Northern Nevada
By Angel Orozco, CBRE Reno
The Reno industrial market was comprised of approximately 115 million sq. ft. at the close of Q2 2024. There was over 180,000 sq. ft. of new product delivered to the market in Q2 2024. The construction pipeline had over 930,000 sq. ft. underway with another 17.3 million sq. ft. in various planning stages. The overall average asking lease rates closed Q2 2024 at $0.87 NNN. Central/Airport and south Reno posted the highest average asking rates at $0.97 NNN and $1.06 NNN, respectively. During Q2 2024, the overall vacancy rate increased to 9 percent, while the availability rate reached 10.6 percent. Notably, this quarter marked the second instance of negative absorption since Q3 2019, resulting in negative 1.8 million sq. ft. of net absorption.
Despite stable demand, the market faced challenges due to an influx of lease expirations and further right-sizing by existing users. Nevertheless, several leases and sales exceeding 100,000 square feet were signed, and the region also garnered recent interest from institutional investors, as highlighted in the top leases and sales tables. Looking ahead, vacancy and availability rates have appeared to peak and are expected to decline in the latter half of 2024 and into 2025 as recently vacated spaces begin to lease. Institutional owners will continue to show interest in the region and leasing velocity is expected to increase.
Southern Nevada
By Laura Wilhelm, CBRE Las Vegas
Net absorption was positive with 550,000 sq. ft. in Q2 2024, marking the 46th consecutive quarter of positive net absorption for the industrial market. Although down from 1.8 million sq. ft. in Q1 2024, current leasing activity would suggest a rebound back to trend in Q3 2024. Preleasing remains a smaller percent of overall leasing activity as tenants now have abundant standing inventory to choose from.
The overall vacancy rate increased by 160 basis points quarter-over-quarter, climbing from 4.7 to 6.3 percent. This is the highest rate the market has seen in nine years, matching the 6.3 percent rate seen in Q1 2015. The Apex submarket, which saw the delivery of three large warehouse/distribution projects (over 500,00-sq.-ft. buildings) without tenant commitments during Q2, played a significant role in the uptick.
A total of 3.8 million sq. ft. was delivered to the market during Q2 2024, bringing the total for the first half of 2024 to 8.2 million sq. ft. With another 10.4 million sq. ft. of projects under construction, vacancy is expected to rise over the course of 2024 but normalize in 2025, as few new projects are slated to start construction over the next 18 months.
