Northern Nevada
By Angel Orozco, CBRE
The Reno industrial market finished the quarter with strong market fundamentals, posting the thirteenth consecutive quarter of positive net absorption. The East Valley submarket remains the most sought out location in Reno for occupiers, posting 714,750 square feet (SF) of positive net absorption for the quarter. Average asking lease rates increased $0.13 quarter-over-quarter, ending the year at a record high of $1.00 per SF monthly on a NNN basis. On the supply side, 1.1 million SF of product was delivered to the market with 9.2 million SF currently under construction.
Market-wide vacancy and availability slightly rose in Q4 2022. The vacancy rate increased 50 basis points (bps) to 1.1 percent and the availability rate followed suit, increasing 80 bps to 2.1 percent. Average asking lease rates increased 15 percent quarter-over-quarter to $1.00 NNN. Flex rates posted a 33 percent year-over-year increase, closing the quarter at $1.24 NNN.
The Reno market closed out the Q4 2022 with a total of 680,845 SF of net absorption, maintaining the market’s strong leasing transactions. The Webstaurant Store accounted for the largest transaction of the quarter for 692,720 SF. As preleased projects are expected to be delivered in 2023, the Reno industrial market is expected to continue the trend of positive net absorption well into next year.
Southern Nevada
By Laura Wilhelm and Garrett Toft, CBRE
The Las Vegas industrial market maintained strong fundamentals throughout 2022, ending the year with low vacancy, strong positive net absorption which outpaced new deliveries, firm asking lease rates and a robust construction pipeline that is already seeing strong preleasing. Net absorption, driven by a 75 percent prelease rate in completed projects, remained positive for another quarter, at 1.8 million SF., bringing the total for the year to 7.4 million SF. This was the third highest annual total in the market’s history and demonstrates the market’s strength over the last several years.
Nearly 2.4 million SF. of space was delivered to the market during the quarter, bringing the 2022 total to 7.2 million SF. The overall vacancy rate remained at historic lows during 2022, ending the year at 1.3 percent, 100 basis points lower than this time last year. Overall, strong tenant demand continued to result in steady leasing activity, keeping the vacancy rate extremely low. Average asking lease rates grew by 21.4 percent year-over-year and by 58.7 percent from fourth quarter 2020. Rent continued to appreciate all year and remained strong in Q4 2022.
While the Las Vegas industrial market proved resilient in 2022, the next several quarters will determine whether the fast pace of industrial activity will begin to normalize. While the planned pipeline is historically large, the timing for deliveries will continue to be spread over a larger period due to market uncertainty.
