Expert sees LV industrial property prices falling

Brian Seals

Friday, Aug. 14, 1998 | 10:35 a.m.

For developers wanting to sell Las Vegas industrial property, now is the time.

That was the message Dean Willmore of GVA Industrial Property Group delivered this week to the Commercial Marketing Group.

"We believe the market peaked earlier this year in terms of sales prices, rents and land prices," Willmore said. "So if your client wants to sell, we believe that now is the time."

Willmore offered examples. Cameron Business Park East recently sold for $101 per square foot. A distribution building at Valley View and Harmon sold for $47 per square foot in March. That kind of distribution space was going for $35 to $36 per square foot two years ago.

"When I say prices have peaked, that's an example," Willmore said. "Industrial space should not sell for $101 a square foot."

The predicted decline in value is partly driven by North Las Vegas, which Willmore said keeps rents in other parts of the Valley "in check."

He said rents in North Las Vegas are now as low as 29 cents per square foot. Last year, industrial space rent was bringing as much as 44 cents per square foot.

Meanwhile, the Las Vegas market has shown the ability to absorb existing vacant spaces. From 1990-97, about 15.6 million square feet of industrial space was built, but the market has absorbed 20.7 million square feet.

"For every two industrial buildings, you basically have three tenants," Willmore said.

The vacancy rate has been aided by two recent developments. Ocean Spray recently leased 46,000 square feet in Henderson, which cut that market's vacancy rate in half, said Willmore. And Office Max's rent of 272,000 square feet in March cut North Las Vegas' vacancy rate by 20 percent.

Willmore said an informal poll of several major industrial developers shows they have confidence in the Las Vegas market. Howard Hughes Corp., for example, plans to add 100,000 square feet at the Hughes Airport Center this fall. And EMJ Development plans to add 130,000 square feet at Warm Springs and Industrial, Willmore said.

"They're all very confident about this market and they plan to build next year," he said.

About 52 million square feet of industrial space exists in the Las Vegas Valley, and Willmore expects that to increase to 54 million square feet by the end of the year and 60 million square feet by 2000.