Las Vegas office market report

Rents have remained consistent from Q1 to Q2 – showing a modest $0.05 increase over the $30.03/sf recorded in the 1st quarter, with average direct market rents ending the 2nd period at $30.08/sf.

“Class A” office space saw the largest jump in asking rents over the past quarter, increasing $0.55/sf to $32.75/sf – a 1.7% increase quarter-over-quarter. This significant increase in asking rents for “class A” space can be credited to the willingness of prospective lessees to compete for high-end office space with upgraded amenities to attract employees back to the office.

Las Vegas’s total vacancy rate increased for the second consecutive quarter, following five consecutive quarters of decreases. The direct vacancy rate increased from 13.0% in Q1 to 13.9% in Q2, while sublet vacancy decreased by 30 basis points over the same period ending the quarter at 1.8%.

Las Vegas rebounded from Covid-19 and its associated mandates much better than other large markets, given lenient business regulations and an increase in office workers from struggling west coast markets. However, the second consecutive increase in the total vacancy rate may indicate a small pull-back to market equilibrium.

Transaction volume (by $) in the Las Vegas office market was down significantly in Q2 when compared to historical averages, as only $27.9m was transacted throughout the quarter –down approximately 66% from its 5-year moving average of $82.3m.

Though transaction volume fell in Q2, price per square foot ($/sf) on transactions increased by $45/sf over the quarter to $211/sf –slightly above par when compared to the 5-year moving average. This indicates that the slowdown in transactions is likely due to more macroeconomic uncertainty, such as rising interest rates, recent publicized bank failures, etc.