April 24, 2023
Las Vegas, NV – Avison Young recently released its First Quarter 2023 Las Vegas Office Market Report.
Las Vegas’ total office vacancy rate shows an increase in the first quarter following five consecutive quarters of decreases. The direct vacancy rate increased from 12.2% in Q4 2022 to 13.0% in Q1 2023. The sublet vacancy rate showed a slight increase of 10 basis points over the past quarter; however, the sublet vacancy rate is currently 185% higher than the decade average of 0.7%.
“The Las Vegas office market has fared well and continues to look up as we saw a return to office rate higher than most markets. Office space remains crucial to service-based tenants such as law firms, accounting, and other collaborative companies. Las Vegas has also seen an influx in industrial product demand, and this carries over into office demand. These factors leverage the Las Vegas office market for continued resilience,” said Scott Donaghe, Avison Young Principal – Las Vegas.
Rents have remained stable from Q4 2022 to Q1 2023 posting a slight $0.10 increase from quarter to quarter, ending the period at $27.80. Though rents increased in the first quarter, it should be noted that the rate at which rents increased slowed in comparison to recent years – the first quarter posted a 0.4% increase, while the average increase in rents over the past two years has been 1.2%.
“Although vacancy has increased, office developers remain bullish on the Southwest and Summerlin submarkets with two three-story class A office buildings totaling 146,000 square feet (sf) under construction in north Summerlin and two four-story class A office buildings, totaling 182,000 sf, under construction in the Southwest submarket. Gross rental rates range from $43.20 to $48.00 per sf/year for both developments,” said Barton Hyde, Avison Young Principal – Las Vegas.
Avison Young creates real economic, social and environmental value as a global real estate advisor, powered by people. As a private company, our clients collaborate with an empowered partner who is invested in their success. Our integrated talent realizes the full potential of real estate by using global intelligence platforms that provide clients with insights and advantage. Together, we can create healthy, productive workplaces for employees, cities that are centers for prosperity for their citizens, and built spaces and places that create a net benefit to the economy, the environment and the community. Avison Young is a 2022 winner of the Canada's Best Managed Companies Platinum Club designation, having retained its Best Managed designation for 11 consecutive years. www.avisonyoung.com For more information: Media Contact:
Darcie Giacchetto, Media Relations Specialist – Southwest: +1.949.278.6224
As an expert in real estate and market analysis, I bring a wealth of firsthand knowledge and expertise to the discussion of the recently released First Quarter 2023 Las Vegas Office Market Report by Avison Young. My extensive experience in the field allows me to dissect and interpret the key components of the report, providing valuable insights for a comprehensive understanding of the current state of the Las Vegas office market.
The report, dated April 24, 2023, unveils notable trends in the Las Vegas office market. After a sequence of five consecutive quarters of decreases, the total office vacancy rate in Las Vegas experienced an increase in the first quarter of 2023. Specifically, the direct vacancy rate rose from 12.2% in Q4 2022 to 13.0% in Q1 2023. Additionally, the sublet vacancy rate saw a slight uptick of 10 basis points over the past quarter, reaching a level that is 185% higher than the decade average of 0.7%.
One of the key statements in the report comes from Scott Donaghe, Avison Young Principal – Las Vegas, who highlights the resilience of the Las Vegas office market. Despite the increase in vacancy rates, the market has shown a return to office rate higher than most other markets. The demand for office space remains significant for service-based tenants such as law firms, accounting, and other collaborative companies. Moreover, the report points out an increased demand in the industrial sector, which has a positive spillover effect on the demand for office spaces in Las Vegas.
The stability of rents is another crucial aspect outlined in the report. Rents remained stable from Q4 2022 to Q1 2023, with a slight increase of $0.10 per square foot, ending the period at $27.80. It is noteworthy that while rents increased in the first quarter, the rate of increase slowed compared to recent years, with a 0.4% increase – in contrast to the average increase of 1.2% over the past two years.
Looking forward, the report indicates optimism among office developers in specific submarkets. Barton Hyde, Avison Young Principal – Las Vegas, mentions ongoing construction activities in the Southwest and Summerlin submarkets, with developers bullish on the prospects. The construction includes two three-story class A office buildings totaling 146,000 square feet in north Summerlin and two four-story class A office buildings totaling 182,000 square feet in the Southwest submarket. The gross rental rates for these developments range from $43.20 to $48.00 per square foot per year.
In conclusion, the First Quarter 2023 Las Vegas Office Market Report reflects a nuanced picture of the market, showcasing both challenges and opportunities. The insights provided by Avison Young, a reputable global real estate advisor, serve as a valuable resource for stakeholders and investors seeking to navigate the dynamic landscape of the Las Vegas office market.
