Tom Miller, CCIM
Northern Nevada’s Industrial Real Estate Market in Q3 – Wow!
We can sum up northern Nevada’s industrial real estate market for the third quarter of 2013 in a single word – wow! The state recorded a huge decline in vacancy, and moving from 12.8% in Q2 to 10.59% in Q3 has to rank as one of the biggest changes on record. Over 2,225,000 sf was absorbed. The big box absorption, which we’ve seen all year, continued as well. And of note, other market sizes were well represented with numerous mid and smaller sized users leasing significant space as well, and all submarket locations also recorded high activity. Leading the charge were North Valleys and Sparks, which are comprised of both Class A and Class B locations. I-80 east and the airport recorded excellent absorption as well. Another positive sign was the lack of sites coming back into inventory, which points to few firms downsizing or leaving the market.
Rental rates are also on the rise across the boards and most easily seen in the big box sector, where they’re driven by simple supply and demand. Rates are creeping up to the point where DP Partners has elected to be the first one to pull the trigger on a new speculative, state-of-the-art 640,000 sf facility in the North Valleys. Many, myself included, predict that this facility will be leased before it is completed – and at a rate that continues to raise the bar.
The market has seen significant interest through 2013 from national developers seeking to establish or expand their presence in the northern Nevada industrial real estate market. In general, the area is considered by many to be ripe for improved operating income levels. This sets the stage for not only higher entry rents but higher renewal rates as well, a scenario that is in dramatic contrast to the situation in recent years of lowering or maintaining tenant rents on renewals.
We enter the fourth quarter anticipating closing 2013 as a banner year, one we can all point to as the recovery period for industrial real estate in this market. Our posts are intended to educate commercial real estate users so they can make better decisions in their real estate use, investments, buying and selling. We encourage your input and commentary. If you are enjoying these posts and finding them useful, help spread the word via Facebook, Twitter, LinkedIn, Google + or email with the buttons below.