Mattox: We have invested in Las Vegas since 2012 shortly after the financial crisis. At that time, assets were trading at deep discounts to replacement cost, and both property and economic fundamentals were still in a state of flux.

Fast forward to today: Las Vegas is experiencing significant new construction activity, particularly in North Las Vegas. This construction is largely confined to “big-box” product targeting large regional distributors and not the incubator and mid-bay product in which we see value. New incubator and mid-bay product has not been built since 2006. Rents for this product type are still below those needed to justify new construction.

We are still around 30% below former peak rents valley wide. For these reasons, we feel there is still room for rents to continue to grow. The Las Vegas strip is a very unique demand generator, and with the Raiders making a new home adjacent to the strip, this dynamic will only become more pronounced. New construction on the Las Vegas strip, either in process or imminently scheduled, equates to more than $14 billion. This has an enormous tangential effect on industrial activity in particular and economic activity in general.

GlobeSt.com: Regarding Gibson Tech Center, what attracted the call-center operator to the property, and what was your company's approach in repositioning this asset to attract high-quality tenants of this caliber?

Mattox: I can't speak for the tenant, but I believe that the appeal to the property from the tenant's perspective was the fact that the building was both freestanding and had an 8:1 parking ratio, and it was effectively a blank slate on the interior. This allowed them to create a floor plan that was uniquely suited to their business model and did not require any adaptation to existing improvements.

Because we are relatively new to the call-center space, I don't speak from considerable experience; however, we did find in talking to existing operators that Las Vegas is desirable due to its location in the Western time zone, the state's business-friendly atmosphere, and its abundant labor pool. These factors, combined with a functional building that was able to be modified to suit the needs of the tenant, allowed us to capitalize on this demand.

GlobeSt.com: As the Las Vegas market continues to accelerate from a market recovery to a market with meaningful growth, what do you believe will move the market forward?

Mattox: As it relates to industrial absorption, there are several factors driving many corporate tenants to set up regional distribution centers in Las Vegas.

Many are coming to Las Vegas due to the availability and affordability of labor, favorable outbound transportation costs, same/next day proximity to major population bases in California and a less stringent regulatory environment. These benefits, combined with the obstacles in coastal states with higher land costs, labor fees and compliance costs, are driving incremental demand to Las Vegas.

Secondly, as I have mentioned, the new construction on the Las Vegas strip and the new Raiders stadium both will have a positive impact on growth in the valley. The number of large and small companies that are directly and indirectly involved with the Strip and the tourism sector has always been staggering to me.

GlobeSt.com: What are your firm's plans and investment strategy for 2018?

Mattox: Our investment strategies do not really change from year-to-year. We are pretty narrowly focused on small and medium-sized multi-tenant and single-tenant industrial properties. We will also selectively invest in office properties, but typically have a shorter investment horizon for this type of asset.

We have had an active couple of years as a company, and while we remain bullish on Las Vegas in the long term, we have seen a large run-up in pricing in the last six to 12 months. Additionally, the spread in cap rates from Las Vegas to other western markets has compressed considerably.

Our initial attraction to Las Vegas was that we felt the available yields were priced to reflect a risk that we didn't necessarily feel was warranted at the time. This “risk premium” has pretty well disappeared. With that said, we plan to continue to invest in Las Vegas and feel that the demand generators and “runway” for further rent growth remain favorable.