As a percentage of total reported lease transactions:
- Lease transactions between 5,000 and 9,999 sf were the greatest in each submarket averaging over the last five years (from 46.2% for NE/NLV to 56.5% in SE/Henderson). This makes sense given that in any market you might expect there would be a greater number of smaller than larger businesses, and that the number of businesses gradually decreases as sizes in square feet get larger. Still, it was interesting to note how each market’s share of total reported transactions varied from year to year in this size range, especially between 2013 and 2014 and again between 2015 and 2016, where almost without exception, each market saw a decline in reported transactions.
- Lease transactions between 10,000 and 19,999 sf demonstrated greater variety in activity. Although there were the second highest number of lease transactions reported in this size range across all submarkets, the years where activity in this size range saw an increase from the previous year were not shared across all submarkets. There did not seem to be a discernible pattern as to why that was. In some submarkets it could have been attributable to lack of inventory, in others perhaps a large number of vacancies becoming available all at once.
- Lease transactions between 20,000 and 29,999 sf were the greatest in the Southwest and least in SE/Henderson submarkets (12.2% and 8.6% respectively).
- Lease transactions between 30,000 and 49,999 sf were the greatest in the NE/NLV and least in SE/Henderson submarkets (11.3% and 3.5% respectively). Unlike all other submarkets, NE/NLV had a greater number of lease transactions reported in the 30,000 to 49,999 sf range than 20,000 to 29,999.
- Lease transactions between 50,000 and 99,999 sf were the greatest in the NE/NLV and least in Airport submarkets (6.8% and 2.7% respectively). Overall, this size range saw the most straight-line, although modest, increase in reported activity over the last five years.
- No surprise that lease transactions in excess of 100,000 sf were the greatest in the NE/NLV and least in the Airport submarket (5.0% and 0.6% respectively) by almost a factor of 10. The NE/NLV submarket has seen an increase in reported lease activity in this size range annually for the past five years and indeed it has been felt as this submarket is the focus of a never before seen big box development activity in the Las Vegas Valley a la Honest Company, Amazon and the like.
- Although location, timing, lease rates, construction and land costs are always considerations, building product divisible to 5-10ksf (ideally with both dock and grade level loading) is about as safe a bet in any submarket in Las Vegas as you can get.
- Availability helps drive activity. As obvious as that sounds, I think it deserves to be stated. There are many examples of times when a lack of availability of a certain size range diminished activity from one year to another and conversely (most notably Henderson 2015-2016, 20ksf+) when the availability of product brought increased activity.
- The NE/NLV submarket has soundly established itself as the leader in big box activity and that is unlikely to change any time soon, winning over the SE/Henderson and Southwest submarkets for requirements in excess of 100ksf at least eight to one.
- Pricing, location and the labor market continue to be the greatest drivers of current big box interest in the Las Vegas Valley. The 25% to 40% historical rate differential between north and south continues to favor the NE/NLV Submarket for these users. Lately, at least two projects in the south, one in the Southwest and the other in the SE/Henderson Submarket, have gotten within 5-10% of current NE/NLV rates and it will be interesting to see if it is enough to sway interest to the south.
Although researching and comparing the type and number of reported lease transactions across the Las Vegas Valley is an imperfect process, and on its own does not lead to any conclusive answers, I think it can and does serve as a helpful guide.
Written and created by Xavier Wasiak with JLL, Brenden Graves, and Tina Hickman representing Xceligent. The article concept was constructed by Xavier Wasiak, and the data for years 2013-2016 and co-commentary was provided by Xceligent. Additional data for years 2012-2016 was also gathered from CoStar.
This is a monthly article that we will be publishing on the “not so talked about Las Vegas commercial real estate trends.” We encourage others to comment on this article as well as volunteer new ideas for us to investigate and data dive into in order to tell a story that will benefit the industry.
Brenden Graves, Sales Executive
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Xavier Wasiak, SIOR
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