Why Is It Difficult to Find Industrial Property in Las Vegas?

industrial property

Due to the increase in online shopping behavior, shipping and fulfillment is in greater demand in addition to the myriad other uses for warehouses. With this in mind, industrial property seems to be a targeted investment for many investment groups.

Unfortunately, the availability of industrial property does not meet the demand, making it difficult for investors to find vacant properties to lease as well as for companies to acquire industrial buildings for investment.

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Why is it Difficult to Find Industrial Property in Las Vegas?

In Las Vegas especially, investors and businesses are facing competition in the real estate hunt, and here are a few reasons why:

1. The Vacancy Rate for Las Vegas Industrial Property Is At 2%

The vacancy rate is the amount of available (vacant) property within a certain category. At 2% vacancy rates we are at historic lows, and there is a pent up demand from prospective tenants, driving up lease rates. With the increased rates, values of industrial properties have risen and outpaced other commercial sectors.

While a low vacancy rate benefits investors already established with industrial property, there is likely not enough industrial real estate to satisfy demand for investment purchases. Subsequently, companies in need of property have a limited market to choose from. The property that is available will be on the market for a high price. The Las Vegas market is still considered a “growth market” in the industrial sector.

Related: What Is the Current Cap Rate in Las Vegas?

2. New Construction Commenced in 2019 For the First Time Since 2008

With the current state of the market, the only way to increase the vacancy rate is by building more properties. More construction generates more supply, resulting in higher vacancy rates and more opportunities for investors and end user buyers.

However, new construction has not happened in Las Vegas, in any significant amount, since 2008. Despite growing demand, the total amount of industrial space had been frozen for more than a decade, with 2019 marking the 1st launch of new activity. With the sizable amount of new construction started in 2019, we are expecting to see normal vacancy rates.

Related: Is Commercial Real Estate a Good Investment in Las Vegas?

3. Demand For Warehouse Space Has Increased

As a highly populated city on the West Coast with favorable tax laws, Las Vegas is a prime location in which to station warehouses for shipping and fulfillment. As demand increases, potential investors look to capitalize on that demand. Many industrial properties have been leased by large tenants such as Amazon, taking a significant amount of space and causing a severe decrease in available property, spurring the need for new construction.

Investors and companies searching and failing to find available industrial properties can benefit from the help of a commercial real estate broker to secure the best solution for their needs. A broker who is intimately familiar with the market and the buildings in each submarket can identify opportunities that have not come to market or which have the largest potential for future growth. By working with an experienced broker you can trust, you can obtain the best deal on the market for your business needs.

Crown Point 2019 Market Report

    Gidget Graham

    GIDGET GRAHAM has over 25 year of real estate experience, from commercial investment properties (sale, lease and management) to residential and commercial development projects, land planning and zoning, to servicing her real estate clients providing the maximum return for investment and long term strategic real estate asset planning. She is current the President of Berg Builders; Managing Member / Broker of Crown Point Commercial Real Estate NV and Managing Member for Crown Point Realty Az. In addition, Mrs. Graham also holds management/ownership in several other entities and serves on Boards as an advisory Director.

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