home, which could lead to burnout and negatively impact their mental health, work productivity, and overall well-being.

In conclusion, the trend of work from home affecting office space demand in different ways in different markets can be attributed to a combination of economic, social, and lifestyle factors. These factors are specific to different markets and industries and are likely to continue to evolve as the pandemic and its aftermath continue to shape the way we live and work. The office market in Las Vegas serves as a prime example of a market that is not only surviving but thriving amidst the challenges of the pandemic.

Bridget Richards, SIOR?CCIM