Q4 2022 Industrial Real Estate Report: Las Vegas, NV
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Las Vegas is known for its nightlife, entertainment, and fine dining. Major industries like aerospace and defense, information technology, tourism, and gaming support the city.
The city’s unemployment increased from 5.3% in Q3 to 5.4% in Q4, which was higher than the national average of 3.5% at that time.
The population of its metro area increased by 60,000 residents from 2021 to 2022.
In Q4 2022, Las Vegas industrial real estate saw an increase in inventory, a decrease in supply, and an increase in vacancies.
General Area Overview & Demographics
The population of Las Vegas is around 644,000, with a growth rate of 1.9%. Approximately 40% of the population was White or Caucasian, 28% Hispanic or Latino, 13% African American, 10% Asian, 3% Native American or Alaska Native, and 0.3% Native Hawaiian or Other Pacific Islander.
Las Vegas Median Household Income & Population
The median household income in Las Vegas was $52,530. This is higher than the median state household income of $49,875 and the national median household income of $57,652. Many Las Vegas residents spend a significant portion of their income on rent, as well.
As of 2019, 33.3% of the population was under 18, while 6.2% was 65 or over. The largest age group was 25-34 years (16.7%). This makes it one of the youngest cities in the US.
There are two universities and several community colleges in the city. The University of Nevada, Las Vegas (UNLV) is a public research university, and Nevada State College is a four-year public college.
The entertainment industry draws millions of visitors annually, and the city has various attractions. The Las Vegas Strip features iconic hotels, casinos, and vibrant nightlife. Other major attractions include the Bellagio Fountains and the High Roller Ferris Wheel.
Las Vegas has a desert climate with hot, dry summers and mild winters. Average temperatures in the summer reach highs near 105°F, while average temperatures in the winter months can be in the low 40s. The city also has low humidity, averaging around 15%, and receives about 4.17 inches of rain annually.
Summary of Las Vegas Industrial Real Estate Performance in Q4 2022
Overall industrial vacancy in Las Vegas rose from 1.3% in Q3 to 1.6% in Q4. The Northwest submarket posted the highest vacancy of 8.4%, while West Henderson had a vacancy of 0%.
The fourth quarter posted 1.4 million square feet absorbed. This declined from Q3’s absorption of 1.8 million. North Las Vegas boasted the highest absorption in Q4 with 649,057, while Airport’s absorption declined by -103,234.
Overall absorption in 2022 for Las Vegas industrial real estate posted at 7.4 million square feet.
What are industrial rents like in Las Vegas?
Average rent per square foot for Las Vegas industrial real estate increased quarter-over-quarter from $1.18 per square foot in Q3 to $1.20 per square foot in Q4.
West Henderson had the highest average direct asking rate in Q4 at $1.35 per square foot, while East Las Vegas had the lowest at $0.83 per square foot.
Rent for light industrial space saw the highest percent increase in 2022 from 2021.
Purchase & Leasing Activity
Las Vegas industrial real estate investment sales volume reached $1.47 billion in 2022, just shy of 2021’s peak.
The average price was $204.53 per square foot across 121 sales, making Las Vegas one of the more expensive cities to buy commercial real estate.
Leasing activity totaled 1.4 million square feet in the fourth quarter across 31 deals. This was a decline from the previous quarter, which reached a total of 3.6 million square feet across 54 deals.
Notable Industrial Real Estate Deals in Las Vegas in Q4 2022
There were several significant deals for Las Vegas’ industrial real estate that took place in Q4 2022:
- RREEF CPIF 2225 purchased 730,771 square feet for $143 million.
- OID Holdings Inc purchased 127,493 square feet for $35.5 million.
- GKT purchased 104,631 square feet for $35 million.
- LaSalle Investment Management purchased 80,181 square feet for $21.2 million.
These are select examples among other activity.
New Industrial Real Estate Development Activity in Las Vegas in Q4 2022
There were approximately 1.7 million deliveries in Q4. This brings Las Vegas’ total to nearly 6.5 million deliveries for 2022.
North Las Vegas had the highest delivery count at 3.1 million in 2022.
There were 7 million square feet under construction at the close of 2022.
Market Forecast for Las Vegas’ Industrial Real Estate Market
Those with capital or who can secure financing will fare well heading into 2023 as the price for land decreases and projects adjust.
Demand for space is still at a record high, causing asking rents to remain high to meet that demand. This is forecasted to continue into 2023.
There remains some uncertainty regarding interest rates, the ability to secure capital, and construction costs, which could pose challenges for some in the coming year.
Takeaways for Industrial Real Estate Investors
While Las Vegas industrial real estate might encounter some challenges in 2023 due to high demand for space and subsequent rent increases, the outlook for the market is still positive.
Though vacancy rates will likely increase, rent increases will likely regulate as the year unfolds.
Do your due diligence, stay vigilant, and happy investing.
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