A slowdown in national economic growth didn’t make its way into local commercial development.
All three commercial sectors made progress in the second quarter, according to a number of reports from local brokerages and research firms.
Industrial was the brightest spot, returning to pre-recession vacancy. Retail was stable, while office lagged.
The sector’s vacancy rate of 5.8 percent was its lowest since the third quarter of 2007, while its net space absorption of 1.6 million square feet was the highest since 2008’s second quarter, CBRE Las Vegas reported.
The market faces an especially acute shortage in large distribution: The market has no available spaces of more than 100,000 square feet, though developers including Prologis, Dermody, Pauls Corp. and Panattoni are building parks ranging from 153,000 to 450,000 square feet.
In all, more than 2 million square feet were under construction, with another 1.9 million square feet to start in coming quarters.
“Developers are investing time and money in these large projects, many without preleasing, which demonstrates their renewed confidence in the market,” said Rachel Stevens, a project manager with research firm Applied Analysis.
Shopping centers were 9.1 percent vacant in the second quarter, down slightly from 9.3 percent a year earlier, according to Applied Analysis. Construction completions were weak, with 4,200 square feet finished — all in one pad at Mardon Avenue and Rainbow Boulevard. But that was on top of 1.9 million square feet of completions in the 12 prior months.
Bobbi Miracle, president of Commercial Alliance Las Vegas, said the segment’s falling vacancy rate is “significant when you see reports showing that the Las Vegas area has more retail space per resident than any city in the nation.”
The alliance, which produced reports with consulting firm Xceligent, noted 87,207 square feet of net absorption, much of it from discount grocer Save A Lot’s three new locations in the northeast, northwest and downtown Las Vegas.
Conditions are positive for growth, Applied Analysis said. Clark County’s taxable retail sales were up 8.1 percent year over year, to a record $37.2 billion, in the 12 months that ended in April. And new-home permits were up 15.1 percent, or 10,122 permits, in the last year, indicating potential population growth.
The office market still has the most ground to gain.
The vacancy rate was 20.3 percent in the quarter, down from 21.6 percent in 2014’s second quarter and a peak of 25.4 percent in the first quarter of 2012.
The most notable transaction in the quarter was Roseman University of Health Sciences’ purchase of the vacant, 143,000-square-foot Nevada Cancer Institute building in Summerlin. Roseman said it plans to open a medical school in 2017.
The sector also saw its 14th straight quarter of positive net absorption, with 189,703 square feet of space leased. The most active industries included law firms, real estate companies, health care-related businesses and financial services firms, CBRE Las Vegas said.
Local office-based employment reached 356,900 jobs in May, up 3,900 positions year over year. The gains came mostly from professional and business services and education and health care, said Brian Gordon, an Applied Analysis principal. If job growth continues, expect “more pronounced improvements” in the vacancy rate, he said.