Recession-driven commercial real estate defaults show no sign of slowing down in the Las Vegas area, but a new report says underlying conditions in the industrial sector may be stabilizing.
Commerce Real Estate Solutions, a brokerage that is a Cushman & Wakefield Alliance member, on Tuesday issued its third-quarter industrial report for the local market, saying "we may have reached the bottom and the industrial market stabilization process has begun for a long, steady recovery.’’
The report covers 3,530 buildings with more than 102 million square feet in Las Vegas, North Las Vegas, Henderson and surrounding areas.
The overall vacancy rate of 15.07 percent was equal to the third quarter of 2010 — it’s bounced up and down since then — as companies signed leases at bargain rates and developers have hit the brakes on construction, Commerce Real Estate said in its report.
"The decrease in speculative development has created demand for income-producing properties, thereby putting upward pressure on values," Tuesday’s report said.
Despite this upward pressure, Commerce Real Estate noted lease rates remain competitive — running from 35 cents per square foot per month to 55 cents.
"Landlords are eager to lease their buildings and make deals on a short-term basis in order to have a means of cash flow," the report said.
Tuesday’s numbers for the third quarter compare to data for the second quarter from Applied Analysis showing that for 19 consecutive quarters, the local industrial market had reported increases in the vacancy rate as about 14.7 million square feet of space was added to the market during that timeframe.
Once a 120,000-square-foot build-to-suit project is finished, and with no significant projects planned in the near term, "future vacancy rate improvements will primarily be sourced to absorption of second-generation space when demand returns," Applied Analysis said in its second quarter report.
Brokerage Colliers International, in its third quarter report issued Wednesday, pegged the local industrial vacancy rate at 15.4 percent and it was less optimistic about local industrial trends.
After strong demand for warehouse and distribution space led to positive absorption in the second quarter, vacating tenants pushed the market to negative net absorption in the third quarter, Colliers reported.
"Slight, measured improvements earlier in the year appear to be degrading, putting industrial performance for the year as a whole into question,'" the Colliers report said.