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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. 

The Nevada rental housing market could turn the corner this year.

Apartment rent growth in the state’s two primary markets is expected to outperform both the United States and recent history in 2025.

The strengthening outlook comes on the heels of wheeling property performance over the past five years. Rent growth surged to historic highs in the 24 months following the onset of the pandemic before a wave of supply and faltering renter demand caused gains to slow precipitously and turn negative.

A slowdown in construction and a rebound in renters leasing apartments allowed rent growth to improve in 2024, a trend expected to continue this year.

Las Vegas rent growth to return to positive territory

Las Vegas is, by far, the largest multifamily market in Nevada with 193,000 apartments in its inventory today. As such, it has also been subjected to the largest multifamily boom in both the state and the history of the market.

At its peak, the multifamily construction pipeline in 2022 and 2023 reached a high of nearly 10,000 units under construction in Clark County, the principal county of the Las Vegas metropolitan area.

The supply-heavy situation in Sin City has understandably made for intense competition between owners of existing complexes, who have cut rents and offered concessions to woo renters over the past couple of years. As a result, rent growth in the Las Vegas multifamily market ended 2024 in the red, as it did the year prior.

Yet, the fall of rents in Las Vegas has been less dramatic than in other Sun Belt markets over the past two years, which have experienced an even more dramatic increase in new units than Clark County. This has left Las Vegas with a considerably smaller hole from which it must dig itself out, at least compared to peer markets in the Southwest, such as Austin and San Antonio in Texas as well as Phoenix.

With roughly 4,000 units under construction as the first quarter of 2025 comes to a close, the supply situation in Las Vegas has moderated substantially. This should lead to a shift in the balance of pricing power between landlords and tenants, with owners regaining some ability to push rents this year and the next, at least on a nominal basis.

Reno apartment recovery in full swing

The pace of rent growth is poised to accelerate in the Reno multifamily market this year as steady underlying demand drivers and a drop-off in new construction support gains.

More than 4,500 net new apartments were completed in 2023 and 2024 combined, the largest two-year period of inventory growth on record. This supply-driven increase in competition caused rent growth to turn negative in 2023, and a historic rebound in renter demand was needed to keep growth positive in 2024.

Looking to this year, less than 1,000 units are now underway in Reno, less than half of which are scheduled for completion in 2025.

The easing of supply-side pressure is expected to drive an improvement in market-wide apartment occupancy, providing landlords with ample leverage to push rents.

As a result, the average asking rent is forecast to rise 3.4% in the Reno apartment market in 2025, outpacing the 2.6% gain expected for the U.S. This would also mark the strongest annual increase since 2021 and could indicate the market is on a sustainable road to recovery.

Source: CoStar Analytics