Little doubting the effect e-commerce and other big box user development has had on our industrial market. New construction is at unprecedented levels, the number of large users in the market has more than doubled in the last two years, and there’s good evidence that this trajectory will not soon diminish. The story of big box has been integral to the Las Vegas industrial market recovery. Still, many have wondered about the rest of the industrial market. If you take away the enormous contributions of larger scale industrial development, how do the remaining segments of the market perform? Lucky for us, Xceligent Director of Analytics Las Vegas, Tina Hickman, has been researching just that question for a deep dive look into the industrial market for this monthly piece.
Tina took a look at performance since Q1 2016 in each industrial submarket in the Las Vegas Valley and excluded buildings in excess of 250ksf and single tenant buildings over 100ksf. Below Tina shares her thoughts and conclusions. Enjoy!
-Trendlines in the subset data remain aligned with overall trends, and not just in an overall view, but also when viewing specific uses. Overall vacancy for our secondary set lies at 6% for 2Q17, which is exactly what was reported for the entire tracked set in our 2Q market trends (data containing big box inventory).
*The above chart contains data from our industrial subset and excludes all properties over 250k sf and single tenant properties over 100k sf.
-Looking at reflections on year-end data for 2016, vacancy for the secondary data set resides 0.4 percentage points higher than that of the overall tracked set, indicating that a good portion of positive movement was held back due to pending construction projects that included big box properties. That said, it comes as no surprise that the largest difference in quarterly totals between the data sets includes those properties that lie in the Northeast market.
*The above chart is inclusive of the entire tracked set.
-The Airport market experienced the exact same amount of absorption in both data sets up until a big box property was purchased for occupancy by Sino-Science North America Photobiotech Inc. That purchase added over 200K sf of absorption for the market during last quarter.
-The Boulder City, Central Downtown, Central East, Central West, Henderson and Northwest markets lack any difference in absorption accounting for more than 10K sf from one data set to the next.
-From an overall standpoint, I would say that either set is a fair analysis of market health. Both reports reflect that the bulk of market activity is still being seen in multi-tenant properties. While occasional spikes have begun to occur with big box users and new construction, there are still other projects out there that are being focused on a scale for smaller flex and light industrial users.
-Looking at live data, we are still seeing over 500K sf of construction from properties that are all under 200,000 sf each, and they’re being proactively marketed as multi-tenant spec space. This is a great indication that supply and demand are on par for the metro.
Bottom line? Although the new larger users and projects have attracted much of the attention in the Las Vegas industrial market, the balance of the product types have performed well, and kept pace with larger product. Although we are seeing new developments planned and under construction in those other product types, they may very well be under served.
Written and researched by Tina Hickman (Xceligent Research), Xavier Wasiak (JLL), and Brenden Graves (Xceligent Sales Executive)
To have your idea featured or to co-write an article with us please contact Brenden Graves, firstname.lastname@example.org or Xavier Wasiak, Xavier.email@example.com