Q4 2022 Office Space Report: Las Vegas, NV
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Las Vegas houses the headquarters of major business giants, including Zappos.com, Allegiant, MGM Resorts International, and many other Fortune 500 and gaming companies.
Total employment in Southern Nevada increased in 2022 by nearly 50,000 jobs, a 4.8% increase from the previous year. The unemployment rate in Las Vegas was 5.4% in Q4 of 2022.
The Las Vegas population increased by 2.4% in 2022 from 2021. Year-over-year, Las Vegas office space market’s vacancies and net absorption decreased but overall asking lease rates increased.
General Area Overview & Demographics
Las Vegas is the most populous city in Nevada and the 28th-most populous city in the United States, with a population of 644,664 as of 2019. About 46% of Las Vegans identify as White (non-Hispanic or Latino), 34.5% identify as Hispanic or Latino, 12.9% are African American, 8.6% identify as Asian and 2.9% are Other Races or Multiracial.
Las Vegas, NV Median Household Income & Population
The median household income in Las Vegas was $53,170 as of 2021. The city’s cost of living is 6% lower than the national average and 4.3% higher than the Nevada average. Higher median income levels range from $81,183 to $96,065. The lowest median income levels range from $41,400 to $45,764.
The median age in the city is 35.2, slightly higher than the national average of 37.7. The largest age group is millennials aged 25-34 comprising 30% of the population followed by Generation X aged 35-54 at 28%. The city also has an above-average population of seniors aged 65+, making up 11.5% of the population. Younger populations aged 18-24 make up a smaller proportion of the city’s population at 16%.
There are several higher education institutions in Las Vegas, including the University of Nevada Las Vegas, College of Southern Nevada, and Nevada State College. These schools offer a wide range of academic programs in the fields of business, engineering, healthcare, and more. Additionally, the city also has community colleges such as the Northwest Career College and Southwest Technical Education Center.
Las Vegas is an incredibly popular tourist destination and home to a wide range of attractions, from world-class casinos and resorts to museums and galleries. The city’s main attractions include the Las Vegas Strip, Bellagio Hotel & Casino, Luxor Hotel & Casino, Fremont Street Experience, High Roller Observation Wheel, Mob Museum, Neon Museum, and the Las Vegas Natural History Museum.
Las Vegas has a hot desert climate, with temperatures ranging from an average high of 106°F (41°C) in the summer to an average low of 43°F (6°C) in the winter. The city receives roughly 310 days of sunshine per year and very little rainfall.
Summary of Las Vegas Office Space Performance in Q4 2022
The total vacancy rate for Las Vegas’ office space market in Q4 2022 reached 11.9%. This was only a mild increase from its Q3 vacancy of 11.7% but a notable decrease from its 2020 vacancy rate of nearly 14%.
The North Las Vegas submarket had the lowest vacancy rate in Q4 2022 at 4.2%, while East Las Vegas saw the highest vacancy rate at 21.2%.
Q4 posted a mild increase in absorption rate at 38,496 square feet, bringing Las Vegas’ office space market’s net absorption for Q4 2022 to 881,326 square feet.
The Southwest submarket had the highest absorption for Q4 at 80,954 square feet. West Central submarket went the furthest into the negative for absorption in Q4 at -57,066.
What are office space rents like in Las Vegas?
Rents for Las Vegas office space increased $0.03 quarter-over-quarter in Q4 2022, increasing to an average price of $2.45 per square foot.
Prices were highest in the Southwest submarket at $2.92 per square foot, while West Central had the lowest asking rate at $2.11 per square foot.
Purchase & Leasing Activity
Total sales volume for Southern Nevada’s office market in 2022 reached $607.5 million across 84 sales.
The average price per square foot was $288.76.
Leasing activity experienced a decrease quarter-to-quarter in Q4 with a reported 214,781 square feet of new space leased.
Notable Office Space Deals in Las Vegas in Q4 2022
Several deals for Las Vegas’ office space properties took place in Q4 2022:
- KB Village View Dist. leased 168,012 square feet.
- VIV Paseo Verde DE LLC leased 113,565 square feet.
- ESN Properties leased 73,200 square feet.
- ResortCom Int’l LLC leased 68,892 square feet.
These are select examples among other activity.
New Office Space Development Activity in Las Vegas in Q4 2022
Class A office space saw 161,461 square feet of inventory added by UnCommons in Q4 2022.
2022 boasted the largest amount of deliveries to Las Vegas’ office inventory since 2018, adding 332,002 square feet.
The Valley is looking to add to those new deliveries with 628,723 square feet of office space under construction.
Market Forecast for Las Vegas’ Office Space Market
Overall, 2022 was a positive year for Southern Nevada’s office space market, with a few exceptions in Q4 which saw several large office spaces released back into the market.
The market has reached a point of stable recovery from 2020’s recession, boasting an office vacancy of 11.9%. This is one of the lowest office space vacancy rates of the decade so far.
The market should see some expansion in 2023 with over 600,000 square feet of office space currently in the pipeline in the Valley and a projected completion of nearly 800,000 square feet by the end of the year.
While these were positive aspects of 2022, the strength of the market in 2023 is contingent upon the possible projected recession in the coming year. The less-than-ideal performance of the market in Q4 2022 is also something to consider. If this is a trend that carries over into 2023, the market forecast does not look favorable.
Takeaways for Office Space Investors
Vacancy rates for Las Vegas’ office space market remain high and so do current asking lease rates. New deliveries in the pipeline are plentiful.
While there still remains some economic uncertainty for 2023, the year ahead could still be a positive one for the nation’s office market. With the potential threat of recession, expect to see some lack of activity in tenant transactions in the first few months of the year as well as a stalling among other aspects of the market.
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