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Real Estate: Industrial market is bullish during third
quarter
October 15, 2004 - Southern Nevada's industrial market
remained healthy during the third quarter, recording a low 9.2
percent vacancy rate, reports Applied Analysis, a Las
Vegas-based economic research firm. That marks a 0.2 percent
improvement over the same period in 2003, but a 0.6 percent
increase from the second quarter this year.
"Overall, the industrial market reported strong expansion with
933,000 of completion, the highest quarterly level since the
fourth quarter of 2002, and achieved a respectable absorption
level," says Applied Analysis principal, Jeremy Aguero. "The
increasing trend of owner-occupied buildings may ultimately
result in vacancies of speculative space in less desirable
areas."
With 77.9 million square feet of inventory in 2,433 buildings,
there was only 7.2 million square feet of unoccupied space.
The quarter closed with approximately 2 million square feet
under construction and almost 5.3 million square feet planned
for future development, including the new $50 million,
826,380-square-foot Henderson Commerce Center IV by Harsch
Investment Properties, located at Warm Springs and Eastgate
roads in Henderson; and a new 266,160-square-foot building at
LogistiCenter, a 103-acre industrial park near Interstate-15
and Craig Road in North Las Vegas being developed by DP
Partners.
The southwest was the most active submarket with 524,409
square feet of net absorption and 1.35 million square feet
under construction, says Rosalind Holland, a research analyst
for Grubb & Ellis Las Vegas. That includes such major
undertakings as the first phase of The Arroyo, a 450-acre, 4.5
million-square-foot mixed-use project by EJM Development
Company, located along the north and south sides of the
Interstate-215 Beltway between Rainbow Boulevard and Buffalo
Drive, plus the 424-acre, 5.5-million-square-foot Beltway
Business Park by Thomas & Mack Development Group and Majestic
Realty Company, located at Decatur Boulevard at I-215.
"It has become increasingly difficult to find suitable space
for larger users," says Kevin Higgins, senior vice president
of Voit Commercial Brokerage. "Identifying land at reasonable
rates for development and locating adequate big box space for
users requiring in excess of 100,000 square feet is
challenging."
Other market challenges include the rising cost of
construction materials, which will continue to influence
development in the near future. Meanwhile, rapid escalation in
land pricing is pushing some developers out of the market and
has the potential to limit supply after 2004.
"One of the biggest concerns we have are homebuilders paying
top dollar for raw land that might otherwise be used for
industrial projects," says Suzanne LaGrange, a senior
associate at CB Richard Ellis. "But the municipalities are
beginning to do a better job of keeping industrial zoning in
place."
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Article ©: T. Illia,
Las Vegas Business Press
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