LAS VEGAS-Depending on who you ask, the availability of industrial space in the Las Vegas Valley increased by between 17- and 120-basis points during the first quarter to somewhere between 6.1% and 7.4% vacancy. Although the first quarter reports by Grubb & Ellis, CB Richard Ellis and locally based Applied Analysis vary on specific vacancy rate, all agree on a few things: that overall vacancy rates here have risen by more than 200 basis points in the past year; that space users have more choice than they’ve had in a long time; and that the construction pipeline (4 million sf under construction) is as skinny as it’s been in the past few years.

Applied Analysis principal Jeremy Aguero says that while vacancies remain elevated compared with the prior year and the lows witnessed in late 2005, a more stabilized environment has prevailed in recent quarters, with the level of investor purchases and speculative leasing slowing materially. With over 6.5 million square feet of availability, he says users that require space in reasonably-accessible locations now have greater access and bargaining power—a condition not present 12 and 24 months ago. “The market reported a much more modest level of space under construction, suggesting runaway vacancy rates are unlikely in the near term,” Aguero says. “We expect vacancy rates to remain in the mid to high single-digit range over the course of the next several quarters. Pricing remains the X-factor for many users as competition within the southwestern United States remains fierce and development costs in southern Nevada remain elevated. Projects entering the market may find it difficult to meet financial targets should lease rate growth remain soft.”Applied Analysis is reporting that the industrial market expanded by 1.5 million sf during the quarter while demand totaled approximately half of that total. Speculative space additions contributed to a rising vacancy rate, which hit 6.7%, up from 6.0% at the start of year and 4.5% this time last year.

CB Richard Ellis says the first quarter marked the sixth straight quarter of increasing vacancy. CBRE is reporting only a 17 basis-point increase in vacancy during the quarter—to 6.1% from 5.94%—but has a lower overall vacancy rate for this time last year, 3.8%, which means both firms show a year-over-year vacancy increase of more than 200 basis points.

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