Panattoni Development is pouring footings for Shuffle Master’s 130,000-square-foot headquarters near the southern Beltway and Jones Boulevard, one of the larger industrial projects under construction in Las Vegas Valley.
The slab will be poured next week and walls will be tilted up in March, with completion of the $11.5 million building scheduled for July, Panattoni partner Doug Roberts said Tuesday during a visit to the construction site.
About 450 Shuffle Master employees are expected to occupy their new workplace by August, he said.
“It’s a pretty good expansion for them. It’s a high-quality location,” Roberts said. “If you can get industrial on the freeway, it’s gold. Their payment and operating debt is far below lease rates. That’s what Shuffle Master figured out.”
Shuffle Master, a Las Vegas manufacturer of automatic card shufflers and table games, bought 9 acres last year for $2.2 million, or $244,444 an acre. Land prices at $6 to $7 per square foot in that area won’t last much longer, Roberts said.
Build-to-suit development, or projects built specifically for the user, is about the only industrial construction activity taking place in Las Vegas these days, said Matt Stater, research manager for brokerage Colliers International.
There were no industrial buildings completed in the fourth quarter, he said.
Many companies want to do business in Southern Nevada, but find themselves either needing to construct their own buildings because of a lack of suitable supply, or find the low construction and land costs too enticing to pass up, he said.
Colliers is showing industrial vacancy at 15 percent in the fourth quarter, up 0.2 percentage points from the previous quarter and up 0.3 points from a year ago.
The collapse in demand for warehouse and distribution space is impossible to ignore, Stater said. Coupled with the significant number of build-to-suit properties in the valley, there’s a fundamental mismatch in available inventory and current demand.
Commercial real estate isn’t seeing much development because of anemic job growth, which affects industrial and office sectors the most, RCG Economics principal John Restrepo said.
Las Vegas added 16,000 jobs in 2012, compared with an average of 33,000 jobs a year before the recession. Job growth peaked at 63,000 from April 2004 to April 2005.
“What you’re seeing is a lot of build-to-suit, but in terms of multitenant speculative development, not much,” Restrepo said. “More often than not, they have specific needs for operations that aren’t matched with what’s available in the for-rent market.”
Colliers reported 169,641 square feet of net absorption in the fourth quarter, but much of the activity is “clearly lateral in nature,” research analyst Stater said. Tenants are looking for less space, better location, cheaper space or some combination of the three, he said.
Despite high vacancy rates, Roberts remains bullish on Las Vegas’ industrial market.
“I think this is going to be a turnaround year,” he said. “People are scared when they hear the vacancy rates, but it doesn’t really bother me. When you see what’s vacant ... a lot of it is obsolete.”
For the most part, Panattoni stayed ahead of the market and didn’t get caught with excess inventory when things went south in 2008, Roberts said. The company has about 500,000 square feet of industrial space in its Las Vegas portfolio.
“We took a break in 2008. We were tired,” he quipped.
In the distressed market of 2009, Panattoni bought a partially developed 19-acre office and industrial park at Buffalo Drive and the Las Vegas Beltway from Nevada State Bank for $7.3 million, and built a 130,000-square-foot recycling and distribution center for U.S. Micro Corp. That building serves as a duplicate model for Shuffle Master’s headquarters.
The company is proceeding with development of South 15 Industrial Park near Henderson Executive Airport.
The Henderson City Council has an item on its consent agenda Tuesday to sell about 150 acres in three phases to South 15 Partners LLC for $13.6 million. SunCap Property Group, a Charlotte, N.C., company, plans to build a new distribution center for FedEx Corp. at the industrial park.
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