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Commercial RE Report: Industry Summary

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Northern Nevada

By Angel Orozco and Dan Buhrmann, CBRE

The Reno Industrial Market returned to healthy market fundamentals in the first quarter of 2022, posting the tenth consecutive quarter of positive net absorption. The vacancy rate fell quarter over quarter, ending the first quarter of 2022 at 0.7%, the lowest on record. Availability rates followed suit, falling to 1.7%.

Average asking rental rates hit an all-time high, posting a rate of $0.80 NNN. The significant increase in asking rental rates was generated by the high rate flexible product that is currently left in the market. Rental velocity continued to soar, leading to 2.7 million square feet of net uptake in Q1 2022. With over 3.5 million square feet of gross rental activity, the Reno market Industrial is expected to see strong absorption figures as speculation pre-leased projects will be delivered in 2022 and 2023. Industrial sales activity in the market remained active in the first quarter of 2022. The largest building sold this quarter was a 38,657 square foot investment sale at 280 Greg St. for $7.9 million.

Reno welcomed over 1 million square feet of new industrial products to market in the first quarter of 2022. Reno’s construction pipeline remains strong with 13 projects totaling over 4.5 million square feet of products currently under construction. Despite prolonged construction due to supply chain disruptions, notable new build pre-letting activity will produce substantial net uptake throughout the year.

Southern Nevada

By Cassie Catania-Hsu, CBRE

After a record-breaking 2021, the Las Vegas industrial market is showing indications for a strong 2022. Net uptake totaled approximately 3.1 million square feet for the first quarter, a single-quarter record, beating the previous quarterly record set during Q2 2021. Overall vacancy rate declined to a new a record 1.1% quarter over quarter. The average monthly asking rental rate continued to climb, with an increase of 6.1% compared to the fourth quarter of 2021.

A large part of the total absorption in the first quarter of 2022 was due to the high pre-letting of projects delivered during the quarter. The North Las Vegas submarket recorded nearly 1.6 million square feet of net absorption. The Henderson submarket recorded over 828,000 square feet of net absorption, and the Southwest submarket recorded approximately 370,000 square feet.

Tenant demand continued to exceed supply. However, 13 million square feet of projects are in progress and will be delivered in the next 12 to 18 months. This level of deliveries should help balance supply and demand. Nearly 5.2 million square feet of projects began construction in the first quarter of 2022, all of which were speculative developments (built without signed leases). Over the past 12 months, more than 7.5 million square feet of space has been added to the Las Vegas industrial market. New deliveries totaled 2.6 million square feet in the first quarter of 2022, with 86% of that space pre-committed. Going forward, pre-lettings are expected to remain high over the next year as new spaces are delivered.