Thursday, April 20, 2000 | 10:35 a.m.
Southern Nevada's master-planned communities are evolving into magnets for new call centers and in the process transforming the region's office market.
That assessment was offered Tuesday during a first quarter update of Las Vegas' commercial real estate market by broker Colliers International.
"Call centers and customer service centers are the hottest growth area in the office market," said Tom Stilley, vice president of Colliers' office division.
"However, space for these centers is tough to find, and the few buildings that are put up are leased as soon as they're completed."
Stilley said master-planned communities, such as Summerlin and Green Valley, are well-suited to handle call centers as they have the pre-requisite fiber optic infrastructure the centers require.
"These companies are primarily looking for Class B and industrial flex space, usually between 20,000 and 50,000 square feet," Stilley said. "Those requirements are causing a lot of developers to re-think their current plans to better meet those needs."
Stilley cited the opening of a Henderson call center by Providian Financial Corp. -- and construction of a nearby center by Ford Credit -- as proof of the growing trend.
Greg Jones, vice president of commercial operations for American Nevada Corp., said Southern Nevada's pro-business environment is also a determining factor in attracting new call centers.
"It's really not just land prices but the business climate that attracts firms like Ford and Providian," he said. "We (Southern Nevada builders) can also construct buildings quickly here."
Jones said the Providian deal closed in mid-December, and the 64,000-square-foot building was operational by mid-February.
Providian's office is Located at 2280 Corporate Circle Drive in American Nevada's Corporate Center; Ford Credit is nearby in an American Nevada building at 150 South Pecos Road.
The Greenspun family owns both American Nevada and the Las Vegas Sun.
Colliers' found the first quarter office vacancy rate was down modestly, dropping from 9.8 percent to 9.3 percent; Class A office space had the highest vacancy rate -- 13 percent -- attributed primarily to an increase in new product.
Office space absorption was highest in Henderson at 118,000 square feet, while the downtown market posted another negative absorption of 14,000 square feet last quarter; total net absorption for the quarter was 449,000 square feet.
Stilley said the northwest, airport and Henderson submarkets remained the hottest growth areas during the first quarter; East Las Vegas and the western Valley suburban markets experienced flat absorption.
In its own first quarter office survey, Las Vegas real estate broker CB Richard Ellis reported an office vacancy rate of 12.96 percent, with total net office absorption of 460,000 square feet.
Colliers' survey found the industrial vacancy rate declined marginally during the first quarter, dropping from 7.9 percent to 7.8 percent.
"But it's important to note that just one year ago, that rate stood at 9.3 percent," said Colliers' industrial associate Todd Long.
"That (industrial vacancy decline) is due mostly to strong absorption rates and a decline in land inventories."
Long said more than 1.2 million square feet of new industrial product was added during the quarter.
"With Southern Nevada's job growth projected to be 44 percent over the next 10 years, there will continue to be strong demand for well-developed industrial product," he said.
Still, higher land costs, flat rental rates, and more prudent lenders present significant challenges to future industrial development.
"As a result, we're already seeing (industrial) rent increases in North Las Vegas, the southwest market and throughout Henderson," said Long.
The first quarter of the new millennium brought more good news for Las Vegas' retail market; both on and off the Strip, the Las Vegas retail sector continues to prosper.
"Over the next 12 months, we expect a total of about 3.3 million square feet of new retail space to be built (on the Strip)," said George Connor, senior vice president of Colliers' retail division.
"The (retail) vacancy rate on the Strip is currently about 1 percent, with rates ranging from $50 to $300 per square foot annually depending on the product, its size and location."
Connor said Strip-based hotels recognize that many of the new visitors to Las Vegas are here to do more than just gamble.
"The hotels have come to realize they are in the entertainment business, and retail on the Strip has become a form of entertainment," he said.
Away from the flash of the Strip, the neighborhood retail sector continues to flourish.
Colliers' retail broker Matt Bear said leasing activity is expected to be heavy again this year, especially in the southwest corridor.
Approximately 1 million square feet of retail space came on line during the first quarter, he said.
The first quarter retail vacancy rate was approximately 7 percent, unchanged from the previous quarter.
Bear said recent volatility in the technology sector could prove beneficial for the Las Vegas retail market.
"We believe REITs (real estate investment trusts) are poised to take another run at the retail market, and they will be responsible for much of the new retail growth in the near future," he said.
"As investors pull back from the technology stocks, we think REITs stand to benefit from an influx of capital."
Bear said the push towards more mixed-use projects -- combining residential and commercial properties at one location -- is a growing trend in Las Vegas.
"Mixed-use projects would work particularly well in downtown Las Vegas," he said.
"The idea of having people work close to their home isn't a new idea, but it's one that could help in the redevelopment of downtown."
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