The commercial real estate market continues to evolve, drawing significant attention at the recent breakfast hosted by NAIOP Southern Nevada.
The event, titled “Deal, Dirt and Development: Southern Nevada Brokers Driving Growth,” featured key industry experts discussing the intricacies of breaking ground, closing deals, and realizing ambitious projects in the region.
Among the speakers were Jason Otter, founding partner at LOGIC Commercial, who shared insights on retail; Tonya Gottesman, a vice president at CBRE, focusing on the office sector; and Chris Lexis, a principal at Avison Young, who spoke on industrial real estate.
The program was moderated by Terri Sheridan, economic development director for the city of North Las Vegas.
Gottesman observed that the office sector has remained consistent, particularly in the southwest region, which has seen significant development due to its advantageous location between Summerlin and Henderson along the 215 Beltway.
“Projects such as Narrative, UnCommons, and Centra Point have performed remarkably well for our community and market,” Gottesman noted.
In Henderson, although the developments are older, there is still active sales to owners and users, indicating a resilient market.
While investor interest in the Las Vegas office market appears limited, Gottesman mentioned some activity in the southwest, though many properties face challenges in attracting investors who need a favorable financial situation to move forward.
On the topic of industrial real estate, Lexis highlighted the southwest area where newer buildings under 50,000 square feet are gaining momentum.
Lease rates in this sector are increasing, with some buildings now commanding prices around $3.50 per square foot.
However, Lexis pointed out a disconnect between sellers and investors, with substantial capital remaining unutilized in the current market.
Otter provided his perspective on the retail landscape, indicating that investors prioritize cap rates and tenant quality over specific corridors.
Even so, transaction activity remains subdued, creating an environment where capital is waiting for favorable buying conditions before entering the market.
“I’ve never seen so much capital on the sidelines, not just from private investors, but institutional ones who are very optimistic about the market,” Otter remarked.
There is anticipation for prospective growth zones as tenants today are more focused on proximity to residential areas and density.
The southwest and west Henderson are identified as promising markets, while Skye Canyon in the northwest valley represents an expanding corridor, exemplified by the success of new retail entrants like Aldi.
Gottesman added that there is a pressing need for more land for office buildings in Las Vegas, with medical office spaces being a significant opportunity.
Hospital systems are actively developing nearby facilities as they possess land adjacent to their properties.
“We’re seeing Intermountain build pediatric clinics, and Optum has acquired a building in Henderson for clinical services,” Gottesman shared.
Additionally, the Culinary Union is investing in a 100,000-square-foot building for medical providers, indicating a robust opportunity for medical office growth, despite the challenges in attracting providers to Las Vegas.
Sheridan also noted that the city of North Las Vegas is looking to develop 135 acres next to the Veterans Administration hospital, with discussions ongoing for surgical centers, medical office buildings, and potentially a hospital campus.
“North Las Vegas currently lacks a general services hospital, and we aim to address that need,” Sheridan stated.
She expressed optimism about the development potential in the area over the next decade, expecting significant progress on the designated lands.
In conjunction, efforts are being made with the Bureau of Land Management to facilitate more land sales for commercial use.
Lexis emphasized that there are opportunities across the valley for in-fill properties and encouraged local municipalities to revise their master plans and zoning regulations to support commercial use.
He identified areas like Eldorado Valley, Jean, Sloan, and Apex in North Las Vegas as places where infrastructure development could lead to abundant possibilities.
“Once infrastructure is established, there are tremendous opportunities in these areas,” Lexis said.
Otter commented on expectations for retail development, predicting little new construction aside from larger grocery retailers and single-tenant establishments.
He mentioned a potential Walmart development in North Las Vegas as an example of this trend.
The challenges of high land and construction costs continue to hinder the growth of new retail spaces.
“The rents that developers require are simply too high, especially when many retailers are witnessing declining sales, not just locally but nationwide.
They are unable to meet the rising rent demands, which complicates the retail landscape,” Otter explained.
Additionally, retail owners face considerable debt challenges as loans come due in the next 16 to 18 months, and many are reluctant to inject new capital into existing deals.
Instead, some owners may opt to sell their assets, capitalizing on their equity rather than reinvesting.
“Many retailers and restaurants thrived during the boom from 2000 to 2006, but now those establishments, often tied to long-term leases, are reconsidering their space and expense structures,” Otter noted.
As many of these older establishments look to downsize, the opportunity for newer retailers and restaurant expansions in Las Vegas remains ripe.
In summary, the NAIOP Southern Nevada breakfast provided an invaluable platform for discussing the current landscape and future opportunities in commercial real estate, highlighting both the challenges and growth potential across Southern Nevada.
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