Las Vegas' Office Vacancy Rate Lowest in Nearly 15 Years
A market where the tide is turning, Avison Young puts it No. 2 in its latest Vitality Index.
With its vacancy rate at its lowest in nearly 15 years, Las Vegas ranks as the No. 2 office market in the US, according to the Avison Young’s Third Quarter Office Market Report.
Avison Young’s Vitality Index, a dashboard of weekly foot traffic patterns from 52 markets across North America, shows the Las Vegas office market has recovered 73.1% from pre-pandemic office numbers, posting several milestones.
In a sign it’s “turning of the tide,” Avison Young reported that Las Vegas office sector in Q3 had a direct office vacancy rate of 12.7%.
It saw $234 million of investment volume in Q3, marking the highest level of activity since Q4 2019.
The average transaction was priced at approximately $315 per square foot (psf), up from $299 psf in Q2 2022 and average transaction psf reached a new high of $315.
Avison Young (which ranked Charleston, S.C., No. 1 and Nashville No. 3) said that the declining availabilities and overall vacancies helped propel rent growth as the Las Vegas office market had one of its strongest quarters in recent years.
“Rent growth should continue, but concerns surrounding a potential recession and rising interest rates could act as potential headwinds,” it reported.
“The Summerlin and Southwest submarkets are on track to garner office sale prices starting in excess of $400 per square foot over the next few years,” Barton Hyde, an Avison Young Principal specializing in the Las Vegas office sector said in a prepared statement.
“Companies and employees alike want to live and work in these desirable suburban Vegas communities.”
Average asking rents increased by $0.46 psf on an annual basis from Q2 to Q3, a significant gain in rent pricing that the market has not seen since the end of 2020. North, Southwest, and West Las Vegas experienced the highest average rents in the Las Vegas region.
Positive net absorption totaled 655,839 sf in Q3, which is the largest gain that Las Vegas has posted in a single quarter since the first quarter of 2020.