The Las Vegas Metropolitan industrial market started 2014 on a good note with the fifth consecutive quarter of positive absorption and lower vacancy rates. The overall vacancy rate decreased 60 basis points from last quarter to 9.6%. Construction activity is dominated by expansions and build-to-suits although speculative construction may be on the horizon for “big box” distribution buildings due to the lack of inventory and strong user demand. Smaller building speculative construction is further out as rents would need to increase significantly to justify the required economic returns.
The U.S. Bureau of Labor Statistics reported that in January the unemployment rate in Clark County was 8.9% or 130 basis points lower than January 2013. UNLV’s Center for Business & Economic Research said that the revised 2013 employment growth shows that employment grew at 3.4% in Nevada, double that of the U.S. employment growth of 1.7%. The report also mentioned that the employment growth was across all major employment sectors “suggesting the growth is sustainable.”
The Southwest submarket is the largest and most desirable submarket in the Las Vegas valley due to its proximity to the strip and high end residential communities. 1st quarter net absorption in the Southwest
totaled 330,946 square feet making up 70% of the total 1st quarter absorption for the Las Vegas Metro. Average asking lease rates in the Southwest remained flat from the 4th quarter 2013; however, lease rates are expected to increase with continued positive net absorption, and user demand.