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LAS VEGAS-Industrial project completions outpaced net absorption in the third quarter, pushing vacancy up nearly a full percentage point, to 5.4% from 4.5% at the end of June, according to Applied Analysis, a local business advisory firm. The increase is generally welcome news for the market, which one year ago had an overall vacancy rate of just 3.5%, leaving far too few options for existing and prospective tenants, according to Applied Analysis principal Jeremy Aguero.

The greater Las Vegas market expanded by 2.2 million sf in the quarter, led by a 500,000-sf delivery at ProLogis Park North, multiple buildings at Cheyenne Industrial Center and a build-to-suit project for Get Fresh Foods. Net absorption during the quarter fell 1 million sf short of total new deliveries, and through the first nine months of the year net absorption stands two million sf behind new deliveries, which total 5.4 million sf and is poised to pass last year's record of 5.5 million sf.

"The industrial sector remains healthy with large-scale projects coming on line and a number of single-user developments under way; this level of expansion will have the industrial market reaching 100 million sf before the close of the year," Aguero says. "At the same time, vacancy rates remain below optimal levels [and]…a lack of vacant land suitable for industrial development…is depressing development pipelines, putting upward pressure on land prices and rents, and making the Las Vegas valley less competitive from an economic development standpoint. In absence of some intervention it is likely that these issues will become increasingly problematic after 2008."