Net absorption in 2024 set a new benchmark in Las Vegas, however, most of the occupancy gains were in assets built in 2023-24. Market participants have observed many renters in older vintages taking advantage of generous concessions at newly built projects, which can range from four to eight weeks of
free rent. The vacancy rate slightly compressed in the past year but remains elevated at 9.9%, relative to the long-term average of 8.0%.
Unrelenting supply pressure is the most prominent factor driving the rising industrial vacancy rate in Las Vegas. Approximately 14 million square feet delivered in 2024, 50% higher than the previous annual all-time high. The pace of completions has decelerated sharply since 24Q1, when over 5 million SF delivered, reverting closer to the historical quarterly average by the fourth quarter.
At 9.3%, the vacancy rate has been rising since mid-2022 and is above the historical average of 7.2%.
At 10.6% as of 25Q1, Las Vegas has one of the lowest vacancy rates among major U.S. metros. The trend of large-scale negative absorption in many office markets has not played out here. The local economy's
dependence on the leisure hospitality sector and minimal tech exposure have served as a buffer against national downsizing trends. Office-using employment growth played a considerable role in Las Vegas' economic rebound post-pandemic and underpinned consistent demand for office space.
The Las Vegas retail market is as competitive as it has been in nearly two decades for tenants seeking space. The availability rate is 5.4% and the vacancy rate is 5.1%, both 17-year lows, as demand has consistently nullified supply pressure. Leasing activity has decelerated from its peak in 2021, primarily due to the lack of available space that meets
tenant requirements. The roughly 2.6 million SF of leased space last year was the lowest in 15 years, and Las Vegas is on pace to post similar numbers this year.
Tourism is the main economic driver in Las Vegas, as the destination is famed for its gaming industry, nightlife, convention business, events, and expanding sports destination. Las Vegas is the nation's largest hospitality market by room count and still achieves the third-highest 12-month average occupancy in the U.S., only trailing New York and Oahu. Driven by leisure and group demand, the 12-month occupancy through February was 78.7%. In 2024, RevPAR is projected to increase by approximately 8%, lifting occupancy above 80% and ADR above $200, a historic peak. The market is boosted.
by hosting mega events such as the Formula 1 Grand Prix race and the 2024 Super Bowl.
The Boring Company, a tunnel construction firm founded by billionaire Elon Musk, is expanding a major underground transportation project in Las Vegas and adding a corporate location in Austin, Texas, as the startup tries to test superfast hyperloop transit across the United States that could eventually affect real estate development.
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Tom Naseef | (702) 737-8000 | BS.016103
Naseef Commercial Services
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