Harsch Investment Properties is adding 600,000 square feet of industrial space in Henderson with the completed first phase of Henderson Commerce Center IV and the start of second phase. Photo by Sara Tramiel/Review-Journal.

Charlotte Pipe and Foundry of North Carolina was looking to build a major manufacturing plant in Las Vegas, but executives got hit with "sticker shock" when they saw land prices at $500,000 an acre, Commerce CRG managing partner Mike Hillis said.

The company needed about 50 acres with railroad service, an unlikely find here, so it chose Port 15 Utah, an emerging rail hub in Cedar City, Utah. Land is $70,000 an acre there.

Las Vegas lost an opportunity to add 30 to 50 relatively high-paying manufacturing jobs and diversify the economy. Charlotte Pipe, which makes plastic pipe and plumbing fittings, pays slightly higher than prevailing wage, more than $15 an hour on average, said Brad Muller, vice president of marketing for the company.

Valley real estate prices have become prohibitively expensive for many industrial users. They want and need to serve the Las Vegas market, but they're particularly sensitive to land base costs.

"Land availability at financially feasible prices remains a concern for new entrants to the (industrial) sector," said Brian Gordon, principal of local research firm Applied Analysis.

Hillis said there is some benefit to having manufacturers locate outside Southern Nevada. It takes the pressure off Las Vegas having to be all things to all people, while still providing easy access to goods the market needs to thrive, he said.

"Bottom line is these guys are looking up here (Cedar City) because there aren't any sites in Las Vegas," Hillis said. "These guys from back east and North Carolina look at how close we are on the map. You can spend a lot on diesel fuel going back and forth when you're saving $450,000 an acre. That's the snapshot they're looking at."

The "bread and butter" industrial users are in the 2,000- to 10,000-square-foot range, and there are plenty of those buildings to satisfy the growth needs of new tenants coming to the valley, Henderson Economic Development Manager Bob Cooper said.

"The image is getting out there that there's no industrial here. That has to be clarified that there's no industrial land as opposed to buildings for lease or sale," he said. "I agree there's no industrial land, but we still have buildings."

He researched five industrial developments in Henderson and found nearly 1 million square feet of new construction planned or under way, available for sale or lease over the next year.

Harsch Investment Properties, with an industrial portfolio of about 7 million square feet in Las Vegas, is adding 600,000 square feet of new industrial space in Henderson with the completed first phase of Henderson Commerce Center IV and the start of phase two.

Other developments include Pacific Industrial Center (215,000 square feet), Wigwam Distribution Center (153,583 square feet upon completion in January), Whitney Mesa (158,000 square feet) and Black Mountain Pointe (98,800 square feet). Most of it is designed for light manufacturing, research and development and bulk warehouse uses.

"With the region's strong economic performance over the past decade, industrial land availability is tightening up, but it isn't gone," Cooper said. "The inventory of new industrial buildings is definitely here."

Industrial vacancy rates are running at record lows in Southern Nevada. Third-quarter vacancy for 87.5 million square feet of space was 3.4 percent, down from 3.6 percent a year ago, according to Applied Analysis. Average lease rates are 74 cents a square foot.

Forward-looking supply, including 5 million square feet under construction, appears to have reached a plateau during the quarter, suggesting this may be the final wave of significant industrial development within the Las Vegas urban core, Gordon said.

It wasn't only the price of land that sealed the deal for Charlotte Pipe. Finding a suitable parcel with rail access was essential for business, Muller said.

"The (Union Pacific) railroad wanted astronomical amounts to build a rail spur," he said.

Rail service is a big play everywhere and so is the cost of power, Hillis said.

Vericon, a company that makes huge glass panels with the bulk of its business in Las Vegas for casinos and high-rise condos, took 22 acres at Fort Pierce Industrial Park in St. George, Utah, for a 235,000-square-foot facility that's under construction. With its own private power company, the industrial park has the cheapest power rates in the Southwest, Hillis said.

Milican fabric company analyzed nine sites, including Reno, Las Vegas, Phoenix and Kingman, Ariz., before going to St. George, again because of extremely competitive power rates, Hillis said.

Kevin Higgins, senior vice president of Voit Commercial brokerage in Las Vegas office, said buildings at Pacific Business Center and H Bizctr Whitney Mesa are ideal for small businesses looking for long-term leases with room to grow.

The buildings range from 3,500 square feet to 7,500 square feet, with ceiling heights of 16 feet to 20 feet, roll-up doors, three-phase electrical, fire sprinklers and painted interior warehouse walls. Turn-key offices can be built out to 60 percent.

Southern Nevada benefited for many years from a business-friendly, low-tax environment that gave it a competitive edge over Southern California, Arizona and Utah. That's nearly vanished.

As industrial land prices skyrocketed from $3 and $4 a square foot to $15 and $20 a square foot over the past 10 years, prospective companies are now flying over Southern Nevada to Phoenix, where more private land is available at cheaper prices.

"Our one edict -- we will not build in California. It's not business-friendly," Muller said. "We actually had land outside Phoenix and sold that parcel to buy in Cedar City. We wanted access to Las Vegas and California without being in California."

Several major industrial developers from Las Vegas are looking at building speculative industrial product at the 800-acre Port 15 Utah, Hillis said.