Office
A recent report from Applied Analysis indictes that the vacancy rate in the office market in Southern Nevada is climbing. That marks the fifth consecutive quarter that vacancies have increased and it looks like it will continue. According to Brian Gordon, a principal of Applied Analysis, “While the office market’s performance during the majority of 2006 reflected a relatively healthy environment, it is now showing clear signs that a materially softer condition is likely to prevail in 2007.”
On a positive note, the demand for Class A office space continues to be high. The vacancy rate in the fourth quarter of 2006 for Class A space was 5.2% whereas speculative space softened to 11.9%. Average asking rents also increased over the previous year by $.15 to $2.29 per square foot triple-net in 2006.
As a whole, the office market in Southern Nevada grew to 41 million square feet in the fourth quarter with another 4.2 million square feet of new space under construction. This represented an additional 3.7 million square feet constructed since 2005. Another 4.7 million square feet is planned for future development.