Commercial real estate in Southern Nevada is back in a big way.
For the first time since the recession, NAIOP Southern Nevada, the Commercial Real Estate Association, has a growing membership base. We stand now at around 380 professional members, up from 320 in 2013. That speaks volumes about our industry. Companies no longer are struggling just to survive but again are invested in nurturing and growing the commercial real estate and development community in Southern Nevada.
The industrial market is well into recovery mode and even is expanding. Speculative industrial buildings are being developed at 150,000 square feet and larger. In addition, many Las Vegas-area distribution centers have expanded recently, including TJ Maxx, which just added 400,000 square feet of new space.
The retail market, too, is well into recovery and looks to expand if current trends continue to improve. Southern Nevada retail feels healthy, with vacancy rates at less than 10 percent, though some inline retail developments without strong anchors still are struggling. Big-box retail is a casualty of the recession and an ever-changing landscape, which is why we are excited to see creative adaptive reuses of such spaces. Look for the former Boulevard Mall Dillard’s space to be converted for office use, for example.
Speaking of office, certain sectors, such as Central Las Vegas, will continue to struggle due to a lack of rent growth compounded with short-term leases. Some submarkets, such as those surrounding the 215 Beltway, downtown Las Vegas and the Strip corridor, have seen vacancy rates remain at nearly half of the 20 percent valley average. The efficiency trend continues, with companies packing more bodies into less overall space since the recession.
The multifamily market is poised to make some major contributions to the valley in the near term. Multifamily developers secured land during the downturn now are in a position to build, and in a big way. More than 9,500 units are projected to be built through 2016. The beltway curve of the 215 is going to see the most activity, with more than half of those units slated for the Southwest submarket. This level of activity will affect construction costs and labor availability.
The single-family builder activity has slowed after being the most active buyers through 2013 and 2014. They seem to be content with current inventory. Prices paid by homebuilders have been in the high $200s to low $400s per acre.
Here’s to more growth in 2015.
Charles Van Geel is president of NAIOP Southern Nevada and vice president of commercial leasing and sales at American Nevada Company.