Real estate:

Developer breaking ground on an office project — a rarity these days

VEGAS INC coverage

With office construction at a near standstill, a Las Vegas developer is breaking ground this week on a project for a residential brokerage firm.

Stable Development executives plan to start work on a three-story, 47,000-square-foot office building near the corner of Horizon Ridge Parkway and Seven Hills Drive in Henderson.

Its main tenant will be Prudential Americana Group Realtors, one of the largest brokerage firms in Southern Nevada.

Site preparation could start as soon as Wednesday at what is now a paved parking lot. A groundbreaking ceremony is scheduled for Thursday, with other work starting that day, as well, said Gordon Miles, Prudential Americana chief operating officer.

Construction is scheduled to finish by late November.

The project is a small, needed boost to the valley’s construction business that comes amid soaring office-vacancy rates and sliding rental rates.

Las Vegas’ office market, one of the worst in the country, had a record 26 percent vacancy rate in the three months ending March 31, up from 25 percent a year earlier, according to local research firm Applied Analysis. The average asking rent was $1.87 per square foot last quarter, down from $1.94 a year ago.

Rental rates have dropped for 15 consecutive months and are down 21 percent from their peak, in the second quarter of 2008.

Developers and lenders are largely avoiding such projects.

Just two office buildings were under construction locally last quarter, according to Applied Analysis, and both were downtown: the 11-story Federal Justice Tower, a government project, and the four-story Robert T. Eglet Advocacy Center, which will house law firms.

Prudential Americana has about 1,000 agents locally and will put 375 of them in the new headquarters. They will be joined by 60 support staff and about 30 people who work for Equity Title of Nevada, which is half-owned by Prudential Americana, Miles said.

Despite the vast amounts of empty office space in the valley, moving into a new building will lower the brokerage firm’s utility costs, given that it will have more efficient heating, ventilation and air conditioning systems, Miles said. The firm also can design the interior from scratch and doesn’t have to deal with remodeling efforts.

Stable already built an office building next to the project site and, according to Miles, was waiting to land a tenant before starting another one.

“That helps greatly when you’re trying to get financing,” he said.

A spokesman for Stable did not return a call for comment.

Tags: Business