Office construction hits the brakes in Las Vegas, report shows

Office construction has hit the brakes in the Las Vegas Valley. No new office projects broke ground in Southern Nevada during the second quarter, continuing a period of “stagnation” that lasted through 2024, according to a report from CBRE Group, which said the slowdown reflects ongoing caution from developers.

The brokerage firm pointed to elevated vacancy rates, limited pre-leasing commitments and “broader economic headwinds” such as tariffs, and it alluded to elevated borrowing costs.

CBRE broker Brad Peterson, a Las Vegas office specialist, told the Las Vegas Review-Journal that a number of factors are slowing construction.

He cited limited land availability, higher interest rates, lender uncertainty about the long-term demand for space, and escalating construction costs.

Overall, such factors make new projects “difficult to initiate,” he said.

Las Vegas’ office vacancy rate in the second quarter, 12.2 percent, was down from 13.9 percent during the same period last year, CBRE reported.

However, Las Vegas’ overall economy has been dealing with a downturn in tourism, the region’s main economic engine, and the local unemployment rate is among the highest in the nation for large metro areas.

The Federal Reserve has signaled the possibility of two interest-rate cuts in the coming months, but its current “wait-and-see approach continued to fuel uncertainty, making a near-term resurgence in office construction unlikely,” CBRE reported.

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.