Users of industrial space in the Las Vegas Valley continued to contract in the third quarter, though the pace has slowed over the past 12 months, the Applied Analysis business advisory firm has reported.
Net absorption fell by 46,600 square feet during the quarter, which means more space was vacated than was leased, resulting in a slight uptick in the vacancy rate to 18.6 percent.
Over the past 12 months, net absorption was a negative 675,000 square feet, an improvement over the negative 1.55 million square feet in the previous 12-month period, Applied Analysis reported.
The tight industrial market in Las Vegas is limiting new construction. Switch Communications is building two new data centers in the southwest valley that will total 900,000 square feet, and Las Vegas Bread is building a 45,000-square-foot facility in the southwest, Applied Analysis principal Brian Gordon said. Old Dominion Freight Lines will soon be moving to a larger facility under construction at Cheyenne Avenue and Lamb Boulevard in North Las Vegas.
"The southwest portion of the valley outperformed the balance of the market during the third quarter with overall demand turning positive," Gordon said in his market report.
While vacancy remains above the valleywide average at 19.1 percent, the southwest valley submarket has experienced the greatest amount of net absorption at 185,300 square feet, he said. Pricing, location, accessibility and unique use requirements will continue to drive development decisions by end-users, he said.
"Those with particular facility needs continue to seek out strategically located opportunities while the timing in the market appears ripe for these types of investments," Gordon said.
Colliers International brokerage showed industrial vacancy of 15.1 percent in the third quarter, unchanged from the previous quarter and 0.3 percentage point higher than a year ago.
Average asking rent for industrial space now stands at 48 cents a square foot on a triple-net basis, which does not include janitorial service, utilities and other operating expenses. That's down 1 cent from the second quarter and 4 cents from the third quarter of 2011.
Colliers found net industrial absorption of 57,969 during the quarter, with no completions of additional industrial space. While absorption is "exceptionally weak," it's at least fairly broad-based and follows two quarters of negative absorption, Colliers research director John Stater said.
Much of the activity in the market is clearly lateral, he said. Tenants are looking for less space, cheaper space or space in a better location, or perhaps a combination of those three, Stater said.
"After a very productive 2011 and a very disappointing start to 2012, Southern Nevada's industrial market appears to be settling in for a long, slow slog," the research analyst said.
In October, the Henderson City Council approved the $13.6 million sale of 150 acres to a group of developers who plan to build the South 15 Airport Center near Henderson Executive Airport.
Colliers broker Dan Doherty said the 2 million-square-foot development will become Southern Nevada's premier industrial park because of its location and size. Buildings in the business park will range from 33,000 square feet to 400,000 square feet.
Industrial properties listed for sale on LoopNet.com include a 2,400-square-foot building in Whitney Mesa Industrial Park for $230,000; a 26,000-square-foot building in the Gibson Wigwam Business Center for $3.2 million; and a 10,000-square-foot office and warehouse building with a secured yard in Henderson for $890,000.
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