Las Vegas Quarterly, Q1-10

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A complete review of the commercial real estate market in Las Vegas, NV.

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Las Vegas Quarterly, Q1-10

  1. 1. VEGAS LAS L Q U A R T E R LY Q1/10 V Q Photo by Chris Poese ©2009 Colliers las Vegas The most successful and innovative brokerage working for you C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 w w w. l v c o l l i e r s . c o m
  2. 2. glossary Industrial Definitions incubator: Multi-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and bay sizes lower than 3,500 square feet. light Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of less than VEGAS LAS 15,000 square feet. light industrial: Multi- or single-tenant buildings without dock-high loading doors that have a parking ratio lower than QU A R T square feetY in the case of multi-tenant buildings, bay sizes of at least 3,500 square feet. 3.5/1,000 E R L and, r&D/Flex: Multi- or single-tenant buildings without dock-high loading doors with parking ratios in excess of 3.5/1,000 square feet. Warehouse/Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of at least 15,000 square feet. Office Definitions Class a office: buildings with steel frame construction, high end exterior finish, distinctive lobbies featuring upgraded finishes, amenities including on-site security, state-of-the-art communications and data infrastructure and covered parking. Class a buildings are usually multi-story. Class b office: buildings osteel frame, reinforced concrete or concrete tilt-up construction. Class b buildings contain common bathrooms and hallways, and their lobbies may have granite and hardwood detailing. Class b buildings are often multi-story. Class C office: buildings of wood frame construction. Class C buildings are often garden-style and are built around courtyards. Medical office: buildings that are more than 50% occupied by medical tenants. Retail Definitions Community Center: retail centers anchored by supermarkets, drug stores and discount department stores. tenants include off-price retailers selling apparel, home improvements/furnishings, toys, electronics or sporting goods. Neighborhood Center: retail centers anchored by supermarkets and drug stores. Neighborhood centers are intended for convenience shopping for day-to-day needs of consumers. Power Center: retail centers dominated by several large anchors including discount department stores, off-price stores, warehouse clubs or “category killers”. Power centers generally inline space. General Definitions Vacant sF: space in a building that is unoccupied and offered for lease by the owner of the company. sublease sF: space in a building that offered for sub-lease by the primary tenant. this space may or may not be unoccupied. Net absorption: the difference in occupied square footage from one period to another. v this report and other research materials may be found on our website at www.lvcolliers.com. this quarterly report is a research document of Colliers international – las Vegas, NV. Questions related to information herein should be directed to the research Department at 702-836-3781.informationcontainedhereinhasbeenobtainedfromsourcesdeemedreliableandnorepresentationismadeastotheaccuracythereof.ColliersNevada,llCdbaColliersinternationalisanindependentlyownedandoperatedbusinessand a member firm of Colliers international Property Consultants, an affiliation of independent companies with over 294 industrials throughout more than 61 countries worldwide. lVQ | Q1/10
  3. 3. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 John M. stater research Manager jstater@lvcolliers.com 702-836-3781 Contents Mike Mixer economic review ........................................ 4 Managing Partner John M. stater mmixer@lvcolliers.com 702-836-3777 While the national economy continues to show signs of Chris Poese economic recovery, Southern Nevada economy remains graphic artist essentially flat. cpoese@lvcolliers.com 702-836-3721 Colliers international 3960 howard hughes Parkway industrial review ......................................... 8 suite 150 John M. stater las Vegas, NV 89169 United states The condition of Southern Nevada’s industrial market is P: 702-735-5700 improving slowly. F: 702-731-5709 www.lvcolliers.com office review ............................................. 16 John M. stater Southern Nevada’s office market continues to show signs of recovery, and has seen an end to the free fall it experienced in 2008 and 2009. retail review ............................................. 22 John M. stater Southern Nevada’s retail market showed minor improvement in the first quarter of 2010, but continued to suffer from rising vacancy and falling net absorption. land review ............................................... 28 John M. stater There remain thousands of acres of residential-zoned land that are owned free and clear, but owners of that land paid more than $250,000 per acre. 294 oFFiCes in 61 Countries on 6 Continents 3 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  4. 4. economic review VEGAS las Vegas Msa gaMing reV LAS While the national economy continues to show signs of economic recovery, southern Nevada’s Las Vegas MSA Gaming Revenue  Q U A R T E R LY $12,000,000,000  economy remains unchanged. leading indicators $10,000,000,000  in southern Nevada have been essentially flat for several months, suggesting that local recovery is $8,000,000,000  not in our immediate future. Unemployment in $6,000,000,000  the las Vegas Msa reached 13.8% after posting a decline at the end of 2009. Job losses continue and $4,000,000,000  both gaming revenue and taxable sales are down $2,000,000,000  year-over-year. the number of residential permits that were pulled in January of 2010 was almost $0  2000  2001  2002  2003  2004  2005  2006  2007  2008  2009  2010 YTD  four times that in January of 2009. New homes sales were down, while sales of existing homes were up. las Vegas Msa eMPloyMent southern Nevada continued to shed jobs at a quick pace in the first quarter of 2010. between Las Vegas MSA Employment  February 2009 and February 2010, the only 1,000,000  sectors of employment that showed growth 900,000  were health & social services and Professional 800,000  700,000  & business services. UNlV’s Center for business 600,000  and economic research is forecasting continued 500,000  job losses of 5.2 percent in 2010, easing by the 400,000  end of that year, and modest 0.5-percent growth 300,000  in 2011. 200,000  100,000  apartment vacancy was up by 12.5% between 0  2000  2001  2002  2003  2004  2005  2006  2007  2008  2009  2010 YTD  the fourth quarter of 2009 and the fourth quarter of 2008 and the residential electric meter count was down by 0.1% between February 2010 and February 2009. the driver’s license count showed las Vegas Msa Visitor VoluMe the number of new residents down by 12.2% between February 2010 and February 2009. 45,000,000  Las Vegas MSA Visitor Volume  National economic recovery, coupled with the 40,000,000  continued recession locally, should keep southern 35,000,000  Nevada’s population on the decline through 2010. 30,000,000  stagnant population growth will probably slow 25,000,000  down the absorption of vacant retail space. 20,000,000  the hospitality & leisure sector continues to be 15,000,000  plagued by problems of its own, keeping southern 10,000,000  Nevada’s engine of growth idle. spurred on 5,000,000  by deep discounts on hotel rooms, year-over- 0  2000  2001  2002  2003  2004  2005  2006  2007  2008  2009  2010 YTD  year visitor volume grew by 2.4%. Most other lVQ | Q1/10
  5. 5. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 important measures, however, continued to slide. in 2009, when 21 banks with combined assets of between January 2010 and January 2009, convention $9.5 billion were taken over by the FDiC. No banks attendance was down 16.4%, airplane passengers at headquartered in southern Nevada have failed so far McCarran international airport were down 0.2% this year. Nationally, banks that failed so far this year and gaming revenue was down 2.2%. las Vegas’ had combined assets of $18.5 billion. room inventory grew by 5.8% between January 2010 and January 2009, largely due to the completion of recovery index portions of MgM Mirage’s CityCenter. on the bright Ultimately, the key to recovery for commercial real side, CityCenter’s performance has been better than estate is employment growth. as total employment local gaming analysts expected, and increased visitor has plummeted, occupancy of commercial real estate volume should help lessen the impact CityCenter has followed. several factors feed into the prospect for has on other high-end “strip” resorts. overall, local renewed employment growth in southern Nevada, gaming analysts expect some recovery on the “strip” which we have combined into a composite index. the in 2010, a portent of recovery in southern Nevada’s index showed a slight decline between December economy as a whole in 2011. 2009 and January 2010. six indexes contributed investment sales in southern Nevada picked up negatively to the composite index: New home slightly in the first quarter of 2010, but continue to be sales, Commercial occupancy, Visitor Volume, New far below the levels seen in 2006 and 2007. sales of residents, employment, and in-loaded Containers foreclosed commercial real estate are sparse. the gap at the Port of los angeles. three indexes, gaming in expectations between buyers and sellers remains revenue, taxable sales and Personal Consumption, vast, but some sellers are starting to price their contributed positively to the index. the decline in properties on actual, rather than pro forma, income. the composite index that began in 2007 is slowing, Cap rates are likely to increase another 100 basis but it is not yet trending upwards. this suggests to us points in 2010, making potential investors reluctant to that meaningful recovery is not likely until 2011 at the jump into the market now. earliest. the amount of distressed commercial real estate in southern Nevada continued to increase in the first quarter of 2010. We are tracking almost 8-million square feet of distressed industrial, office and retail Clark County eConoMiC Data property in southern Nevada, up from 6.6 million Oct-09 Oct-08 square feet last quarter. approximately 40 percent of Unemployment rate 13.8% 10.3% this space is office product, 40 percent retail and 20 Visitor Volume 3,141,556 3,066,738 percent industrial. the largest quarter-over-quarter gaming revenue $764.36 M $781.67 M increase was in industrial space, which grew by 55% taxable sales ytD* $7.166 b $8.208 b to 1.6-million square feet. the amount of distressed residential Permits** 466 134 office space grew by 29% to 3.2-million square feet, Commercial Permits** 21 31 while distressed retail grew by a scant 2% to 3.2 New home sales 240 284 million square feet. the number of foreclosure sales existing home sales 3,111 2,536 of commercial real estate remains low. * December 2009 / December 2008 ** February 2010 / February 2009 according to the FDiC website, 30 banks failed so Source: The Center for Business & Economic Research, UNLV far in 2010. this is an increase over the same period 294 oFFiCes in 61 Countries on 6 Continents 5 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  6. 6. VEGAS LAS looking ahead local economy. Medical research centers like the Cleveland Clinic for brain health Q U A R T E R LY as the impact of the construction and the Nevada Cancer institute are one industry on the local economy recedes, form of diversification that is happening the need for economic diversification will now. other avenues include solar energy become ever more apparent. southern and trade centers on the model of the Nevada remains a popular place to live World Furniture Center. We all know and do business, due its pleasant climate that times are bad now, but we should and friendly tax environment. as tourism also be aware that exciting things are in recovers along with the national economy, southern Nevada’s future if only we have our primary engine of growth will come the foresight to plan ahead. to life. this, in turn, will spur recovery in our construction sector as the standing inventory of residential and commercial real estate is exhausted. in short, southern Nevada’s economy will recover to a point with or without diversification. Diversification of the local economy is important, however, for establishing greater economic stability. Nobody wants to see another severe recession in the near future, but it will surely come without a continued push to diversify the DistresseD sQuare Footage By ProDuCt tyPe Distressed Square Footage By Product Type  62,000  R&D/Flex  144,000  Q4‐09  Q1‐10  104,000  Incubator  220,000  476,000  Light Industrial  738,000  49,000  Light DistribuKon  139,000  323,000  Harehouse/DistribuKon  340,000  892,000  Neighborhood Center  907,000  1,194,000  Community Center  1,229,000  1,017,000  Power Center  1,027,000  438,000  Medical Office  614,000  1,217,000  Class C Professional  1,496,000  537,000  Class B Professional  656,000  314,000  Class A Professional  501,000  0  200,000  400,000  600,000  800,000 1,000,000  1,200,000  1,400,000  1,600,000  lVQ | Q1/10
  7. 7. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 eMPloyMent growth (year oVer year) Employment Growth (Year Over Year)  Retail  ‐5,200  Health Care & Social Assistance  1,700  Professional & Business Services  ‐400  =inancial Ac0vi0es  ‐2,200  Wholesale  ‐200  6ransporta0on & Warehousing  ‐1,400  Manufacturing  ‐1,600  ‐20,100  Construc0on  ‐25,000  ‐20,000  ‐15,000  ‐10,000  ‐5,000  0  5,000  CoMMerCial real estate reCoVery inDex Commercial Real Estate Recovery Index  110  2006 = 100  105  100  95  90  85  80  Jan 2005  Feb 2005  Mar 2005  Apr 2005  May 2005  Jun 2005  Jul 2005  Aug 2005  Nov 2005  Sep 2005  Oct 2005  Dec 2005  Jan 2006  May 2006  Jun 2006  Aug 2006  Oct 2006  Nov 2006  Dec 2006  Jan 2007  Feb 2007  Mar 2007  Apr 2007  May 2007  Jun 2007  Jul 2007  Aug 2007  Sep 2007  Oct 2007  Nov 2007  Dec 2007  Jan 2008  Feb 2008  Mar 2008  Apr 2008  May 2008  Jun 2008  Jul 2008  Aug 2008  Sep 2008  Oct 2008  Nov 2008  Dec 2008  Jan 2009  Feb 2009  Mar 2009  Apr 2009  May 2009  Jun 2009  Jul 2009  Aug 2009  Sep 2009  Oct 2009  Nov 2009  Dec 2009  Jan 2010  Mar 2006  Sep 2006  Feb 2006  Jul 2006  Apr 2006  294 oFFiCes in 61 Countries on 6 Continents 7 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  8. 8. inDustrial VEGAS LAS Q U A R T E R LY 215 NORTH LAS VEGAS 95 NORTHWEST EAST LAS VEGAS WEST 15 CENTRAL 95 AIRPORT 215 SOUTHWEST HENDERSON Photo by Chris Poese ©2009 Colliers las Vegas Market inDiCators Q2-2010 industrial review Q1-10 Projected the condition of southern Nevada’s construction sector lost over 20,000 VaCaNCy industrial market is improving slowly. jobs during this period while the other there is yet some pain to endure, as three industrial sectors (transportation Net absorPtioN the amount of distressed industrial & warehousing, wholesale and CoNstrUCtioN property is increasing rapidly and manufacturing) lost between 1,200 and industrial employment continues to 2,100 jobs. Unemployment in the las reNtal rate fall. sales and leasing activity, however, Vegas-Paradise Msa stood at 13.9% has improved dramatically from 12 as of February 2010, up from 10.3% in to 18 months ago, foreshadowing a February 2009. in general, the pace of “bottoming-out” of the market. Net industrial job losses does not appear absorption improved over last quarter, to be decreasing, promising continued although it remained negative. Vacancy weak demand for industrial real estate continued to increase, reaching 15% through at least the first half of 2010. this quarter, a 3.4% increase from one quarter ago and a 33.9% increase For the first time since we began from one year ago. there were no tracking southern Nevada’s industrial new industrial projects completed market, there were no new completions this quarter, and only five projects of industrial space. almost 1.7 million remained in the pipeline. year-over- square feet of industrial product was year vacancy increases, which increased completed during 2009. While this is last quarter after several quarters of bad news for construction workers trending downward, got back on track and developers, it is necessary for the this quarter. eventual recovery of the industrial between February 2009 and market, as an over-supply of industrial February 2010, las Vegas-Paradise space has plagued the market for the Msa employment in sectors that past two years. 1 Forward supply is a combination of space presently under construction in a quarter and space planned to begin construction within the next 4 quarters. traditionally occupy industrial space Forward supply of industrial space in declined by almost 30,000 jobs. the the Valley stood at only 400,608 square lVQ | Q1/10
  9. 9. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 feet in the first quarter of 2010. this was a slight decline in year-over-year vacancy experienced eight increase from the 370,608 square feet recorded at quarters later. During this recession, year-over-year the end of last year. Most of the space in the pipeline vacancy increased for seven quarters between the is in the Marnell air Cargo Center located in the first quarter of 2007 and third quarter of 2008. airport submarket. of the remainder, more than half the most active businesses taking industrial space in is in the form of build-to-suit projects. 2009 were involved in food services, transportation, Net absorption was much improved this quarter over retail services, manufacturing and construction. last, with only 497,401 square feet of industrial space even though the number of deals signed were fairly returned to the market. Net absorption improved even between companies headquartered in Nevada this quarter for light industrial and Warehouse/ versus companies from other states, the companies Distribution space, with the latter posting almost headquartered outside of Nevada took 83% of the 100,000 square feet of net absorption. both the all the square feet occupied during the first quarter airport and henderson submarkets posted positive of 2010. this trend will probably continue for the net absorption this quarter, with the West Central rest of the year. submarket joining those two in increasing net 54% of all leases signed in 2009 were signed by absorption on a quarterly basis. gross absorption of companies headquartered in Nevada, while 13% industrial space stood at 3.6 million square feet in were with California companies. 47% of leases southern Nevada this quarter, double what it was signed in 2009 were with regional or national one year ago. companies (companies operating in multiple states industrial vacancy increased to 15% this quarter, a and/or internationally). given the state of the local 0.5 point increase from one quarter ago and a 3.8 economy, leasing activity by national and regional point increase from one year ago. industrial vacancy companies should loom large in the coming months, has been rising for 15 straight quarters, since the and will probably benefit some product types, such second quarter of 2006, when it was at a low of as Warehouse/Distribution, more than others. 3.1%. the Northwest submarket continued to have the weighted average asking lease rate for industrial the Valley’s highest vacancy rate at 32.8%. although space decreased this quarter to $0.59 psf NNN east las Vegas experienced a sharp increase in from last quarter’s $0.61. if adjusted for inflation , the vacancy, it continued to have the lowest vacancy weighted average asking lease rate actually increased rate in the Valley at 9.4%. Vacancy increased in the this quarter by $0.01 psf. adjusted for inflation, the east las Vegas, North las Vegas, Northwest and weighted average asking lease rate for industrial southwest submarkets, and decreased in the airport product has dropped by $0.22 psf from its peak in and henderson submarkets. this was the second the first quarter of 2007. Current inflation-adjusted straight quarter in which henderson industrial asking rental rates are almost equal to what they vacancy decreased. Warehouse/Distribution space were in the third quarter of 2004. also experienced a small decrease in vacancy since last quarter. achievable rental rates, i.e. the rental rates actually being paid by new industrial tenants, are as much the change in industrial vacancy on a year-over-year as $0.33 psf lower than asking rental rates. the gap basis was 3.8 points this quarter, lower than the 4.3 between achievable and asking rates averaged $0.11 point increase in the fourth quarter of 2009. this during 2009, and now stands at an average of $0.16 number had been on the decline for four quarters in the first quarter of 2010. the largest gap is in r&D/ before spiking last quarter. given the rapid increase in Flex projects, while there is virtually no gap now in vacancy experienced in 2009, MaRket SnapShOt it is likely that this number Q1-10 Q4-09 Q1-09 Q-O-Q Change Y-O-Y Change will fall through most of 2010. Vacancy rate 15.0% 14.5% 11.2% + 3.4% + 33.9% year-over-year vacancy increased for three quarters asking rent (PsF, NNN) $0.59 $0.61 $0.76 - 3.3% - 22.4% Net absorption (sF) -497,401 -815,284 -288,378 + 38.9% - 72.5% during the mini-recession New Completions (sF) 0 495,529 739,803 - 100.0% - 100.0% of 2001-2002, with the first 294 oFFiCes in 61 Countries on 6 Continents 9 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  10. 10. inDustrial VEGAS light industrial projects. the InDuStRIal eMplOYMent LAS lowest gap between achievable Feb 2010 Feb 2009 Change and asking rents among Construction 51,300 74,200 -22,900 Q U A R T E R LY submarkets is in east las Vegas, Manufacturing 20,200 22,300 -2,100 with achievable rents $0.06 transportation & Warehousing 30,400 32,500 -2,100 “While local and regional higher than the average asking Wholesale 21,000 22,200 -1,200 rent, and North las Vegas, with total 122,900 151,200 -28,300 economic weakness will achievable rents only $0.06 Source: Nevada Department of Employment, Training and Rehabilitation. continue to hamper a lower than the average asking of $118 and $149 respectively. Prominent complete recovery of our rent. owner/user sale availabilities include industrial market, national adjustments in asking rents were more the berlin industries building in the recovery will help at least balanced this quarter than last. Four Northwest submarket (101,000 square submarkets experienced an increase in feet), the Decatur business Center some segments of the asking rents and only three a decrease. in the southwest submarket (87,000 industrial market prosper.” of the five product types, only incubator square feet) and the Progressive gaming space saw an increase in asking rents. Facility in the airport submarket (87,000 the 289 new availabilities that entered square feet). the industrial market this quarter had an the inventory of industrial buildings average asking rental rate of $0.54 psf for sale as investments increased from NNN, $0.06 lower than the 278 new 1,185,000 square feet in the fourth availabilities that entered the industrial quarter of 2009 to 1,213,000 square market during the fourth quarter of feet this quarter. the average asking 2009. of existing availabilities, 21% price decreased by $2 psf this quarter to had their asking lease rate decrease $133 psf. sellers of industrial investment this quarter by an average of $0.14 psf, properties are still quoting an average while 22% showed an increase by an cap rate of 8%, though it is important average of $0.15 psf. this is a marked to note that more and more sales change from the 2009, when only listings fail to quote a cap rate at all, just three to five percent of existing leases as fewer and fewer investment sales posted an increase in asking rent. these comps quote a cap rate. Prominent movements in asking rent suggest that investment sale availabilities include landlords are becoming more confident hughes airport Center bldg 14 in the in the future of southern Nevada’s airport submarket (133,000 square industrial market. feet), Patrick lane industrial Park in the the inventory of industrial properties airport submarket (100,000 square available for owner/user sale decreased feet) and aabacus industrial Park in the this quarter to 3,886,000 square feet southwest submarket (72,000 square from 4,044,000 square feet in the fourth feet). quarter of 2009. one year ago, there in the first quarter of 2010, 204,000 was 4,065,000 square feet of owner/ square feet of industrial properties sold user space on the market. the average as investments at an average sales price asking price for owner/user industrial of $121 psf. this represented a very sales decreased to $132 psf, well below small decrease in terms of square feet the average asking price of $152 psf ReGIOnal WaRehOuSe / DIStRIbutIOn recorded one year ago. More than 65% Market asking Rent (Q4-09) of the available owner/user sale square las Vegas, NV $0.47 psf NNN footage in southern Nevada was in Phoenix, aZ $0.53 psf NNN the North las Vegas and southwest inland empire, Ca $0.32 psf NNN submarkets, with average asking prices reno, NV $0.31 psf NNN lVQ | Q1/10
  11. 11. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 sold from one year ago, but a substantial increase in southern Nevada, light Distribution is probably in the average price. owner/user sales this quarter the most closely tied to the health of the “strip” amounted to only 36,000 square feet with an resorts. you can expect the prospects for recovery average price of $141 per square foot, again showing of the light Distribution market to improve if visitor a decrease in the amount of space sold from one volume and gaming revenue continue to improve. year ago, but an increase in the average price. light industrial space could be the poster child for Despite the “expectations gap” between buyer and industrial over-supply in southern Nevada. From sellers, and continued difficulties in securing loans 2007 to 2009 a total of 2.85 million square feet of light for commercial real estate, the sales market does industrial space was completed, much of it because appear to be stabilizing. higher prices for industrial land made freestanding Net absorption in Warehouse/Distribution product buildings that could be leased and quickly sold an turned positive in the first quarter of 2010, coming in attractive option for developers. Unfortunately, net at 92,779 square feet. the Warehouse/Distribution absorption of light industrial space over the same market enjoys greater leasing activity from national period was -621,652 square feet. recently, though, and regional companies than do other product there have been some signs of improvement. Net types in southern Nevada, and therefore might absorption in the first quarter of 2010 was almost lead the market into recovery, or at least buck the 300,000 square feet higher than in the fourth overall industrial trend. the local transportation quarter of 2009, and lease comparables suggest that sector is still shedding jobs on a year-over-year landlords have been pricing light industrial space just basis, however, so hopes of a quick turn-around about right for the past four quarters. on the down based on a single quarter of positive net absorption side, the light industrial market is dominated by local might be premature. the asking rent of Warehouse/ companies, with almost 70% of the companies taking Distribution space in southern Nevada was still light industrial space last year being headquartered higher than in California’s inland empire and reno in Nevada. since the local economy is still showing in the fourth quarter of 2009, but was lower than signs of distress, the chances for a speedy recovery in Phoenix, arizona, a key competitor. the amount of the light industrial market remain slim. of Warehouse/Distribution space available for sub- if the market for incubator space is any indication, lease increased by 278,000 square feet this quarter, small businesses are not yet recovering in southern again suggesting the product type is not out of the Nevada. although net absorption for incubator woods yet. Just the same, we think Warehouse/ space was positive in fourth quarter 2009, it turned Distribution will lead the industrial pack in 2010. negative again this quarter, returning 70,828 square light Distribution space continued to struggle this feet to the market. small business people are still quarter, posting -299,912 square feet of net absorption, facing an unsure environment of taxes, health a significant decrease from the 11,464 square feet insurance and regulations, and this as much as of net absorption in the fourth quarter of 2009. anything will keep them, and the incubator market, Vacancy stood at 22%, a 1.7 point increase from last on the sidelines in 2010. quarter, and a 4.8 point increase from one year ago. the very flexibility that seemed to serve r&D/Flex the average asking lease rate for light Distribution space well in 2009 failed to save it in first quarter space decreased this quarter over last by $0.04 to 2010, possibly because retail and office tenants are $0.53 psf NNN. of all the industrial product types InDuStRIal DevelOpMent pIpelIne project type Submarket Size pre-leasing Completion 1192 Center Point light industrial henderson 25,000 sF bts Q2-10 7000 W Post rd light industrial southwest 50,000 sF bts Q3-10 7040 redwood light industrial southwest 50,000 sF 0% Q3-10 Marnell air Cargo Center Warehouse/Distribution airport 79,000 sF 100% Q3-10 Marnell air Cargo Center light Distribution airport 122,000 sF 59% Q3-10 294 oFFiCes in 61 Countries on 6 Continents 11 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  12. 12. inDustrial VEGAS LAS finding competitively priced retail and renter is not good for the seller/landlord, Q U A R T E R LY office space more satisfactory to their and plunging rental rates will push more needs. although r&D/Flex space posted industrial product into foreclosure. positive net absorption in 2009, net Distressed industrial space totaled absorption fell to -101,171 square feet this 1,572,000 square feet in first quarter quarter and vacancy jogged upward to 2010, a 55% increase from last quarter. 28.8%. southern Nevada’s industrial market is southern Nevada’s industrial market had going through a monumental period of a hard time in 2009, and it is not yet clear re-pricing and restructuring. 2010 will be that 2010 will be significantly better. gross a tumultuous year, but we believe a better absorption has rebounded substantially year than 2009 by most measures. While since this time last year, but high negative local and regional economic weakness will net absorption suggests that southern continue to hamper a complete recovery Nevada isn’t capturing new tenants, but of the industrial market, national recovery rather seeing existing tenants on the hunt will help at least some segments prosper. for lower rents. in itself, this is not a bad thing for the economy as a whole. in a long recession, companies must reduce their expenses to stay in business, and the local industrial market certainly does not need more businesses vacating space. a market that is good for the buyer/ year oVer year VaCanCy Change Y‐O‐Y Vacancy Change  6.0%  4.8%  5.0%  4.3%  4.2%  4.2%  4.0%  3.8%  3.8%  3.5%  4.0%  3.1%  2.7%  2.6%  3.0%  2.1%  2.1%  1.8%  1.8%  1.6%  1.6%  1.6%  1.4%  1.4%  2.0%  0.7%  0.6%  1.0%  0.2%  0.0%  ‐0.1%  ‐0.1%  ‐1.0%  ‐0.9%  ‐1.1%  ‐1.5%  ‐1.6%  ‐1.8%  ‐2.0%  ‐2.2%  ‐2.2%  ‐2.5%  ‐3.0%  ‐3.2%  ‐3.5%  ‐3.5%  ‐4.0%  ‐3.9%  ‐5.0%  Q101  Q201  Q301  Q401  Q102  Q202  Q302  Q402  Q103  Q203  Q303  Q403  Q104  Q204  Q304  Q404  Q105  Q205  Q305  Q405  Q106  Q206  Q306  Q406  Q107  Q207  Q307  Q407  Q108  Q208  Q308  Q408  Q109  Q209  Q309  Q409  Q110  lVQ | Q1/10
  13. 13. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 oCCuPanCy Vs inDustrial eMPloyMent 170,000  91.0%  89.7%  90.0%  160,000  88.8%  89.0%  150,000  87.6%  88.0%  140,000  86.6%  87.0%  85.5%  86.0%  130,000  85.0%  85.0%  120,000  84.0%  161,400  148,000  137,400  132,500  128,100  122,900  110,000  83.0%  100,000  82.0%  4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010  Industrial Jobs  Occupancy Rate  historiCal net aBsorPtion Vs CoMPletions 739,803  1,000,000  495,411  495,529  800,000  342,574  212,270  600,000  400,000  41,723  200,000  0  0  ‐200,000  ‐288,378  ‐400,000  ‐497,401  ‐600,000  ‐800,000  ‐815,284  ‐831,975  ‐1,000,000  ‐1,016,256  ‐1,200,000  4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010  /01 234567859  :5;7<08594  294 oFFiCes in 61 Countries on 6 Continents 13 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls
  14. 14. inDustrial VaCanCy Vs rental rate 16.0%   $0.76    $0.76    $0.80    $0.71   14.0%   $0.66    $0.70    $0.61    $0.59   12.0%   $0.60   10.0%   $0.50   8.0%   $0.40   6.0%   $0.30   4.0%   $0.20   2.0%   $0.10   10.3%  11.2%  12.4%  13.4%  14.5%  15.0%  0.0%   $‐     4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010  Vacancy  Asking Rental Rate  InDuStRIal SaleS Q1-10 Q4-09 Q1-09 owner/User space for sale (sf) 3,886,000 4,044,000 4,065,000 average asking Price/sF $132 $138 $152 space sold (sf) 36,000 151,000 142,000 average Price/sF $141 $160 $100 investment space for sale (sf) 1,213,000 1,185,000 1,050,000 average asking Price/sF $133 $135 $137 average Cap rate 8.0% 8.0% 7.3% space sold (sf) 214,000 258,000 195,000 average Price/sF $115 $66 $91 average Cap rate n/a n/a 5.6% lease aCtiVity pROpeRtY aDDReSS leaSe Date leaSe teRM SIze leaSe Rate tYpe hughes Cheyenne Center Feb 2010 126 months 84,397 sf $0.52 NNN Warehouse/Distribution Wigwam Jones industrial Park Jan 2010 38 months 9,401 sf $0.56 Mg light Distribution Procyon avenue business Center Feb 2010 36 months 7,967 sf $0.53 NNN light industrial West harmon business Park Feb 2010 13 months 2,788 sf $0.52 NNN r&D/Flex ali baba Commerce Center Jan 2010 38 months 2,211 sf $0.55 NNN incubator sales aCtiVity pROpeRtY aDDReSS SaleS Date Sale pRICe SIze pRICe/SF tYpe Decatur Crossing Feb 2010 $17,750,000 140,594 sf $126.25 light Distribution Park West business Center Mar 2010 $2,000,000 23,517 sf $85.04 Warehouse/Distribution Coleman airpark Jan 2010 $900,000 12,439 sf $72.35 light industrial traverse Point Commerce Center Jan 2010 $887,000 8,020 sf $110.60 light industrial h bizctr Whitney Mesa Jan 2010 $645,930 7,177 sf $90.00 r&D/Flex lVQ | Q1/10
  15. 15. C o l l i e r s l a s V e g a s | F i r s t Q ua rt e r | 2 0 1 0 InDuStRIal MaRket StatIStICS FIRSt QuaRteR 2010 eXIStInG pROpeRtIeS DIReCt vaCanCY SubleaSe vaCanCY tOtal vaCanCY net abSORptIOn SF u/C and pROpOSeD SF avG RentS total vacancy Completed Current Completed under type bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate Rate YtD this Qtr Rate period YtD Constr Sq Ft previous Q Sq Ft Sub MaRketS aIRpORt SubMaRket Wh 76 4,667,484 388,531 8.3% 45,700 1.0% 434,231 9.3% 16.9% 355,757 355,757 - - 78,936 $0.57 lD 67 2,969,897 664,543 22.4% 31,453 1.1% 695,996 23.4% 21.8% (49,570) (49,570) - - 121,992 $0.57 lI 199 2,864,013 311,337 10.9% 8,995 0.3% 320,332 11.2% 10.8% (22,184) (22,184) - - - $0.76 InC 91 1,750,621 274,027 15.7% 6,508 0.4% 280,535 16.0% 16.9% 13,970 13,970 - - - $0.79 FlX 66 1,308,181 394,897 30.2% 17,076 1.3% 411,973 31.5% 32.2% 8,753 8,753 - - - $0.90 tOtal 499 13,560,196 2,033,335 15.0% 109,732 0.8% 2,143,067 15.8% 18.2% 306,726 306,726 - - 200,928 $0.69 eaSt laS veGaS SubMaRket Wh 24 1,022,855 100,080 9.8% 0 0.0% 100,080 9.8% 0.0% (100,080) (100,080) - - - $0.70 lD 20 352,819 35,089 9.9% 0 0.0% 35,089 9.9% 11.0% 3,827 3,827 - - - $0.47 lI 93 1,152,384 52,818 4.6% 6,400 0.6% 59,218 5.1% 4.0% (13,540) (13,540) - - - $0.44 InC 13 298,623 75,720 25.4% 0 0.0% 75,720 25.4% 19.4% (17,751) (17,751) - - - $0.47 FlX 8 142,294 14,509 10.2% 0 0.0% 14,509 10.2% 5.6% (6,567) (6,567) - - - $0.57 tOtal 158 2,968,975 278,216 9.4% 6,400 0.2% 284,616 9.6% 5.1% (134,111) (134,111) - - - $0.55 henDeRSOn SubMaRket Wh 75 6,283,356 581,721 9.3% 10,000 0.2% 591,721 9.4% 10.8% 57,095 57,095 - - - $0.43 lD 36 1,696,226 459,418 27.1% 13,432 0.8% 472,850 27.9% 26.3% (26,589) (26,589) - - - $0.54 lI 324 3,088,118 597,350 19.3% 0 0.0% 597,350 19.3% 20.2% 25,521 25,521 - - 25,000 $0.72 InC 29 456,976 64,495 14.1% 4,830 1.1% 69,325 15.2% 13.3% (8,618) (8,618) - - - $0.60 FlX 78 1,275,017 274,493 21.5% 0 0.0% 274,493 21.5% 22.8% 15,990 15,990 - - - $1.01 tOtal 542 12,799,693 1,977,477 15.4% 28,262 0.2% 2,005,739 15.7% 16.4% 63,399 63,399 - - 25,000 $0.63 6 nORth laS veGaS SubMaRket Wh 178 18,748,956 1,940,004 10.3% 528,095 2.8% 2,468,099 13.2% 11.0% (85,957) (85,957) - - - $0.36 lD 168 4,672,500 1,109,974 23.8% 45,964 1.0% 1,155,938 24.7% 21.6% (134,575) (134,575) - - - $0.37 lI 609 6,977,954 1,296,688 18.6% 35,972 0.5% 1,332,660 19.1% 19.0% 5,140 5,140 - - 94,680 $0.46 InC 31 562,095 217,895 38.8% 0 0.0% 217,895 38.8% 36.5% (12,630) (12,630) - - - $0.57 FlX 46 780,909 229,803 29.4% 7,779 0.0% 237,582 30.4% 28.7% (18,612) (18,612) - - - $0.88 tOtal 1,032 31,742,414 4,794,364 15.1% 617,810 1.9% 5,412,174 17.1% 15.2% (246,634) (246,634) - - 94,680 $0.42 nORthWeSt SubMaRket Wh 5 224,906 132,990 59.1% 0 0.0% 132,990 59.1% 59.1% - - - - - $0.49 lD 1 50,000 0 0.0% 0 0.0% 0 0.0% 0.0% - - - - - $- lI 17 298,896 52,615 17.6% 4,500 1.5% 57,115 19.1% 20.0% 7,108 7,108 - - - $1.06 InC 4 99,427 40,869 41.1% 0 0.0% 40,869 41.1% 16.7% (24,291) (24,291) - - - $1.09 FlX 55 672,202 214,814 32.0% 0 0.0% 214,814 32.0% 22.2% (65,453) (65,453) - - - $0.98 tOtal 82 1,345,431 441,288 32.8% 4,500 0.3% 445,788 33.1% 26.7% (82,636) (82,636) - - - $0.85 SOuthWeSt SubMaRket Wh 135 12,559,601 1,344,661 10.7% 444,500 3.5% 1,789,161 14.2% 12.7% (134,036) (134,036) - - - $0.54 lD 184 6,990,703 1,453,124 20.8% 118,153 1.7% 1,571,277 22.5% 21.1% (60,816) (60,816) - - - $0.64 lI 749 9,133,520 1,630,504 17.9% 20,268 0.2% 1,650,772 18.1% 16.0% (184,820) (184,820) - - 80,000 $0.65 InC 120 2,496,381 364,302 14.6% 9,796 0.4% 374,098 15.0% 15.7% 19,691 19,691 - - - $0.71 FlX 101 1,564,088 553,437 35.4% 28,416 1.8% 581,853 37.2% 34.2% (35,282) (35,282) - - - $1.02 tOtal 1,289 32,744,293 5,346,028 16.3% 621,133 1.9% 5,967,161 18.2% 16.7% (395,263) (395,263) - - 80,000 $0.66 WeSt CentRal SubMaRket Wh 63 1,897,447 56,592 3.0% 0 0.0% 56,592 3.0% 3.0% - - - - - $0.51 lD 36 682,456 113,752 16.7% 800 0.1% 114,552 16.8% 14.3% (32,189) (32,189) - - - $0.55 lI 491 6,656,164 589,487 8.9% 16,604 0.2% 606,091 9.1% 9.9% 64,506 64,506 - - - $0.53 InC 66 2,462,109 379,633 15.4% 0 0.0% 379,633 15.4% 13.7% (41,199) (41,199) - - - $0.76 FlX 12 219,832 34,171 15.5% 0 0.0% 34,171 15.5% 15.5% - - - - - $0.73 tOtal 668 11,918,008 1,173,635 9.8% 17,404 0.1% 1,191,039 10.0% 9.9% (8,882) (8,882) - - - $0.61 M a R k e t tOta l Wh 556 45,404,605 4,544,579 10.0% 1,028,295 2.3% 5,572,874 12.3% 11.7% 92,779 92,779 - - 78,936 $0.45 lD 512 17,414,601 3,835,900 22.0% 209,802 1.2% 4,045,702 23.2% 21.3% (299,912) (299,912) - - 121,992 $0.53 lI 2,482 30,171,049 4,530,799 15.0% 92,739 0.3% 4,623,538 15.3% 14.8% (118,269) (118,269) - - 199,680 $0.60 InC 354 8,126,232 1,416,941 17.4% 21,134 0.3% 1,438,075 17.7% 16.8% (70,828) (70,828) - - - $0.71 FlX 366 5,962,523 1,716,124 28.8% 53,271 0.9% 1,769,395 29.7% 27.9% (101,171) (101,171) - - - $0.96 tOtal 4,270 107,079,010 16,044,343 15.0% 1,405,241 1.3% 17,449,584 16.3% 15.4% (497,401) (497,401) - - 400,608 $0.59 Q u a Rt e R lY C O M pa R I S O n a n D t O ta l S Q1-10 4,270 107,079,010 16,044,343 15.0% 1,405,241 1.3% 17,449,584 16.3% 15.4% (497,401) (497,401) 0 0 400,608 $0.59 Q4-09 4,256 107,079,010 15,546,942 14.5% 996,001 0.9% 16,542,943 15.4% 14.2% (815,284) (2,951,893) 495,529 1,790,176 370,608 $0.61 Q3-09 4,244 106,583,481 14,236,129 13.4% 945,745 0.9% 15,181,874 14.2% 13.4% (831,975) (2,136,609) 212,270 1,294,647 590,229 $0.66 Q2-09 4,210 106,371,211 13,191,884 12.4% 1,028,315 1.0% 14,220,199 13.4% 11.9% (1,016,256) (1,304,634) 342,574 1,082,377 712,104 $0.71 Q1-09 4,188 106,028,637 11,833,054 11.2% 744,605 0.7% 12,577,659 11.9% 11.0% (288,378) (288,378) 739,803 739,803 643,955 $0.76 Q4-08 4,168 105,288,834 10,804,873 10.3% 775,544 0.7% 11,580,417 11.0% 10.4% 41,723 (227,364) 495,411 4,443,334 1,109,988 $0.76 the InFORMatIOn COntaIneD In thIS RepORt WaS pROvIDeD bY SOuRCeS DeeMeD tO be RelIable, hOWeveR, nO GuaRantee IS MaDe aS tO the aCCuRaCY OR RelIabIlItY. aS neW, CORReCteD OR upDateD InFORMatIOn IS ObtaIneD, It IS InCORpORateD IntO bOth CuRRent anD hIStORICal Data, WhICh MaY InvalIDate COMpaRISOn tO pRevIOuSlY ISSueD RepORtS. 294 oFFiCes in 61 Countries on 6 Continents 15 $48. 1 B i l l i o n i n annual trans action Volume | 1 .1 Billion sF Manage d | 1 2 ,7 4 9 Professiona ls

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