Avison Young Expands in Las Vegas

LOS ANGELES—Avison Young is expanding its Las Vegas office, and has appointed tenant representation specialist Scott Donaghe to the Las Vegas office. Donaghe will continue to be part of the firm's Southern California-based tenant representation team. Although the Las Vegas market was strongly affected by the recession, the market is experiencing a strong recovery with a sub 7% unemployment rate. Donaghe joined Avison Young in 2013, working with corporate occupiers to grow the firm's tenant representation services. Since joining the company, he has completed more than 200,000 square feet in lease transactions. In honor of his new position, we sat him down for an exclusive interview to talk about the Las Vegas market and the firm's interest in expanding there.

GlobeSt.com: Can you give me a snapshot of the Las Vegas market?

Scott Donaghe: The Las Vegas market was hit particularly hard during the recession, but is progressing toward pre-recession occupancy levels. What Avison Young has been observing is that there is a compelling trend with companies making a flight to quality office product. Newer vintage and recently renovated Class A buildings are seeing strong tenant activity, while older product lags behind bringing down the occupancy level overall. At 24%, the current vacancy rate for class-A product is showing a slow but steady decline from the peak of 31.7% in 2010. Asking rents still lag with a peak rate at $2.73/SF/Mo full-service gross (FSG), and current rates at $2.38/SF/Mo FSG. As a tenant rep broker, this steady pace of recovery bodes well as we help our clients seek out the best space possible to fit their workplace needs.

GlobeSt.com: What is driving growth in the Las Vegas office market?

Donaghe: The healthcare and gaming sectors. As jobs and the population increase, the demand for healthcare grows. And logically, as the national economy and consumer confidence improves, the gaming industry follows suit. Currently, I am working with three clients in the gaming sector that are looking to expand their footprint here. The trickle-down effect is also favorable in this sector. As the industry thrives, a substantial support 'ecosystem' of gaming-related companies grows as well. These include groups that generate content for casino games both on-property and online, as well as those that supply machines and other essential products.

GlobeSt.com: What are your goals in this new position and in this market?

Donaghe: My primary goals in this new position and market are to provide a sophisticated level of tenant-focused consulting, a higher level of service, and street-level market knowledge. With a focus on tenant-only representation, I am able to alleviate any concern from occupiers that there could be potential conflicts of interest. My clients appreciate that I can ensure I have only their best interests in mind, without ties to local landlords.

GlobeSt.com: What submarkets within the Las Vegas area are in the highest demand?

Donaghe: The office market in Las Vegas isn't as centralized as many downtown metropolitan areas. While there is a downtown central business district, a significant portion of the remaining office product spans throughout the greater Las Vegas region. Summerlin, a suburban submarket, has a growing demand for class-A office space.  Allegiant Air recently located to a new five-building 120,000-square-foot campus in Summerlin. Additionally, Downtown Summerlin, a mixed-use retail and office complex will be opening for operations this month and is over 50 percent pre-leased. The 215 freeway corridor is another high-demand area as a number of executives live in Summerlin and Henderson and many businesses covet the flexibility and ease of access provided along this highly visible corridor. There are also a few marquee projects near the Las Vegas Strip such as Hughes Center, which boasts some of the highest rents in Las Vegas. Hughes Center, a 68-acre mixed-use, master-planned business center that includes class-A office space, hotel, dining and other amenities.

GlobeSt.com: What is your outlook of the market over the next 12 months?

Donaghe: Avison Young is extremely bullish on the continued recovery of the Las Vegas market and we anticipate significant positive absorption over the next 12 months and beyond. With the state's favorable tax rates and proximity to high growth California, We expect to see a continued inflow of companies looking to capitalize on the abundant economic benefits and strong labor pool that are available in Las Vegas.