The Nevada Independent

Your state. Your news. Your voice.

The Nevada Independent

As online retail grows, Southern Nevada warehouse space emerges as hot commodity

Jackie Valley
Jackie Valley
A sign for an Amazon distribution center, including the company's logo

Two major developers took the plunge several years ago and constructed massive, speculative industrial buildings in the Las Vegas Valley.

They didn’t sit empty, hinting at the burgeoning demand for industrial warehouse and distribution space in the region. The growth and popularity of e-commerce, which forces retailers to find warehouse space for their goods, is driving the trend as companies increasingly eye Southern Nevada as a prime location for their operations, a group of commercial real-estate brokers said Tuesday.

“We’re still playing catch up,” said Kevin Higgins, executive vice president of real-estate firm CBRE. “Others now saw that we were building 400-, 500- and 800,000 square feet and saying, ‘Las Vegas, certainly we need to take a look at that as a potential place for us to relocate.’”

Fanatics, a clothing and merchandise company, has a 400,000-square foot distribution center at Northgate Distribution Center. The campus is seen on Tuesday, July 18, 2017. Photo by Jeff Scheid.

During the last 12 months, companies such as Amazon, Walmart, Bed Bath & Beyond, Fanatics and The Honest Company have set up — or announced plans for — warehouse or distribution centers in North Las Vegas, buoyed by the region’s central location to several western states and 60 million people.

“The Las Vegas story is quite compelling,” said Darin Mellott, director of research and analysis for CBRE’s southwest region. “We’re seeing that show up in numbers.”

For starters, the Las Vegas metropolitan area is about 40 percent the size of the Phoenix market, but both cities have about 4.6 million square feet of industrial space under construction, he said. Sixty percent of that space in Southern Nevada has been pre-leased.

In the second quarter of this year, the industrial vacancy rate dropped to 4.4 percent in Las Vegas and net absorption exceeded 1.1 million square feet, CBRE officials said. Those numbers, in part, could push the region to a record year in terms of new construction and net absorption, which refers to the total new square footage leased by tenants.

Nationwide, the vacancy rate is at its lowest point — 4.6 percent across 13.5 billion square feet of industrial products such as warehouses, distribution centers, manufacturing buildings and flex space, said David Egan, CBRE’s global head of industrial research.

“It really puts into perspective how strong the market has been,” Egan said. “What we’re seeing is unprecedented.”

The real-estate experts attribute the bullish market to e-commerce as consumers increasingly turn to online shopping, where companies like Amazon promise fast shipping for an annual fee, giving busy customers a more convenient option.

Case in point: The online retail giant reported that its Amazon Prime Day, a members-only sales event that happened last week, raked in $1 billion in sales. That made it the company’s biggest sales day ever.

Egan said it’s difficult to pin down exactly how much industrial space is leased for e-commerce businesses, partially because many traditional brick-and-mortar retailers are entering the field but not detailing which locations are dedicated to online sales. In addition, some companies rely on third-party logistics firms to handle aspects of e-commerce, further muddying the waters.

Even so, CBRE officials estimate that 30 percent to 40 percent of leasing in the commercial marketplace is for e-commerce.

The “e-commerce revolution” has made the industrial sector the darling of the commercial real-estate market, Egan said. Aside from supply, the other challenge can be labor — finding a location that has enough workers willing to take the jobs along with states or municipalities with wage scales that suit a company’s financial restraints.

An under-construction industrial building near Lamb Boulevard and Interstate 15 is seen on Tuesday, July 18, 2017. Photo by Jeff Scheid.

Cheaper land, easy access to the highway and an available workforce are making North Las Vegas the hub for industrial expansion in Southern Nevada at the moment, Higgins said. A chunk of the e-commerce activity has been in an industrial area known as the Northgate Distribution Center, near Interstate 15 and Lamb Boulevard.

“It isn’t build it anywhere and it will come,” he said. “You still have to have the dynamics the customer is looking for … These global companies are not just willy nilly saying, ‘Hey, I think I’ll put 800,000 square feet somewhere in the southwest. Las Vegas sounds good.’ They are digging in looking at labor, looking at transportation.”

Most of the industrial buildings under construction in Southern Nevada range from 300,000 to 800,000 square feet. For the sake of size comparison, an average Walmart store is 106,000 square feet.


Featured Videos

Comment Policy (updated 4/20/2021): Please keep your comments civil. We reserve the right to delete comments or ban users who engage in personal attacks, use an excess of profanity, make verifiably false statements or are otherwise nasty. Comments that contain links must be approved by admin.
7455 Arroyo Crossing Pkwy Suite 220 Las Vegas, NV 89113
Privacy PolicyRSSContactJobsSupport our Work
The Nevada Independent is a project of: Nevada News Bureau, Inc. | Federal Tax ID 27-3192716