Northern Nevada
By Angel Orozco, CBRE
The Reno industrial market is comprised of 108.3 million square feet (SF). The market has substantially grown over the last five years, adding over 20.5 million SF of new inventory. The construction pipeline remains plentiful, with a variety of projects totaling over 5.8 million SF currently underway and 13.9 million SF in various planning stages. Additionally, both vacancy and availability rates increased quarter-over-quarter to 4.1 percent and 6 percent, respectively. The overall average asking lease rates closed the quarter at $0.89 per SF on a monthly, NNN basis. For the first time in several quarters, sublease space returned to the market as tenants adjusted to market and overall economic conditions. Industrial sale activity remained sparse due the Fed’s move to increase interest rates. As a result, only one institutional sale transacted in Q2 2023.
The Reno market totaled 625,676 SF of net absorption during Q2 2023, maintaining the market’s ongoing robust occupancy growth. Looking forward, the Reno industrial market will continue to experience strong market fundamentals as construction projects continue to prelease ahead of delivery. However, the market is witnessing persistent fluctuations in completion timelines, attributed to the ongoing supply chain issues and destabilizing economic conditions.
Southern Nevada
By Laura Wilhelm, Garrett Toft & Kevin Higgins, CBRE
The Las Vegas industrial market maintained its momentum in the second quarter of 2023, reporting the 42nd consecutive quarter of positive net absorption. With continued strong tenant demand, construction continued at a steady pace, with a nearly 90 percent prelease rate for the 3.5 million SF delivered this quarter. This brought the year-to-date total to 5.5 million SF delivered. Projects under construction increased from 16.8 to 19.8 million SF, with 5.5 million SF breaking ground in the quarter. Net absorption remained robust throughout the second quarter, totaling 3.1 million SF.
The overall vacancy rate reached 1.7 percent in the second quarter, an increase of 80 basis points from this time last year, when the market reached its all-time lowest vacancy rate. Considering the substantial amount of space coming online in the next few quarters, this upward trend will likely continue. Sublease space is largely flat from quarter to quarter. Average asking lease rates rose slightly but at a much slower rate than in 2022, with the average achieved lease rate showing virtually no change from the previous quarter. Going forward, leasing momentum will need to accelerate to maintain the current vacancy rate. Although land transactions have slowed in recent quarters, there remains very little infill industrial land available for development.
