Las Vegas commercial vacancy rates rising

Jennifer Robison

Friday, April 19, 2002 | 10:56 a.m.

Vacancy rates in industrial, office and retail space are up around the Las Vegas Valley, but still remain at healthy levels, said brokers of Colliers International at a market update meeting Thursday.

The vacancy rate for industrial space across the valley in the first quarter was 8.8 percent, compared to 7.8 percent at the end of the fourth quarter and 5.6 percent in the first quarter of 2001.

The overall vacancy rate in the office sector rose to 12.9 percent in the first quarter, up from 11.3 percent at the end of the fourth quarter and 9.2 percent in the same quarter a year ago.

The retail sector posted a market-wide vacancy rate of 3.5 percent, compared to 3.3 percent at the end of the fourth quarter and 2.2 percent in the first quarter of 2001.

Dan Doherty, SIOR, senior vice president of the brokerage's industrial division, said 2002 would bring a larger number of big-box industrial users to the valley, especially in North Las Vegas around Craig Road and Cheyenne Avenue and Interstate 15, where several local developers, including Centra Properties, Conde Del Mar, RDS/Insight, MagnuM Opus and Panattoni Development, have hundreds of thousands of square feet under construction.

In the office sector, tenants are looking more for value rather than high-end, Class A properties, said Tom Stilley, senior vice president of Colliers' office division.

In addition, vacancy rates in some submarkets are punishingly high.

Stilley called Henderson the biggest contributor to rising vacancy rates in the valley; builders are bringing more space online than there is demand to soak it up, and the vacancy rate in Henderson is close to 24 percent as a result, he said.

"It's going to be a rocky road for office space in the next six months," Stilley said, as he cited an increase in concessions landlords are making to tenants, such as free rent, higher tenant improvement allowances and moving expenses.

The Colliers report, which was researched and assembled by Restrepo Consulting Group, also said demand for retail space in the first quarter lagged slightly, partly due to higher rents that smaller retailers have trouble affording, and partly because slowed national and local economies have affected employment rates.

"This could point to softening (retail) demand over the next three to six months," the report said.