Vacancy rates for industrial and office spaces in Southern Nevada have been on the rise, signaling a decrease in demand for these properties. Experts in the industry are attributing this trend to companies waiting to make decisions about their space needs until after the upcoming election.
During a recent luncheon hosted by the Southern Nevada CCIM Chapter, panelists including Rod Martin from Majestic Realty, Jeff LaPour from LaPour, and Doug Roberts from Panattoni Development discussed the current state of the industrial and office markets in the region. They noted that tenant velocity has decreased significantly in the past six to twelve months, leading to a slowdown in activity.
The industrial market in Southern Nevada saw an addition of 3.8 million square feet of inventory in the second quarter of 2024, resulting in a vacancy rate of 6.4 percent. This is a significant increase from the 1.6 percent vacancy rate recorded in the same quarter of the previous year. Similarly, the office market experienced a rise in vacancy rates from 11 percent in the second quarter of 2023 to 12.1 percent in the third quarter of the same year.
Panelists expressed concerns about the impact of the upcoming election on decision-making in the real estate market. They mentioned that uncertainty surrounding the election has led to a slowdown in tenant demand, with companies adopting a wait-and-see approach before committing to new leases. The panelists also discussed the potential effects of interest rate cuts by the Federal Reserve on the industry, highlighting the importance of loan sizing and equity in real estate investments.
In addition to the factors affecting the industrial and office markets, panelists touched on the role of government incentives in attracting businesses back to the region. They emphasized the need for strategic planning and investment in local industries like chip manufacturing and pharmaceuticals to stimulate demand for industrial space.
Looking ahead, the panelists anticipate that landlords may offer free rents and incentives on tenant improvements to attract customers to their properties. Despite the current challenges facing the real estate market in Southern Nevada, the panelists expressed confidence in the long-term outlook for the industry and emphasized the importance of adaptability and resilience in navigating uncertain economic conditions.
