A Southern Nevada developer plans to build a warehouse that it says will be the area's largest speculative industrial project in years.
Prologis, based in San Francisco with extensive holdings locally, held a groundbreaking ceremony Tuesday for a 464,203-square-foot building at Pecos and Gowan roads in North Las Vegas. No tenants are lined up.
Work crews are expected to start grading the 20.5-acre site today or Thursday and to finish the shell of the complex by April 1, said Jeff Foster, vice president and Las Vegas/Phoenix market officer for Prologis.
Foster said his group is “feeling encouraged” they’ll sign a tenant in coming months. If all goes well, they’d build a 153,456-square-foot warehouse next door, but the developers also would consider paving that roughly 7-acre adjacent site for employee or big-rig parking, Foster said.
As with all speculative projects, however, there’s no guarantee any users will step up, leaving the possibility that the larger building will sit empty for some time.
During the boom years, developers flooded the valley with speculatively built strip malls, office buildings and warehouses. Many of them went bankrupt or were seized through foreclosure during the recession.
Investors built 31 million square feet of industrial space locally from 2002-08, according to Colliers International. The market’s vacancy rate was just 3 percent in spring 2006, when the economy was roaring. But after it crashed, buildings emptied out, and the warehouse vacancy rate ballooned to almost 15 percent by 2010.
As of the second quarter this year, the vacancy rate had fallen to 10 percent.
Many of the boom-era warehouses were built poorly and in bad locations, and many were relatively small. A glut of those properties sits empty today.
But in recent months, with employers scouting for properties amid a dearth of large, available buildings, warehouse developers have been laying out plans to build on spec again — and to build big.
That includes Prologis, which owns about 3.6 million square feet of local warehouse space, mostly in North Las Vegas, according to Foster. The company’s last speculative projects in the valley were in 2007 or 2008, he said.
Developer Doug Roberts has planned to build two 200,000-square-foot speculative buildings in southwest Las Vegas. Also, Dermody Properties is said to have been planning a 390,000-square-foot speculative facility near Nellis Air Force Base, though one broker has said Dermody may not start construction until it lands a user.
As far as Foster knows, Prologis had the last speculative industrial development in the area among all investors. However, Dan Doherty, a veteran industrial broker with Colliers, has said that the last big, speculative warehouse project to open locally may have been from Roberts — a five-building complex that was completed in 2008.