Demand Remains Strong as Market Conditions Continue to Improve
The Las Vegas industrial market continued to show resiliency in the second quarter of 2020 even amidst the economic uncertainty related to the COVID-19 pandemic. Robust tenant demand for new and larger industrial space contributed to 1.7 million sq. ft. of net absorption, slightly outpacing Q1 absorption. The vacancy rate decreased for the third straight quarter to 3.4% which is encouraging given the current state of the world economy. Although demand from e-commerce companies drove absorption, other tenant industries such as third-party logistics, food and beverage, and manufacturing companies were active. Sublease space is rising but not drastically and at the moment there seems to be enough demand from winning areas of the economy to offset weakness in the resort and convention services industries.
Notable transactions in the quarter include Camco Marine leasing 203,884 sq. ft. at Northgate Distribution Center and Ruby Has leasing 373,000 sq. ft. at the recently completed North 15 Logistics project. Based on the current tenant demand in the market, Q3 is shaping up to be another great quarter.
Despite the uncertainty, Preylock Real Estate Holdings purchased 855,000 sq. ft. Tropical Distribution Center, leased to Amazon, at a record ±4.50% cap rate. VanTrust Real Estate developed and sold the project.
If current activity continues there is a good chance that it will be hard to recognize in the year end 2020 statistics that a major macro event took place. It’s been a wild ride over the last few months, but we are optimistic about the future of industrial and the ultimate economic rebound for our City.