Commercial Real Estate:
The Year Ahead for Las Vegas
What have been the strongest segments of the commercial real estate space in Las Vegas in 2019 and why?
The industrial market is hot, like most of the country, with a tremendous amount of product being developed throughout the valley. We’re seeing a lot of companies, such as Amazon, Google, Honest Co., Fanatics, and Sephora, all capitalizing on the lower occupancy costs and lower taxation relative to surrounding states. In addition, the cost of living in Southern Nevada is more affordable, and from a strategic standpoint, having secondary distribution centers in Las Vegas makes sense.
Competitive costs and a favorable tax regime is driving the industrial property market in the Las Vegas valley.
"...it was recently reported that Lifetime Fitness will be opening their third location on the southeast corner of Durango and Sunset, just across from the UnCommons project that’s being developed by Matter Real Estate Group."
Multifamily product is being developed everywhere you look. The new space is highly amenitized, encouraging interaction between tenants, including modern gyms and common areas.
Retail is also doing well. In fact, it was recently reported that Lifetime Fitness will be opening their third location on the southeast corner of Durango and Sunset, just across from the UnCommons project that’s being developed by Matter Real Estate Group.
Lastly, the office market is picking up steam, with a number of projects ready to break ground for 2020. We have also seen new tenants enter the market, such as Amazon, with their 30,000 square foot human resources facility, national CPA firm Clifton Larson Allen, Madison Square Garden, New York University, and many others.
"Las Vegas is netting approximately 60,000 new residents per year, which is going to support these new projects and increase our staff base."
Going into 2020, what are some of the challenges and opportunities that you see for commercial real estate investors and tenants?
I think there are a lot of opportunities out there, especially as the region continues to diversify. We’re becoming less dependent on the Strip, however, there are still many exciting projects in that corridor, including Resorts World, The Drew, the MSG Sphere, and, of course, the Raiders’ new home, Allegiant Stadium. That development is spilling over into other areas of the valley, paving the way for a lot of investment opportunities. In the off-Strip office space, replacement costs can be a bit of a challenge, particularly with the number of new properties coming online, but this all relatively normal.
A rendering of the MSG Sphere, with
the Venetian and Palazzo in the background.
Las Vegas is netting approximately 60,000 new residents per year, which is going to support these new projects and increase our staff base. This is very positive for our region’s economy and for the property development space.
"We’re starting to see the southwest develop into a thriving business corridor."
Amazon has selected sites in North Las Vegas
and Henderson for new fulfillment centers.
Which regions of the valley are seeing the most activity, and in which property types?
North Las Vegas, West Henderson, and parts of the southwest are seeing a lot of activity in industrial projects. Mostly notable are the 2.3 million-square-foot Amazon facility and the 715,000 square foot Sephora building in North Las Vegas. The City of Henderson sold 300 acres to Haas Automation, 150 of which will be developed for a manufacturing facility. Kroger is in that same area, as well as Amazon, with a 600,000 square foot facility.
With our population growing, multifamily developments are in high demand, and are sprouting up all over the valley. Retail tends to follow rooftops, so where new multifamily springs up, this asset class is sure to follow.
In the office space, Howard Hughes will be breaking ground on their 10-story Three Summerlin tower in Downtown Summerlin. In the southwest, Credit One will be constructing a second building along the 215. Just to the west of that, we’ll have the 100,000-square-foot Narrative project. And, of course, there’s the much talk about Matter Real Estate’s mixed-use UnCommons development, which will feature 500,000 square feet of office space, another 100,000 square feet of retail, and 800 multifamily units.
Matter Real Estate's UnCommons development
at the intersection of the 215 and Durango.
Black Fire Innovation is a collaboration between UNLV and
Caesars Entertainment at the new UNLV Tech Park in the southwest.
On the north side of the 215, UNLV Tech Park has just completed their first building, which is a joint venture with Caesars Entertainment called Black Fire. They have plans to develop several additional buildings at this site. Boyd Gaming has decided to make the northeast corner of Buffalo and Sunset the site of their headquarters. With additional office projects and strong residential growth in this area, the retail development will continue to experience strong growth. We’re starting to see the southwest develop into a thriving business corridor.
"We’re going to see a lot more flare to new developments across product types as developers get more creative and push the architectural aesthetics envelope."
Are there any commercial property types that are in short supply here in the valley?
I think we’re in a very healthy market, where supply and demand are relatively balanced and there is not an oversaturation in any asset class. Following a significant slowdown in all product type construction starting in 2008, multifamily development has picked back up since 2014, and industrial since 2015.
Where do you see the biggest room for improvement, whereby developers need to rethink the way they are constructing certain types of commercial properties?
There is a lot of older office product in the market, which is why we’re seeing a move towards quality and amenities in new construction right now. New developments have more amenities as a way to attract and retain employees. Developers that are breaking ground on new projects right now are putting a tremendous amount of thought and effort into designs. We’re going to see a lot more flare to new developments across product types as developers get more creative and push the architectural aesthetics envelope.
Tenants are leaning towards more innovative office designs.
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