"A significant amount of office condominium space has come on-line in the past several quarters primarily due to land price and construction cost escalations combined with favorable interest rates," Gordon says. "We have no expectation that this condition will repeat itself into the foreseeable future; and, in fact, there is increasing evidence that the tide may be turning toward a softer overall condition."

Class A space has the lowest vacancy at 4.9%, according to the report, while class C space has the highest at 10.9%. Slicing it by geography, the 16-million-sf City of Las Vegas market had the lowest vacancy rate at 7%, while Unincorporated Clark County, the largest market with 17 million sf, posted a vacancy rate of 10.6%. Vacancy in the City of Henderson, home to 5.3 million sf of office space, stands at 12.2%.

"Demand for space in the southwest portion of the Valley remains relatively healthy as employers have identified this area as a convenient location for both employees and customers," says Applied Analysis principal Jeremy Aguero. "On the other hand, softness has been reported in the north and southeast submarkets as accessibility and proximity to major labor pools may be impacting their performance."

Average asking lease rate growth continued during the quarter, reaching $2.21 per sf compared to $2.17 in the first quarter and $1.99 this time last year. The biggest jump in asking rates over the past year occurred in Unincorporated Clark County, where the average rate rose $0.25 to $2.15 per sf per month, a 13% jump. The most expensive market is the City of Henderson, where the average asking rate is $2.39, up 8% in the past 12 months. The average rate within the City of Las Vegas is $2.20, up 6.8% in the past year.

"We continue to see above-average rental rate growth in the speculative sector, while rising land and construction costs will continue to drive rates north on future projects," Aguero says. "New pricing levels have expanding and relocating firms paying premiums never before witnessed for quality speculative space."

Significant completions during the quarter included:

• The 100,000-plus-sf building at Rainbow Sunset Pavilion developed by Plise Cos. in the southwest submarket.
• Several buildings at Desert Canyon Business Park at the southwest corner of Interstate 215 at Russell Road.
• Space at Flamingo Pointe Corporate Centre on West Flamingo at Fort Apache.
• Office condominiums at the Park at Spanish Ridge developed by Glen, Smith & Glen Development along Interstate 215 north of Russell Road.
• Several buildings at the Sunset Post Medical Center in the southwest submarket.