While core industrial markets continue to thrive, Colliers’ latest research report—10 Emerging U.S. Industrial Markets to Watch in 2022—explores the markets positioned to experience the most robust increases in demand from occupiers and owners. Learn more about one of these markets: Las Vegas.
“2021 ends in historic fashion, with 2022 set to match it. The fourth quarter of 2021 brought in approximately 1.5 to 2 million square feet of net absorption, ending the year with more than 11 million square feet of net absorption. To put that in perspective, Southern Nevada averaged about 5.1 million square feet of net absorption per year over the prior five years. Year-end vacancy also reached a low of 2.4%. With delays in construction due to material supply constraints and incredible tenant demand from local and regional tenants, things will remain tight for Las Vegas in 2022.” – Paul Sweetland, Senior Vice President | Las Vegas
Southern Nevada offers a competitive tax structure and a friendly business climate, as well as excellent access to interstates and highways, including the new I-10 linking Las Vegas with Phoenix, AZ. This makes Las Vegas a link in the Canamex corridor. The area’s proximity to the ports of Los Angeles and Long Beach, its position to the Union Pacific railroad, and its proximity to other major trade routes like Interstate 40 and the BNSF Railroad make Southern Nevada an ideal place for a western distribution facility. In addition, the Valley’s population of 2.3 million hosts close to 40 million visitors most years.
The main drivers of logistics in Southern Nevada are the area’s rapidly expanding population and the nexus of I-10, I-15 and US93/95 in the Valley. The Las Vegas resort corridor is a key destination for the Valley’s logistics infrastructure – considering that Las Vegas consumes more shrimp each day than the rest of the United States combined.
Vacancy decreased to 2.4% in the fourth quarter of 2021, down from 6.2% one year ago when industrial deliveries surged and lockdowns caused a pause in demand. The Valley’s incredible increase in occupancy has occurred alongside record levels of new development.
Industrial net absorption hit 11.7 million square feet in 2021 – a record-shattering performance for the Las Vegas Valley. E-commerce-driven logistics continues to be very important to the Valley, but demand by light manufacturing firms is also on the rise.
Industrial deliveries hit 6.4 million square feet in 2021, with nearly all new supply in the form of warehouse/distribution space with the lion’s share in the North Las Vegas market. This is just shy of the record set in 2020. 5.7 million square feet of industrial space is under construction and will be completed in 2022, with another 13.6 million square feet planned to begin construction within the next 12 months.
ASKING RENTS & SALES ACTIVITY:
Overall industrial asking rental rates hit a new high in 2021, standing at $11.14 per square foot at years’ end, 34% higher than the $8.34 per square foot recorded a year ago. Warehouse/distribution product ended 2021 with an asking rental rate of $7.11 per square foot – appropriately lucky numbers for the world’s leader in gaming!
To learn more, explore the 10 Emerging U.S. Industrial Markets to Watch in 2022.