Though many major U.S. cities may be seeing lower demand for office space as remote and hybrid workplaces increasingly become the norm following the COVID-19 pandemic, experts say the commercial real estate market in Las Vegas is still going strong.
Office vacancy in Las Vegas is lower than traditional rates, said Marc Magliarditi, a first vice president at the commercial real estate firm CBRE. Magliarditi attributed the growth of tenants in Las Vegas office buildings to the expansion of professional sports in Southern Nevada, and the fact that it’s a more suburban market than cities that may rely heavily on public transportation.
“We’ve been fortunate here in Las Vegas,” he said. “That demand has been pretty steady, and I would even say strong … post-pandemic.”
Las Vegas is a growing, tax-friendly community with a good climate, which are just a few factors that might make it enticing for potential office tenants, said Jeff LaPour, founder and CEO of LaPour Partners.
The Valley’s increasing population, strengthening economy and short supply of office space also are driving high demand, he said.
“You have companies that are growing,” said LaPour, who is also a member of NAIOP, the Commercial Real Estate Development Association. “You have companies that are relocating from California or other parts of the country, and they have a need for space.”
Employers are also making bigger investments in new and improved office space, he said, in an effort to recruit and retain employees after the pandemic. This means newer, nicer office buildings are going quick.
Easy parking, multiple access points into the building, natural light, walkability and more are just a few of the amenities that companies are looking for in office buildings, LaPour said. Mid-sized buildings that are easily navigable make a big difference, he said.
“The market’s very good,” LaPour said, adding that tenants are paying some of the highest rates Las Vegas has ever seen. “There’s been pent-up demand, and there’s great credit tenants—good absorption. But you have to have a brand new, Class A building that’s desirable. If you don’t, then you’re gonna have trouble.”
Small business has a great impact on suburban markets when it comes to commercial real estate, as well, said Wes Drown, treasurer of Commercial Alliance Las Vegas. In spite of inflation and economic headwinds, he said, small businesses are not stopping or slowing down.
“We forget about the American spirit,” Drown said.
Many companies nationwide are downsizing as a result of fewer people coming into the office. Drown pointed to a Las Vegas medical center looking to downsize, now that much of its marketing staff is enjoying working from home.
“And that’s an example of an adjustment that’s just kind of starting to make sense to them, because they’ve had enough time trying it both ways post-COVID,” he said. “But, for the most part, we’re seeing small businesses not being impacted to the extent that we have a lot of vacancy.”
Drown said demand for office space will likely remain high in Las Vegas going forward, but will become more of a challenge as there’s increasingly less available to lease or buy.
“We have almost no new construction, just a couple buildings,” he said. “So I expect we’ll continue to see increasing rent rates because there’s not enough product and there’s not enough land, frankly, to build enough products.”
LaPour said he’s confident the commercial real estate market will continue to bounce back from pandemic lows, although much of the older office space that has become obsolete over time will have to be torn down or repurposed and ultimately given “new life.”
“I do think that the market for office will come back,” he said. “I was never a believer that office is dead.”
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