The population and employment figures for Las Vegas jumped by more than 7% and 8%, respectively, in 1994 according to Perspective, a market research publication issued by the nonprofit Metropolitan Research Association. The report also said more than 28 million individuals made visits to the city, representing an annual increase of 19.9%. As tourists, they spent over $19 billion.
"We look at the next 5 years and we continue to see pretty consistent activity in the market with no major slowing down," says Charlie McPhee, senior vice president of marketing and leasing for the Howard Hughes Corp.'s commercial and industrial division
Hughes is among the active players in the commercial area. "We have two office properties being built on spec right now," says McPhee. The largest is 3773 Howard Hughes Parkway in Hughes Center, which will bring 165,000 sq. ft. to the market when completed in October.
Summerlin also is seeing a substantial amount of growth.
Lee & Associates keeps tabs on more than 240 office buildings located in seven submarkets in the Las Vegas metro area. The information is gathered from listing brokers, management companies and landlords.
In first quarter 1995, Lee & Associates reports a market base of 9,767,250 sq. ft. and a vacancy factor of 9.32%. "That translates into 910,650 vacant sq. ft.," according to Chuck Witters, senior vice president at the company. At year-end 1994 the city had 806,000 sq. ft. vacant.
Witters says lease rates have remained firm and are "easing upward on an effective basis. Few, if any, concessions are being given to tenants."
Witters' research shows approximately 542,000 sq. ft. under construction, but practically all of it is close to 100% preleased or will be leased upon completion.
He also notes an additional 268,000 sq. ft. is being planned or developed for late in the year or early 1996.
Perry Muscelli, senior vice president of CB Commercial, is impressed with growth in the area of build-to-suit. "This could be a record-breaking year, certainly over the next 12 months in terms of the number of square feet being built."
Also at Lee & Associates, industrial and investment specialist Steve Spelman is heavily involved in helping companies relocate to Las Vegas. CEOs are "looking not only to locate in a business friendly community, but also in an area with an affordable style of life that is an incentive to members of the corporate family." He says highly efficient computer networking will streamline the warehousing/distribution process.
Spelman says the true vacancy rate in the 32 million sq. ft. of quality product is "probably closer to 1%." Anticipated development of spec product for this year is at 1,250,000 sq. ft. "Projections call for more than 3,000,000 sq. ft. of absorption, tightening an available inventory base."
Kit Graski, senior associate and retail specialist with CB Commercial, says all areas of the city are doing well. "Green Valley (in the southeast) and Summerlin (in the far west) are promoting the growth of retail. In Green Valley we have the Galleria at Sunset Mall now under construction, scheduled for completion February of 1996. It will include Dillard's, Robinson-May, JCPenney and Mervin's and have approximately 900,000 sq. ft. in the first phase, and 300,000 sq. ft. in the second phase.
Retailers are flocking to Las Vegas, and the city has or soon will have Best Products, Best Buy, Home Place, Cost Plus, Blockbuster Music, Linens and Things, Good Guys, Montgomery Ward Electric Avenue and others.
The Green Valley area, legally and geographically a part of Henderson, is experiencing "an unprecedented rate of commercial development," according to representatives of American Nevada Corp. (ANC), a Greenspun company and primary developer of the community.
Alan Perlmutter, senior vice president of commercial development for the company, says ANC is developing more than 500,000 sq. ft. of commercial space, "excluding areas where we have sold parcels or leased land for projects that other companies are developing." ANC reports occupancy rates in excess of 90% at all of its commercial properties. He cites rapid population growth as the major factor behind the recent surge of development.
The Green Valley Corporate Center is a planned 250,000 sq. ft. Class-A office park on a 90-acre site adjacent to a proposed beltway. The first phase is a two-story, 50,000 sq. ft. building, completed in May of this year. Perlmutter says 47,000 sq. ft. has been preleased and prelease negotiations are in progress for the second phase of the center, a twin two-story 50,000 sq. ft. project that will begin construction late this year.
Reno and Sparks
In Reno and Sparks at the northern end of Nevada, Chris Nelson, principal with Trammell Crow, is bullish about industrial growth. "In 1995 there will be about one million square feet of new spec under construction," says Nelson. Of that, about 800,000 sq. ft. will be completed by year end, including Security Capital's new 240,000 sq. ft. development.
Dave Morze, market officer for Security Capital, says his firm also initiated work on the new 55-acre, 1.1 million sq. ft. Golden Valley Industrial Park in Reno. "It's speculative, but we are preleasing."
Missy McQuattie, leasing manager for Heitman Properties Ltd. in Reno and president of the Northern Nevada chapter of NAIOP, says, "Industrial is still very strong in Reno and Sparks. Last year we were seeing activity toward the east, but this year we're seeing growth toward the south." Also, "There's been a real trend toward large users, 50,000 sq. ft. and up, and expansions for existing companies," says McQuattie.