Office Highlights

    The Las Vegas Valley office market continued its above-average pace of expansion with 767,000 square feet of space coming on line during the first quarter. Recent additions bring the Southern Nevada office market inventory to 41.9 million square feet. Market demand was less than new supply, as the region demanded (or absorbed) 551,000 square feet during the first quarter 2007. This resulted in a first quarter vacancy rate of 11.1 percent, representing an increase from 10.8 percent in the preceding quarter and 8.7 percent reported one year ago. The market recorded its sixth consecutive quarterly rise in vacancies, which are up 2.9 percentage points from the 8.2-percent low mark witnessed during the third quarter of 2005. With 4.1 million square feet of space under construction, vacancies are likely to experience additional upward pressure throughout 2007. It is also worth noting another 7.8 million square feet remain in various stages of planning..

Apartment Highlights

     By the close of the first quarter of 2007, the Las Vegas apartment market reported rental rate growth greater than the rate of inflation at 4.3 percent. Average asking rents reached $872 per unit per month, ahead of $836 per unit witnessed during the first quarter of the prior year. With apartment in Las Vegas averaging 897 square feet per unit, rents are pressing north reaching $0.97 per square foot; rents on a per-square-foot basis were $0.93 one year ago. It is important to note that an average is just that, with an equal share of projects above this line (e.g., the majority of new communities entering the market) and below this line (e.g., more mature communities in less desirable neighborhoods). While rental rates are rising, occupancy levels appear to be softening. Occupancies averaged 94.1 percent, which was slightly off the 95.1 percent reported at the close of the first quarter of 2006. Average occupancies have remained within a relatively tight range during the better part of the last decade, and we expect this trend to continue.

Retail Highlights

     The Las Vegas retail sector expanded by 1.8 million square feet during the first quarter of 2007, while market demand, or net absorption, matched the market鈥檚 expansion. The latest activity resulted in a 2.5-percent vacancy rate, which was down from the preceding quarter at 2.7 percent and down modestly from the 2.6 percent reported one year ago. At the close of the quarter, the market reported 46.2 million square feet of inventory, with another 4.8 million square feet under construction. Beyond supply already underway, another 14.1 million square feet remains on the drawing board. Future supply includes several competitive regional retail outlets and mixed-use centers that will likely see plans evolve over time..