Beltway opening up LV real estate opportunities

Southwest Las Vegas has the greatest potential for commercial development in the next few years because construction of the western leg of the Las Vegas Beltway will open up previously inaccessible areas.

But a panel of development experts said economic indicators show Southern Nevada may be on the verge of hitting a lull, especially if the parade of new resort properties in the city's horizon doesn't draw the visitors the gamers expect.

Four panelists addressing the 300-member Southern Nevada chapter of the National Association of Industrial and Office Properties on Thursday concluded the Las Vegas commercial property market could be at risk for a downturn if local companies have to lay off workers.

"We're not only susceptible to risk, but we could be on the verge of risk," said Jim Stuart of Colliers International. "Visitor volume, convention attendance and Strip revenues are down. If it continues, we could see layoffs."

Stuart noted more than half of the city's jobs are in the service industry, so a continued downward trend in visitation could hurt the entire economy. He said attempts to diversify the economy to head off dependence on the tourism industry have been fruitless because companies seeking skilled laborers have been frustrated.

Dan Doherty, another panelist from Colliers International, said the the biggest constraints on demand to locate in Southern Nevada are the limited skilled worker pool, the state of the area's education system and the cost of real estate.

The service industry also contributes to that problem, Stuart added, because casinos are offering lucrative salaries. People with high education levels would rather support their families with the high-paying casino jobs than take a lower-paying position in another field.

The atmosphere of the Southern Nevada economic scene is similar to the way it was in 1989, Stuart said.

"Back then, we were all convinced that a casino couldn't make it unless it had cheap buffets and then The Mirage opened," Stuart said. "Now, we're wondering if $300 rooms and a Cezanne gallery is going to bring in people. I'd be the last guy to question a move by Steve Wynn, but if Bellagio doesn't make it, we have a huge problem."

Panelists concurred that the office and industrial property sectors are slightly overbuilt and that developers should stand back and allow some absorption to occur.

Doherty said there currently is a 7.2 percent vacancy rate in industrial sites, a 9.5 percent decrease from last year. He said the market is maturing in 1998 and there's about a 1 1/2-year supply in the current inventory with existing properties and those currently in development.

He characterized the market as difficult for new builders since competition is high in the area.

In the office segment, panelist Chuck Witters of Lee & Associates said there is a 6.2 percent vacancy rate in Class A office space with a 1.4-year inventory -- considered small by industry standards. Class B office space has a 3.3-year inventory available, meaning the market is somewhat looser.

Witters said the average lease rate in the office segment has crawled up only 2 cents per square foot since last year, an indication the market hasn't eroded. He said representatives of the industry are wary of sales campaigns offering free rent, which would signal a turnaround from a developer's market to a tenant's market.

The biggest demand for office space is for calling centers, Witters said, and Las Vegas' biggest competition is coming from Denver, Dallas, Tampa, Fla.; and Columbus, Ohio.

More commercial opportunities are becoming available as the Beltway develops and the southwest portion of the city will be the next growth zone.

"There's no shortage of land in some new frontiers, despite what you may read in the paper," Stuart said.

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