Businesses attracted to Southern Nevada’s industrial space help diversify area’s economy

Jerry Doty, a commercial real estate professional (senior vice president) with Colliers International in Las Vegas poses for a photo Friday, Sept. 30, 2022.

Last year, Novva Data Centers started building a 275,000-square-foot warehouse on 20 acres in North Las Vegas.

The facility—expected to cost about $400 million—will eventually house computer servers, routers, switches, storage systems and other information technology components.

When the announcement for the complex was made, Wes Swenson, founder and CEO of the Utah-based company, called North Las Vegas an ideal location for a data center, partly because of its proximity to California and regional markets.

The announcement was a win for North Las Vegas and its effort to build out a burgeoning industrial area. It also underscored the growth of the region’s industrial real estate market.

Jake Higgins, senior vice president for commercial real estate services and investment firm CBRE Group Inc., said the local industrial market has been “very active” since about 2015.

“We have about a 150 million-square-foot base here in Las Vegas,” Higgins said. “In 2015, we were at about 110 million. We’ve seen a lot of construction and completed deliveries during the past few years.”

The area has about 13 million square feet of industrial space under construction, Higgins said. Securing industrial space here can be difficult, with a vacancy rate of less than 1%, he said.

Hot spots include North Las Vegas, which Higgins said is the biggest industrial submarket in Southern Nevada, Henderson and the southwest Valley.

Much of the activity revolves around companies from tech hot spots in Southern California and the San Francisco Bay Area.

But companies from east of the Rocky Mountains have also taken notice of Las Vegas, Higgins said. That’s partly because of Nevada’s favorable business tax structure and because it’s only a few hours from major ports in Southern California.

“Las Vegas has really become a West Coast distribution hub,” Higgins said. “A lot of companies are relocating or moving parts of their business here to service the West Coast. You can day-service 14 states from here and can cover roughly 25% of the population.”

Because space is at a premium, costs to lease industrial spaces have also been rising.

The average lease rate ask in the Las Vegas market was $1.11 per square foot during the second quarter of this year, according to CBRE’s research team.

That was up 7% from the previous quarter and more than double the lease rate ask eight years ago.

“We’ve been hearing for a number of years about companies wanting to move out of California, but I think many kind of dragged their feet,” said Jerry Doty, a Las Vegas-based senior vice president for Colliers International’s industrial division. “COVID has helped take that to a level we’ve never seen before.”

In the past, much of the industrial space in the Valley was gobbled up by companies in the hospitality service and construction sectors, Doty said.

Today, Las Vegas has a more diverse base of businesses, he said.

Amazon has invested in multiple facilities in the Valley, and Google in 2019 broke ground on a $600 million data center in Henderson.

But a number of local companies have grown or have plans to expand.

Fohse, a company that makes specialized light systems for cannabis grow operations, and Boxabl, which makes durable tiny homes, have announced expansion plans here.

“We’ve diversified the tenants here to where, even if we were to have an economic slowdown, the industrial market is diverse enough to not be impacted as much,” Doty said. “The bulk of what we’ve seen has been distribution, but we’re also seeing lots of manufacturing, printing companies, aluminum can manufacturing and other sectors.”

In Southern Nevada, however, there are two big questions that come up whenever expansion is mentioned: What land is available for new building and how much water will be used?

“We don’t have a lot of room to grow,” Doty said. “Five years ago, we used to point to the Apex [Industrial Park] at the far northern point of the Valley and say that maybe that will start delivering in 10 years. Because of our growth, though, we’re pushing Apex faster than anyone thought we would.”

The Apex park features more than 7,000 acres of developable land, according to North Las Vegas officials. But Doty said the southern portion of the development is nearly bought out.

“Developers are starting to look to places like Jean and Sloan,” Doty said. “We’re going to those boundaries. Maybe next we’ll see development talked about for places like Pahrump and Mesquite. Not long ago, we were saying that was 20 years away, but that might not be the case now.”

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This story appeared in Las Vegas Weekly.

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