Northern Nevada
By Angel Orozco, CBRE
The Reno industrial market was comprised of approximately 111 million sq. ft. at the close of Q3 2023. The market has substantially grown this year, adding over 6.44 million sq. ft. of new inventory. The construction pipeline remains plentiful, with a variety of projects totaling over 2.8 million sq. ft. currently underway and 16.1 million sq. ft. in various planning stages.
The overall average asking lease rates closed Q3 2023 at $0.87 per sq. ft. on a monthly, NNN basis. Sparks and South Reno posted the highest average asking rates at $1.09 and $1.10, respectively. The vacancy rate had no change quarter-over-quarter (QoQ) and the availability rate increased slightly to 6.2%.
The industrial tenant demand remained stable in Q3 2023 with increased demand by consumer product users. Industrial sale activity remains mute due to elevated interest rates brought on by the Federal Reserve to curb inflation.
The Reno market totaled 1.84 million SF of net absorption during Q3 2023, maintaining the market’s ongoing robust occupancy growth. This activity demonstrated a bifurcated market with high tenant demand for spaces over 100,000 SF and lower demand for sub 100,000 SF.
Southern Nevada
By Laura Whilhelm and Garrett Toft, CBRE
The Las Vegas industrial market posted another quarter of positive net absorption totaling 455,000 SF, bringing the year to date total to 5.4 million SF. Bed Bath and Beyond’s bankruptcy impacted net absorption as the retailer vacated 715,000 SF in the third quarter. The overall vacancy rate for the quarter inched up 80 basis points quarter over quarter to 2.5 percent – the highest recorded since the second quarter of 2021, yet historically still relatively low. Considering the large amount of space expected to deliver over the next six to 12 months, strong preleasing will be required to maintain low overall vacancy. Preleasing currently stands at 22.1 percent.
With an oversupply of unleased space, the North Las Vegas submarket began to see a softening in average asking lease rates at around $0.90 per sq. ft. in big box spaces. Conversely, rates in the Southwest and Henderson submarkets remained steady due to a lack of available space. The construction pipeline remained robust during the quarter. Projects under construction totaled 19.8 million SF at the close of the quarter, with 2.4 million SF breaking ground. The rapidly-growing Apex submarket, situated in the upper northeast portion of the market, continued its expansion.
