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1/13/23
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Avison Young recently released its Fourth Quarter 2022 Las Vegas Office Market Report. Las Vegas has led the nation in its ‘employee return rate’ as it pertains to office space. Using December 2019 as a baseline, Las Vegas has 97.6% of its employees back in the office full-time, whereas the national average for this benchmark is just 46.3%. This has greatly offset long-term consequences pertaining to Las Vegas’s office real estate market.
Las Vegas’s economy is still rebounding following the Covid lockdown mandates. With the unemployment rate currently sitting at 5.7% heading into 2023, Las Vegas has lagged in relation to national benchmarks for unemployment. This is to be expected as Las Vegas’s top commodities are tourism and hospitality – both of which were highly impacted by the pandemic. However, Las Vegas’s rebound should not be overlooked as the rate has declined significantly from a high of 30.1% at the start of the pandemic.
“The Southwest and Summerlin submarkets continue to outperform all other competing submarkets within greater Las Vegas, with commercial office purchases well-exceeding the overall Las Vegas average $259 per square foot (psf) by $40 to $60 psf and higher,” said Barton Hyde, an Avison Young Principal specializing in the Las Vegas office sector. “The Howard Hughes Corporation continues to expand its office footprint within the Summerlin area with the completion 1700 Pavilion Center Drive, a 266k sf class A office property, and Summerlin South which will consist of two 73k sf class A office properties. Both properties demand full-service rental rates above $43.00 psf annually which is about 15% higher than all competing class A office properties.”
Due to Las Vegas’s favorable return to-office-numbers over the past year – the region has been able to offset major issues many other large markets have undergone pertaining to vacancy and negative net absorption in their respective markets. Total office vacancies have decreased to 13.8% at the end of the fourth quarter, down from last year’s rate of 14.8%. At the end of Q4, there was 3.3 msf of total vacant space in the market, down 6.7% from the year prior.
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