Vegas Office Vacancy Rises Past 11%

LAS VEGAS-Second quarter net absorption in the office market totaled 916,000 sf while new deliveries totaled 1.2 million sf, pushing the Valley-wide office vacancy rate up 20 basis points to 11%, according to a report from the locally based advisory firm Restrepo Consulting Group LLC and the local office of Colliers International. Supply has outpaced demand for four straight quarters. One year ago, vacancy was 8.7%.

The overall market now has 36.6 million sf of inventory in 1,820 buildings. The highest vacancy rates are in the high-growth submarkets such as North Las Vegas, Airport, Henderson and the Southwest, according to the report.

Despite the rise in vacancy over the past year, asking rents have continued to rise…until now. After seven consecutive quarterly increases, the Valley’s average monthly asking rent in the second quarter remained unchanged from the previous quarter at $2.51 per sf (full service gross). When the consecutive increases began in the third quarter of 2005, the asking rate was $2.12 per sf, according to the report.

The rise in vacancy is not occurring across the board. A new report by CB Richard Ellis finds that Las Vegas CBD had the third lowest office vacancy rate in the nation at 8.5%. The Colliers-Restrepo report pegs the Downtown office vacancy rate at 7.3% but may have different criteria for what is considered part of the Las Vegas CBD.

Looking ahead, another 1.4 million sf of office space is under construction, mostly in the Southwest submarket, and an additional 4.4 million sf is in the planning stages, according to the report.