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Office Vacancy Holds Steady But Set to Rise

LAS VEGAS-New supply was met with nearly equal demand in the second quarter, an unlikely scenario in coming quarters, according to a new report.

By Brian K. Miller | Updated on August 20, 2007

LAS VEGAS-Overall office vacancy in the Las Vegas Valley held steady at around 11.5% during the second quarter but is expected to see increases in coming quarters as new supply increases its lead on demand, according to the latest office market report by Applied Analysis, a locally based research and consulting firm.

The market expanded by 883,000 sf during the quarter-including a 240,000-sf building at 3883 Howard Hughes Parkway in Hughes Center-while market demand (net absorption) totaled 820,000 sf. Applied Analysis now tracks 1,700 buildings totaling 43.2 million sf. Looking forward, Applied Analysis research shows that projects under construction will expand the market by an additional 3.1 million sf over the next several quarters. Demand is not expected to keep pace and rents are expected to stagnate, according to Applied Analysis principal Brian Gordon.

“Following a rise in vacancies to normalized levels, the southern Nevada office market has managed to maintain stability during the second quarter, a condition that will not likely continue,” Gordon says. “The amount of forward-looking supply remains robust and will outpace the amount of demand in the near term.”

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