Las Vegas was blanketed last decade with warehouses and other industrial properties, as speculators tried to cash in on the valley’s building boom.
Many of the properties now sit vacant and probably will for years — but as a local booster group sees it, what Las Vegas needs now is even more industrial space.
The key this time around, they say, is to build big.
The Las Vegas Global Economic Alliance has released a report saying dozens of companies that considered moving here picked other cities largely because of a dearth of big, available industrial properties in the valley, costing Southern Nevada thousands of jobs.
The report, produced by advisory firm RCG Economics, found “a gap” between the supply and demand of local warehouses. This indicates an opportunity for investors to add inventory, the report said, but many of them are not developing anything.
Las Vegas, an industrial lightweight compared with regional rivals Los Angeles, Southern California’s Inland Empire and Phoenix, has plenty of empty warehouses available for use, but they don’t match what clients say they want, said Jonas Peterson, LVGEA’s chief operating officer.
“There’s not enough buildings for them, so they’re forced to go somewhere else,” he told the Las Vegas Sun’s editorial board Tuesday.
For its report, RCG surveyed government and nonprofit economic development groups, as well as real estate brokers who specialize in industrial buildings.
The respondents said 151 companies requested information on large vacant buildings in the past year. Fifty-six of those companies were labeled as “most serious,” meaning Las Vegas was a finalist for where they might move.
If all of those firms came here, they would create 18,850 jobs, RCG said.
RCG noted that companies often scout different cities at once and essentially play governments off each other when trying to figure out where to move.
To give a conservative estimate of the “real demand” in Las Vegas, RCG said, it slashed in half both the number of inquiring companies, to 75 or 76, and the number of jobs the most serious ones would create, to 9,325.
About 70 percent of the most serious companies want buildings between 100,000 and 300,000 square feet. When asked why companies choose locations other than Southern Nevada, 15 respondents said it’s because of a “lack of building inventory.” That was the most common reason cited, followed by “incentives from other states,” at 12.
The valley has few buildings between 200,000 and 600,000 square feet, but it has dozens of options at less than 50,000 square feet, said real estate veteran and former North Las Vegas Mayor Mike Montandon, now the vice president of business development at DC Building Group, a general contractor.
But finding developers who are willing, and able, to build a speculative project could be tough.
It seems unlikely that banks would finance a project in Las Vegas without any tenants lined up. The valley became bloated during the boom years with warehouses, strip malls, office buildings and other properties, many of which slid into foreclosure or bankruptcy during the recession and, today, struggle for tenants and command tiny asking rents.
About 31 million square feet of industrial space was built in the valley from 2002 to 2008, according to Colliers International, and then quickly plunged. In 2012, no projects were completed.
During the recession, Nevada’s transportation and warehousing sector lost 5,700 jobs, or about 10 percent of its workforce, according to state data.
The industrial sector has been on the mend, with a handful of construction projects throughout the valley in the past year or so. State officials predict the transportation and warehousing sector will have 56,200 jobs by the end of 2015, about 3 percent more than in 2007, when the sector peaked.
To lure more development, though, rental rates need to climb, Montandon said.
Large industrial buildings in Las Vegas command 30 to 40 cents per square foot in rent, while landlords in Phoenix can charge in the high 40s for similar properties, according to Montandon.
As it is, there is only one board member of a real estate association Montandon belongs to who is willing to build a large, speculative project, “but I can’t say there’s two,” Montandon said.
“If they were getting 50 cents (per square foot),” he said of Las Vegas landlords, “they’d be building.”