LV industrial vacancies rise

The vacancy signs are out.

Not at Las Vegas hotels, but at many industrial developments across the Valley.

As members of the National Association of Industrial and Office Properties gathered last week for an annual bus tour of the Valley's real estate market, many leasing agents painted a divergent picture of the market.

Vacancy rates appear to be unusually high, but few people appear to be concerned as 1998 is shaping up as yet another bountiful year.

According to CB Richard Ellis, there is about 54 million square feet of industrial space, with about 10 percent of it vacant.

"That's probably the highest I've seen at any point in the last 14 years," said Kevin Higgins of CB Richard Ellis.

The wealth of space is typical of a market that has enjoyed robust times in recent years. The good times prompted developers to overbuild, Richard Lee of First American Title said by phone Monday.

Lee said real estate investment trusts (REITs) are investing heavily in the Las Vegas market and current stock market fluctuations could force them to reconsider, but interest in the Valley remains strong.

"We didn't overbuild a lot, but we overbuilt a little," Lee said.

Despite that, the occupancy rate is still higher than that of other cities, Lee said.

And vacant space is not necessarily bad. Las Vegas is still making a name for itself by offering industrial space, said Paul Workman of BankWest of Nevada.

"We've never been an industrial space provider," Workman said. "You have to build a large amount and give people choices."

Moreover, some companies have yet to see a slowdown in leasing activity.

Industrial space is plentiful in areas like North Las Vegas and Henderson, where rates are low and, generally, spaces are larger.

But the vicinity of McCarran International Airport and southwestern Las Vegas remains the Valley's mecca of industrial development.

The southwestern Las Vegas market accounts for about 15 million square feet of the Valley's industrial space, said Donna Alderson of CB Richard Ellis. Agents say that area commands the highest demand and rents and absorbs vacancy more quickly than other parts of the Valley.

Mark Bouchard of the Thomas and Mack Co. said that company's projects, generally in the southwest and south-central areas, are meeting the company's expectations.

"We're not seeing a step down whatsoever," he said.

And companies dealing in high-end office space are seeing continued demand for Class A offices.

CB Richard Ellis' figures show about 12 million square feet of office space, with a vacancy rate of about 14 percent. But the demand for high-end, Class A office space remains high, said Dave Scherer of Prudential Southwest Realty.

"The Class A market is still fairly tight," Scherer said.

Michael Newman of the Howard Hughes Corp. said that company's newest building at 3960 Howard Hughes Parkway opened in May and is now 70 percent leased.

"That's a pretty good indication that Class A is a solid market," Newman said.

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