Demand Wanes for Las Vegas Office Space

LAS VEGAS, Nov. 13, 2009 — Office market fundamentals in Las Vegas are expected to deteriorate further through 2009, as the effects of deep payroll cuts continue to diminish space needs, resulting in sizable amount of sublease product returning to the market, according to a fourth-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

 Given the severity of downturn, firms that operate in multiple sites are increasingly beginning to consolidate operations.

“Office deal flow in Las Vegas has decelerated over the past year and will likely remain light until a greater number of lender-owned assets come to market,” says John Vorsheck, (top right photo) regional manager of the Las Vegas office of Marcus & Millichap.

 

Following are some of the most significant aspects of the Las Vegas Office Research Report:

•  Total employment in Las Vegas will retreat by 57,000 jobs this year, or 6.4 percent. Office-using employers are expected to trim 7,400 positions, a 4.5 percent decrease.
•  Developers are scheduled to bring 893,000 square feet of new office space to the Las Vegas metro in 2009, after nearly 1.1 million square feet was added last year. Deliveries have averaged almost 1.3 million square feet annually during the past five years.
• A slowdown in the formation of new companies, coupled with expectations for further downsizing, will push up vacancy 510 basis points to 24.2 percent this year. In 2008, vacancy increased 570 basis points.
•   In 2009, asking rents in the Las Vegas market are forecast to drop 5 percent to $24.75 per square foot, while effective rents are on pace to retreat 8.6 percent to $18.88 per square foot.

 For a copy of the complete Las Vegas Office Research Report, as well as reports on other markets nationwide, visit our website at www.MarcusMillichap.com.

 

Press Contact: Stacey Corso, Communications Department, (925) 953-1716