Northern Nevada
By Bob Shanahan, Colliers | RENO
Reno’s office market exhibited resilience in Q2 2024 despite its highest occupancy losses since 2020. The vacancy rate increased slightly to 10.9 percent, driven by several vacancies, yet it remained below the five-year average, highlighting the market’s stability. The State of Nevada’s substantial leasing activity, including 108,104 SF leased year-to-date, has been a key stabilizing force as it returns to in-office work and more deals are on the horizon. South Meadows and Meadowood saw notable vacancy increases, yet their high asking rents of $2.09 and $2.04/SF, respectively, reflect strong demand for quality space. Despite a sharp decline in sales volume to $12.6 million due to high interest rates, the market’s overall outlook remains positive. Sale prices are decreasing slightly from 2023 but cap rates are starting to stabilize. With interest rate cuts likely coming soon, sales activity should begin to tick upward.
As no new construction is expected, the ongoing leasing activity is likely to absorb additional space, potentially reducing vacancy rates by year-end. Regional availability is at its lowest since 2019, and sublease space continues to decline, setting the stage for positive net absorption in the coming quarters. Reno’s office market is positioned for a solid finish to 2024, with declining vacancy, healthy demand and continued resilience.
Southern Nevada
By John Stater, Colliers | Las Vegas
After hitting a recent low vacancy rate in the second quarter of 2023, office vacancy has increased for three consecutive quarters. Southern Nevada had -182,201 SF of net absorption in the second quarter of 2024, sending vacancy up to 12.1 percent. The weighted average asking rental for office space increased to $2.64 PSF on a full service gross (FSG) basis. The troubles experienced by larger office markets over the past four years appear to have come to Las Vegas in 2024. The market posted -300,960 SF of net absorption so far this year, its worst performance since midyear 2010. This came after a recovery in 2021 and growth in 2022 and 2023 that made it appear southern Nevada was immune to national office trends.
Southern Nevada was, sadly, not immune. The challenges faced by larger markets, including work-from-home, lower demand for space due to greater efficiency and worries over the trajectory of the national economy were as real in southern Nevada as anywhere else in the United States.
Moving forward, landlords should focus on retaining their existing tenants and making themselves competitive for new or growing tenants in the marketplace. If economic troubles are looming, it will be especially valuable to keep one’s building in as strong a position as possible to cope.
