Increased construction activity and user demand for locations with good freeway access and visibility — especially in regard to U.S. 95 and Interstate 215 — are the most visible trends in Las Vegas’ office market, according to CB Richard Ellis.

“Development and user interest continue to evolve along the I-215 corridor from the southeast to the northwest,” says CB Richard Ellis senior vice president Brad Peterson, who lists airport access and central location between these submarkets as factors spurring the development direction. Major developers planning or building office projects along this corridor include American Nevada Company, Thomas & Mack Development Group, EJM Development, Centra Properties and Pageantry Development.

Although still predominantly a lease market, the Las Vegas office sector is experiencing a greater tenant demand for ownership due to continued low interest rates. This has driven the development of master-planned projects that subdivide into small lots, ranging in size from 4,000 to 10,000 square feet. “Several developers are seeking to capture this pent-up demand for ownership by small and mid-size tenants,” says Peterson.

Also, more out-of-state companies are expanding into the area as the nation’s economy improves. Centra Properties; Pageantry Development; Vescorp; Glen, Smith and Glen Development; and Shea Development are office developers new to the Las Vegas area.

The southeast submarket leads the Las Vegas Valley in new office construction and absorption. In the area, American Nevada Company has developed the 830,000-square-foot Green Valley Corporate Center, a 90-acre master-planned office park, and the Green Valley Corporate Center South, an 85-acre master-planned office park consisting of approximately 554,000 square feet with an additional 200,000 square feet planned.

IADT closed recently on a 50,000-square-foot lease at Green Valley Corporate Center South. Devry University and 7-Eleven are leasing 18,500 and 27,000 square feet, respectively, at the center. Elsewhere, Culinary Institute has committed to 58,000 square feet of space at The Crossing Business Center in Summerlin.

The northwest submarket posted the lowest office vacancy rate (8.15 percent) in the entire valley at the close of 2003. The Howard Hughes Corporation’s enormous master-planned Summerlin project there includes 1.1 million square feet of office space. The Crossing Business Center, Summerlin’s first business center, features multi-tenant office buildings totaling 245,000 square feet of space.

Class A office rents in Las Vegas range from $2.15 to $2.90 per square foot. According to CB Richard Ellis, Las Vegas’ overall vacancy rate in the office sector was 14.72 percent as of the end of 2003. While the airport and northwest submarkets posted the lowest vacancy figures, the southwest registered the highest vacancy rate (26.38 percent).

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