Nevada Commercial RE Report Industrial Summary Fourth Quarter 2022

Northern Nevada

from angel Orozco, CBRE

Reno’s industrial market ended the quarter on strong market fundamentals, posting positive net absorption for the thirteenth consecutive quarter. The East Valley submarket remains the most desirable location in Reno for occupiers, posting positive net absorption of 714,750 square feet (SF) for the quarter. Average lease rates offered increased $0.13 sequentially to end the year at a record high of $1.00 per SF monthly on an NNN basis. On the supply side, SF1.1M worth of products have been launched with SF9.2M currently under construction.

Market-wide vacancy and availability increased slightly in the fourth quarter of 2022. The vacancy rate rose 50 basis points (bps) to 1.1 percent and the availability rate followed suit, rising 80 bps to 2.1 percent. Average asking rents increased quarter over quarter by 15 percent to $1.00 NNN. Flex fares were up 33 percent year-on-year to close the quarter at $1.24 NNN.

The Reno market completed Q4 2022 with net absorption totaling 680,845 SF, sustaining the market’s strong leasing transactions. The Webstaurant Store was the largest transaction of the quarter at 692,720 SF. With pre-approved projects expected to be delivered in 2023, the industrial market in Reno is expected to continue the trend of positive net absorption well into next year.

Southern Nevada

from Laura Wilhelm and Garret Toft, CBRE

The Las Vegas industrial market maintained strong fundamentals throughout 2022, ending the year with low vacancy rates, strong positive net absorption that exceeded new deliveries, firm asking rents and a robust construction pipeline that is already showing strong pre-letting. Net absorption, driven by a 75 percent pre-release rate on completed projects, remained positive for another quarter at 1.8 million SF, bringing the total for the year to 7.4 million SF. This was the third-highest annual total in the market’s history and shows the strength of the market over the past several years.

Almost 2.4 million SF. space was brought to market during the quarter, bringing the total for 2022 to 7.2 million SF. The overall vacancy rate remained at an all-time low in 2022, ending the year at 1.3 per cent, 100 basis points lower than around this time last year. Overall, strong tenant demand continued to lead to steady letting activity, which kept the vacancy rate extremely low. Average asking rents increased by 21.4 percent year-on-year and by 58.7 percent compared to the fourth quarter of 2020. Rents continued to rise throughout the year and remained strong in the fourth quarter of 2022.

While the Las Vegas industrial market has shown resilience in 2022, the next few quarters will determine whether the fast pace of industrial activity begins to normalize. Although the proposed pipeline is historically large, the timing of deliveries will continue to be spread over a longer period due to market uncertainty.