Northern Nevada
By Angel Orozco, CBRE
The Reno industrial market was comprised of approximately 115 million sq. ft. at the close of Q3 2024. There was one space of 40,000 sq. ft. of new product delivered to the market in Q3 2024. The construction pipeline had 1.7 million sq. ft. underway with another 16.5 million sq. ft. in various planning stages.
The overall average asking lease rates closed Q3 2024 at $0.86 NNN. During Q3 2024, the overall vacancy rate increased to 10.5%, while the availability rate reached 11.6%. Notably, this quarter marked the third instance of negative absorption since Q3 2019, resulting in negative 1.8 million sq. ft. of net absorption.
Despite stable demand, the market continued to face challenges due to an influx of lease expirations and further right-sizing by existing users. Nevertheless, several new leases and sales exceeding 100,000 square feet were signed. Looking ahead, vacancy and availability rates appeared to have peaked and are expected to decline in the last quarter of 2024 and into 2025 as recently vacated spaces begin to lease. Institutional owners will continue to show interest in the region, and sales activity is expected to increase in Q4 2024 and into 2025, driven by interest rate cuts and the conclusion of the 2024 Election. Additionally, the Reno market is not expecting most of the new deliveries until early 2025.
Southern Nevada
By Laura Wilhelm and Garrett Toft, CBRE
In Q3 2024, the Las Vegas industrial market recorded its 47th consecutive quarter of positive net absorption, with nearly 700,000 sq. ft. of additional space occupied. This represents a quarter-over-quarter increase of 28.6%, bringing the year-to-date total to 3.0 million sq. ft. In the upcoming quarter, we expect to see further positive net absorption, driven by consistent leasing activity.
In Q3 2024, 2.8 million sq. ft. of new space was completed, bringing the year-to-date total to 11.0 million sq. ft. The market is on pace to set a new annual delivery record of 16.0 million sq. ft., surpassing the prior record of the 11.3 million sq. ft. delivered in 2023.
As expected, the vacancy rate rose by 120 basis points to 7.5%, up from 6.3% last quarter. This current vacancy level represents the highest point the industrial market has seen in a decade. The upcoming new supply will likely result in increasing vacancy in Q4, which might approach 10.0%. However, deliveries are going to taper off in 2025 with very few new construction starts, and we should see a gradual decline in the vacancy rate in 2025.
