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Vegas Office Market at 10% Vacancy

LAS VEGAS-Vacancy in the seemingly insatiable office market is higher than this time last year, but absorption remains strong.

By Brian K. Miller | Updated on October 15, 2006

LAS VEGAS-According to Grubb & Ellis, the suburban office market here has added more than one million sf of office space in the past 12 months. In many markets, that would cause a significant bump in the vacancy rate. In Las Vegas, where 381,000 sf of net absorption occurred in just the past three months, the additions have raised the vacancy rate from 9.1% to 10%. Over the same period, class A asking rents have jumped to $29.98 from $27.67, an 8.3% increase, and class B rents have jumped to $23.93 from $22.49, a 6.4% increase, according to G&E.

Part of the reason for the boost in class A rates is its general lack of availability. Of the 24.25 million-sf suburban office market–which accounts for 95% of the overall office market–class A space totals just under six million sf. The lack of supply creates high demand, which has led to strong absorption of what does come to market. As a result, while overall suburban vacancy stands at 10% class A vacancy is nearly 300 basis points lower at 7.2%.

Not surprisingly, the addition of class A space is accelerating. On the heels of adding one million sf over the past 12 months, the market will add another 1.2 million sf during the next six months. With much of it already having been spoken for, any uptick in vacancy is expected to be short lived, according to the report.

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