Once Upon a Time
NAIOP Southern Nevada’s Bus Tour Committee is pleased to present the 2022 “Once Upon a Time ” Bus Tour. These past several years have been a whirlwind and during that time the Southern Nevada market has continued to grow!
We are pleased to report that commercial real estate development continues to remain strong throughout the Las Vegas Valley. During the past 12 months we have seen an increase in demand in all sectors which has attributed to the healthy development pipeline we see today. The success of Las Vegas is only heightened by developers working closely with our chapter’s architects, engineers, contractors, brokers, and all our other consultants and service providers to realize market opportunities. These combined efforts will continue to play an important role in recruiting new businesses and jobs to Southern Nevada, supporting the sustainability and allowing us to continue to diversify our local economy.
We are extremely excited to present the 59 industrial, office, and retail projects on our tour that have been completed recently or are currently under construction. Our goal for this event is not only to showcase these exciting new developments for our members, but also generate awareness about the viability of new development in our market as well as to provide insight into what is happening within the market in each of the respective product types. We sincerely thank the NAIOP Board of Directors, the Bus Tour Committee members, and all of the NAIOP member sponsors and advertisers who make this event possible. Without your time, efforts, and resources, we would not be able to put on such an important event.
Welcome to the NAIOP Southern Nevada 2022 “Once Upon a Time” Bus Tour and thank you for your attendance as we celebrate the next chapter in Southern Nevada’s development.
Southwest Submarket
Office
By: Tonya Gottesman
MDL Group
the Southwest Submarket, located south of Flamingo and west of the I-15, is 8.2 million SF, the second largest submarket in the Las Vegas Valley and the only submarket experiencing a significant amount of new development.
Currently the submarket accounts for about 18% of the total office square footage in the Valley and there is currently nearly 400,000 SF under construction.
The submarket has proven to be a sought-after location for office users as there is high quality product and a desirable midpoint for both Summerlin and Henderson residents. In fact, now many consider it to be the center of town from an office perspective.
There is currently 395,000 SF under construction. Net absorption so far this year is 181,000 SF, which is 46% of overall absorption for the Las Vegas Valley. The average lease rate is $2.74 PSF FSG, which is over 13% higher than the total average lease rate within the Valley.
Both vacancy rate and lease rates within the submarket have remained relatively steady since the beginning of 2022 and sublease space is almost non-existent at 1.3%. Overall, the submarket shows continued rent growth with an increase of 7% over the past year.
Owner/User sales continue to be strong with prices increasing by 25% from Q1 2021 to present. With accessibility via the I-215, overall availability remains well below the Valley average.
The Southwest Submarket is one of only a few within the Valley that have interest from developers of all product types and where both users and developers want to be.
Industrial
By: Paul Sweetland, SIOR
Colliers International
Consisting of approximately 40 million SF of industrial space, or 26% of the overall market, the Southwest Submarket’s vacancy rate sits at 1.0% with average asking lease rates at $1.23 PSF and net absorption just under 1 million SF through the second quarter.
As of Q2 2022, the Southwest Submarket has delivered nearly 622,000 SF with approximately 1.4 million SF under construction. Some warehouse/distribution projects currently under construction include Becknell Blue Diamond, totaling 254,492 SF (65% pre-leased); CapRock Spanish Ridge, totaling 230,899 SF; Post 215 Logistics, totaling 182,520 SF (100% pre-leased); and Beltway Business Park (buildings 13, 14, and 15), totaling 268,040 SF (52% pre-leased). With a majority of the new product being warehouse/distribution buildings, some developers have decided to focus on small bay product. For example, Beedie recently broke ground on their 259,731 SF two-building project Pioneer Business Center, which showcases suite sizes ranging from 7,000 to 13,000 SF that are offered for sale or lease as individual units.
Recent lease transactions in the submarket include a 38,400 SF lease at Mountain West Industrial Park and a 165,542 SF lease at Becknell Blue Diamond. In addition, a 182,520 SF lease was inked before completion of construction at Johnson Development’s Post 215 Logistics Project, which is expected to be completed in Q1 2023.
The Southwest Submarket generally demands a higher rental rate compared to other submarkets due to the close proximity to the resort corridor, Harry Reid International Airport, and easy access to I-15 and I-215. With industrial land becoming more and more scarce, the Southwest Submarket will continue to provide upward pressure on lease rates and will continue to see significant demand.
West Submarket
Office
By: Travis Landes
CBRE
Comprised of roughly 7 million square feet of office product, the West Las Vegas Submarket is the largest submarket based on available office and has new projects announced quarterly. Through the second quarter of 2022 the West Submarket experienced positive net absorption in both Q1 and Q2 totaling a little over 53,000 SF. Vacancies in the West Submarket tend to be among the lowest in the Las Vegas metropolitan statistical area (MSA) and, as of Q2 2022, had a direct vacancy rate of 5.9 percent, which is the lowest in the Valley. CBRE is reporting a total vacancy rate of 10.9 percent Valley-wide when considering office product 10,000 SF and above.
Historically, the West Submarket has outperformed other Las Vegas submarkets; however, with the recent growth of the Southwest Submarket along the 215 Curve, this trend has begun to shift to the Southwest submarket. Within the heart of the West Submarket is the 400-acre mixed-use development of Downtown Summerlin, which includes an office component comprised of multiple Class A, LEED Certified, office buildings.
The latest office building, 1700 Pavilion, is currently under construction with an anticipated delivery in the fourth quarter of this year. Adjacent to the Las Vegas Ballpark, the 10-story, state-of-the-art office building, is a true Class A project, and will be roughly 80 percent pre-leased prior to delivery. With the success of the two office buildings Howard Hughes has built so far, and with the success of the preleasing Howard Hughes has announced their next project will be breaking ground soon, which will be two 90,000 SF sister buildings next to the Aristocrat buildings on Town Center and the 215.
Due to its proximity to Summerlin, ample amenities in the area, and easy accessibility to the rest of the Valley, the West Submarket will continue to be a highly desired submarket in southern Nevada.
North Las Vegas Submarket
Office
By: Mike Tabeek, SIOR, CCIM
Newmark
the Northwest Submarket is encompassed by the 215 Beltway to the west, east along US-95 and Rancho Dr., Charleston to the south, and everything north in between those boundaries. As of Q2 2021, this market consists of approximately 5,959,910 SF of office space, which represents 15% of the total office space tracked in the Las Vegas Valley. The second quarter shows a 12.1% vacancy rate in this submarket, down from 13.2% this time last year.
Leasing rates in the northwest currently average $2.02 PSF, FSG and have stayed relatively flat since last year. While the office market was strong finishing 2021 and leading into 2022, it has begun leveling off with market uncertainty. The market still seems to be healthy, and deals are getting done, it’s just taking longer to get them over the finish line.
Occupiers are being more thoughtful in their approach when it comes to leasing office space and a lot of that has to do with construction costs continuing to rise. Tenants are having to make the decision of contributing more cash out of pocket for tenant improvements.
There were a few significant office sales in the northwest. Sir Williams Court sold for $10.25 million ($202 PSF), 10030 and 10080 Alta sold for $9.5 million ($345 PSF) and 1401 Hillshire sold for $7.4 million ($210 PSF).
Industrial
By: Sean Zaher
CBRE
The North Las Vegas Submarket is the largest submarket in the greater Las Vegas Valley consisting of roughly 60.4 million SF or 40% of the overall market and 62% of the distribution product type in Las Vegas. Southern Nevada, specifically North Las Vegas, has quickly become the epicenter of e-commerce/logistics for the southwest region due to its proximity to the southern California ports and its ability to service 20% of the population within a day’s travel.
North Las Vegas ended 2021 at a 0.4% vacancy rate with 7 million SF of net absorption (70% of the market’s overall absorption). As of Q2 2022, the vacancy rate sits at 0.3% with 2.8 million SF of net absorption YTD (56% of the market’s overall absorption). Due to lack of availability over the last year, projects within North Las Vegas have seen a significant increase in pre-leasing activity as well as a drastic appreciation in rental rates. Estimated rates are as follows for the various product types: Mid-bay (5,000 to 20,000 SF) -$1.00 PSF range; Light Industrial (20,000 to 100,000 SF) – low to high $0.90s PSF; Distribution (100,000 SF and above) – ranges from $0.78 to $0.90 PSF.
In terms of new construction, North Las Vegas has 10.3 million SF under construction which makes up 75% of the total under construction pipeline within the Valley. There is an additional 15.8 million SF in the planned pipeline which is 66% of the total planned projects within the Valley. Of the total under construction within North Las Vegas, 55% is preleased as of Q3 2022.
Over the last 12 months within North Las Vegas land pricing has moved from $16 to $20 PSF to $25 to $30 plus PSF.
Map and Property List
Retailer Briefs
EXPERIENTIAL RETAIL AND THE STRIP
By: Angelica Clemmer, CCIM
ROI Commercial Real Estate
the Strip is hot with tourism, gambling, redevelopment and new developments of resort and retail projects. Harry Reid Airport set a record in June with 4.7 million visitors. May marked 15 consecutive months in Nevada with more than $1 billion in gaming revenue.
In good Vegas fashion, The Hawaiian Marketplace, located directly across from City Center, is being torn down and replaced with a 400,000 SF retail project called The Blvd. The project includes 300,000 SF high street retail and 100,000 SF of open-air food and beverage (F&B)/entertainment uses. Delivery to tenants is expected Q3 2023.
The Grand Bazaar Shops will demolish two strip facing retail buildings and the Bally’s marquee sign in preparation of the rebranding of Bally to the Horseshoe and the building of two, 30,000 SF flagships. Ryman Hospitality and Blake Shelton will partner to bring a 3-story bar and restaurant with a rooftop honky-tonk, Ole Red to the hard corner of the project. The other flagship will be 3-stories with a rooftop sports bar, Bottled Blonde. The flagships will complete the 5-year redevelopment of the project.
Across the street, Project 63 is under construction adding 130,000 SF of retail space to the Resort Corridor. Cameron Mitchell’s Ocean Prime recently announced their first Las Vegas restaurant at Project 63 taking 14,500 SF with a 2,500 SF rooftop terrace. Fontainebleau signs are up and 97,000 SF of high-end retail leasing is underway. The project will include 8 acres of poolside experience, clubs, 10 fine dining restaurants, a 30,000 SF gourmet market and 150,000 SF of gaming. Last but not least, the $550 million Dream Hotel, located across from Mandalay Bay, broke ground in July and is expected to deliver a 20 story, 531 room, with 20,000 SF of gaming resort in 2024.
RETAIL PADS
By: Deanna Marcello
Logic Commercial Real Estate
Retailer’s shopping habits have continued to confirm that convenience is everything making retail pads more in demand than ever for their location, visibility, and convenience. Retailers continue to move away from inline buried locations and are paying up for a pad location. Developers are maximizing on pad rent as opposed to maximizing GLA (Gross Leasable Area). Tenant operations are catering to drive-thru, curbside pick-up or other convenience driven services, requiring retailers to alter traditional footprints to updated layouts.
The last 24 months has solidified retailers will pay higher rent to secure Class A location pad sites. Characteristics of a Class A pad site include outparcel to a daily trips box, signalized intersection, excellent visibility, strong traffic-counts, adequate signage and ease of access/circulation. Active pad tenants such as QSR, fast casual, automotive services/sales, gas, personal services and medical retailers are also important.
Demand for retail in Las Vegas remains strong with retail vacancy decreasing to 4.8% this quarter, the lowest retail vacancy rate recorded in southern Nevada since before the Great Recession and freestanding retail pads at the lowest of all subtypes at 4.5%. Annual rent growth in Las Vegas remains positive at 9.1%, and was roughly 7.6% four quarters ago, with pad rents seeing higher trends nearing 11% as land value and construction costs continue to rise impacting rental averages of $48 PSF NNN for new construction. Despite increased interest rates, investors remain active in 2022 with $4.1 billion of retail assets trading in the last 12 months. Single Tenant pads continue to see compression in cap rates. Overall, the retail pad market for tenants forecasts continued growth and demand for 2022.
QSR AND RESTAURANTS
by: Dustin Alvino
Marcus & Millichap
QSR and restaurants continue to be one of the most highly sought-after assets for both developers and investors. The impact of the pandemic pushed many restauranteurs to cater to drive-thru, curbside and other convenience driven services to compete when their inside seating was rendered unusable. The impact of this increased the level of competition for existing and proposed drive-thru locations throughout the Valley and pushed rents on existing, build-to-suits and ground leases to new heights.
Casual/sit-down dining restaurants in the Las Vegas valley saw rents jump 8.6% year-over-year to $29.59 PSF. New construction QSR sites in the Las Vegas Valley saw rents jump to $50.11 PSF which is a result of rising construction and land costs, but also supply and demand. This is roughly 11% higher than Q2 2020 to Q2 2021 for new construction QSR sites. Overall market vacancy for restaurant/QSR space sits at 5%. Cap Rates for all new construction QSR/restaurant/tavern properties averaged 4.28% since Q2 2021.
Since Q2 2021, there have been 31 QSR, fast casual, sit-down and tavern transactions throughout the Las Vegas Valley. That represents a 30% increase over the prior trailing period of 24. Of those, 20 transactions were of new construction restaurants which represents 64% of the total velocity. On market or in escrow restaurant/QSR/tavern deals account for another 15 assets currently.
Overall, the restaurant/QSR/tavern market for both tenants and investors remains active and strong through Q2 2022. The expectation for most investors is that cap rates will continue to soften as the cost of capital continues to increase. That said, for high quality single tenant retail properties cap rates have remained relatively flat throughout 2022 even as the cost of capital has increased. This is a testament to the old real estate adage “location, location, location.”
HOTSPOTS: CHINATOWN/DTLV
by: Steve Neiger, ccim
Colliers International
Two mature submarkets comprised of often-deteriorated buildings constructed decades ago, both Chinatown and DTLV have been experiencing a resurgence unlike anything southern Nevada has ever seen. What started as organic growth in adaptive re-use and transitions from industrial/office-flex to retail, has now turned into two of the most sought-after submarkets in the Las Vegas Valley. Both submarkets experience different rental rates for new construction versus existing buildings. In both submarkets, pre-existing restaurant spaces command premiums.
In terms of sale data, comp ranges in both submarkets swing wildly. Due to scarcity, it is common to see sales for existing buildings in both submarkets from $400 to $600 PSF. For the same reason, land in these two submarkets command the highest prices PSF of any in the Valley (off-Strip), with good dirt sometimes selling at $50 to $75 PSF ($2 to $3 million per acre) and beyond.
Downtown Las Vegas, consisting of 3,116,752 SF, is seeing vacancy rates drop from 12.5% in Q2 2021 to just 7% in Q2 2022 – nearly a 50% decrease. For new-construction, rental rates range from $36 PSF to $48 PSF with significant TIA packages. For existing buildings, rates range from $18 PSF to $30 PSF with spaces mostly “as-is”. Chinatown consists of 1,790,424 SF. In Q2 2021 Colliers approximated this area, generally known as properties fronting Spring Mountain Rd. from the I-15 west to Rainbow Blvd., to have a vacancy rate of just 2%. That number may be as low as 0.5 to 1.0% as of Q2 2022 (formal retail data is not yet tracked or available). For new construction, rental rates range from $42PSF to $54PSF with significant TIA packages. For existing buildings, rates range from $18PSF to $42PSF with spaces mostly “as-is”.
Apex Submarket
Industrial
By: Jake Higgins
CBRE
The Apex submarket is the located at the northernmost portion of the North Las Vegas market and will house the next wave of industrial development for the Las Vegas Valley. It is situated along the Interstate 15 starting north of the Las Vegas Speedway and stretching to the US Highway 93. The Apex Industrial Park consists of approximately 7,000 acres (3,500 acres of flat/developable land) which will be able to accommodate nearly 55 million SF of industrial growth once fully built out.
The area has seen a tremendous amount of activity in this past year due to the infrastructure that is making its way from the southern portion and pushing north. Over the next several years this infrastructure expansion will continue to northern Apex near the US 93, allowing increased development opportunities. This has been made possible with new infrastructure spending by local municipalities as well as public/private partnerships with the City of North Las Vegas and the Southern Nevada Water Authority.
There are currently several developments underway within the southern portion of the Apex submarket with more to follow. The first speculative buildings will start to deliver Q2 2023. Major developers within the area include Dermody, Hopewell, Moonwater, Northpoint, Odyssey, Prologis, VanTrust and Western States. There is approximately 4.5 million SF speculative development underway with another 8.6 million SF planned.
Current users/tenant that have already committed to locating to this area include Kroger, Air Liquide, Hey Dude (Crocs), Saddle Creek Logistics and Operating Engineers.
The primary product type being constructed in Apex is bulk distribution with sizes of 200,000 SF on up to 2 million SF. Rates in this area can range from $0.70 – $0.85 PSF NNN depending on the size.
Due to the limited land availability within the Las Vegas Valley, we will continue to see future industrial growth in the Apex market for years to come.
Central/Airport Submarket
Industrial
By: Danny Leanos
Jones Lang LaSalle Brokerage, Inc.
With its central location and proximity to Harry Reid International Airport, the Las Vegas Strip and the Las Vegas Convention Center, the Airport Submarket, with over 15.5 million SF of industrial space, remains a preferred location for many occupiers. The submarket maintains a low vacancy rate of 3.5% and commands higher rents in the valley. Recently, occupiers absorbed 142,099 SF YTD with an average lease rate of $1.16 PSF NNN. Landlords continue to push rents and ask between $1.10 to $1.35 PSF NNN for small bay to mid-bay product in the 5,000 to 40,000 SF range. Flex product is commanding $1.30 to $1.50 PSF NNN and space in the 100,000+ SF range is achieving rates from $0.90 to $1.10 PSF NNN.
Two new significant projects totaling 408,420 SF will be added to the inventory later this year. Schnitzer, will finish construction on Sunset Airport Center 2, a four-building project consisting of small to mid-bay spaces and totaling 258,300 SF. Compass Logistics Center, a project from Hopewell, will deliver an additional 150,120 SF in the later part of 2022.
Demand is high for investment properties across the Valley. Notable investment sale transactions in the Airport Submarket this year include a two-building project at 4027 and 4075 E. Post Road totaling 40,625 SF that sold to GID in July for $238.65 PSF and 1120 Grier, a 100% occupied 37,462 SF multi-tenant building, which was purchased at a 4.25% cap by a one-off investor for $271.00 PSF in May. With a lack of available land sites in the area, the Airport Submarket will continue to face limitations for future development. With solid tenant demand the submarket should remain tight and continue to see low occupancy and strong rents.
Henderson Submarket
Office
By: Taber Thill, SIOR
Colliers International
the Henderson Submarket consists of 281 office buildings, totaling just under 5.5 million SF and its borders are defined by Henderson city limits. The bulk of the Henderson Submarket is comprised of Class B and Class C buildings with only eight Class A buildings totaling 583,668 SF.
The vacancy rate in Q2 2022 was 11.2 percent, which is a 1.8 percent decrease from Q2 2021, and the average asking lease rate increased by $0.14 PSF to $2.51 PSF FSG from the same time last year. The Henderson Submarket has a wide range of tenants and is a surrounded by several large master-planned communities such as Green Valley, Seven Hills, MacDonald Highlands, Anthem and Inspirada.
Valley Health Systems broke ground on a 40-acre medical campus adjacent to the Raiders practice facility. The total cost is estimated to be $385 million dollars and the project anticipated opening date is Q2 2024. Other notable projects include the Park at Horizon Ridge, a six-building owner/user project delivering Q1 2023. The majority of the submarket’s growth is in West Henderson where the office market is following the new retail and housing developments.
Industrial
By: Zac Zaher
Cushman & Wakefield
The East Henderson Submarket is the original Henderson industrial market area surrounding the I-215 and US-95 Freeway intersection. It consists roughly of 15 million SF and represents 10% of the overall market. As of Q2 2022, the vacancy rate sits at 1.4%, with 400,000 SF in net absorption.
East Henderson has seen significant rent growth over the last year given the limited new construction deliveries and lack of available existing space. Mid-bay product (5,000 to 20,000 SF) ranges from $1.10 to $1.15 PSF. Light industrial product (20,000 to 100,000 SF) ranges from $1.00 to $1.05 PSF. Distribution product (100,000 SF and above) ranges from $0.95 to $1.00 PSF. Recent significant lease transactions for the East Henderson Submarket include a 260,000 SF lease to Event Support Group and an 86,000 SF lease to Ferguson Plumbing Supply.
While East Henderson has been relatively quiet in terms of construction deliveries over the past year, developers have been active in acquiring over 175 acres of land positions for future development. Finding sizeable sites (10 + acres) has been and will be challenging for developers in this submarket moving forward. In terms on new construction, East Henderson currently has 450,000 SF under construction with an additional 2.3 million SF of planned projects in the pipeline. New projects under construction include Clarion Partners’ 406,000 SF South 95 Logistics and 32,000 SF BLAK Industrial Park. The planned developments include projects from institutional developers such as Prologis and Overton Moore Partners.
West Henderson Submarket
Industrial
By: Jerry Doty, SIOR
Colliers International
The West Henderson submarket went from a single industrial building (Levi Strauss 638,365 SF) to over 5.4 million SF in a short amount of time. While not previously separated from East Henderson, the West Henderson submarket has established itself as one of the strongest areas of town. Current vacancy sits at 2.5% with average asking lease rates at $1.20 PSF NNN and net absorption through the second quarter at 1,488,022 SF.
Recent lease comps for the West Henderson Submarket include a 75,349 SF lease to a 3PL and a 44,908 SF lease to Kubik, Inc., both at Ares’ Silver and Black Industrial Plaza. Invesco also signed three separate deals totaling 123,466 SF (32,730 SF, 45,000 SF and 45,736 SF) at their recently completed project, Bromigo Industrial Plaza. In addition, Golden Management leased 101,693 SF to Alliance North America, Inc. at their brand-new Executive Business Park.
Through the second quarter of 2022, the West Henderson submarket has delivered nearly 1.6 million SF with approximately 1 million SF currently under construction. New projects to the area include Silver and Black Industrial Plaza (150,374 SF), Bromigo Industrial Plaza (154,435 SF), Dermody’s LogistiCenter at I-15 South Phase 1 with two buildings totaling 595,480 (100% preleased), and Diamond Bermuda Industrial Park, an industrial condo project totaling 128,680 SF. In addition, Matter Real Estate’s Matter Park @ West Henderson Phase II (185,151 SF) should be completed by the end of 2022 (100% preleased).
Despite being brand new, the West Henderson submarket is almost completely built out with minimal supply of industrial land remaining. Without the City of Henderson allowing annexation and rezoning or a significant chunk of BLM land released, the West Henderson submarket will be extremely limited on growth for the next few years.
About NAIOP
NAIOP, the Commercial Real Estate Development Association, comprises 20,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy.
Formed in 1986, the NAIOP Southern Nevada chapter has grown dramatically since it’s inception as a socially oriented club to become the voice of commercial real estate development in southern Nevada.
With over 650 members, the chapter is known throughout the community for organizing special events such as the awards program, annual bus tour of office, retail and industrial projects, annual golf tournament, monthly breakfast meetings featuring informative guest speakers and numerous education workshops and seminars. The chapter is also actively involved in government affairs at the local and state levels.
NAIOP Southern Nevada has received national recognition over the years winning Chapter Merit Awards for its Spotlight Awards program, educational Programs, membership, government affairs, volunteerism, community service projects, Developing Leaders Institute, Outstanding Contribution by a Chapter President and Outstanding Contribution by a Chapter Executive.
Benefits of Becoming a President’s Circle Sponsor
We invite you to join us in supporting NAIOP Southern Nevada by becoming a President Circle Sponsor in 2023. Your active participation and sponsorship in NAIOP help our industry and our chapter thrive. Sponsorship funds stay in our chapter to sustain our Legislative efforts and chapter operations, to provide for effective committees and to create the quality experiences you expect from NAIOP. As a sponsor, you will receive name recognition at our programs, exposure in promotional materials, discounted event sponsorships and exclusive invitations to tours.
Benefits for the President Circle Sponsors vary depending on an organization’s level of commitment but they include everything from being named the sponsor of a major event at the Platinum level to discounts on event sponsorships and recognition at the breakfast programs among other perks.
Our 2023 President’s Circle Sponsorship package details the benefits and other sponsorship opportunities within our chapter throughout the year. Contact us today for more details and a copy of the package information. Commitment forms are due no later than January 6, 2023 to secure full benefits for the year.
Providing name recognition alongside one of southern Nevada’s most trusted commercial real estate organizations while supporting the best of the best in the CRE industry, President Circle Sponsorships just makes sense. For more information, contact NAIOP at (702) 798-7194 or by emailing info@naiopnv.org.
Thank you for your membership, support and commitment to NAIOP and our community.
