Despite rising vacancy and decreasing demand, the market remains resilient and poised for future growth.
New big-box developments are helping to transform Southern Nevada into a regionally competitive logistics hub, particularly for e-commerce and distribution companies. Demand is expected to continue growing in the near term as occupiers relocate or expand from adjacent states like California to capitalize on Nevada’s tax benefits and lower operating costs.
Construction deliveries totaled 1.8M SF during Q4 2024, bringing the year-end total to more than 14.2M SF, eclipsing its previous high in 2023 by approximately 56%. In total, the amount of new product added to the market is more than double the market’s most recent five-year average of 7M SF. As expected with the high volume of activity, both new construction starts and under-construction levels have decelerated, with 8.1M SF currently under construction.
Key industries expected to drive future growth include advanced manufacturing, lithium-ion battery production, clean technologies, and logistics. These sectors are attracting businesses looking to establish long-term operations and support substantial growth through 2030. The goal is to help diversify the economy through these sectors and align with the region’s industrial development trends.
After historic lows just two years ago, vacancy rates are currently rising, largely due to the influx of new deliveries. Market-wide, the vacancy rate increased from a low of 1.2% in mid-2022 to 3.3% at the end of 2023 and currently sits at 9.2% after a 140-basis-point increase quarter-over-quarter. Near-term vacancy rates are expected to rise as demand catches up to supply before stabilizing during the second half of 2025.
Total net absorption reached 88,262 SF, bringing the year-end total to nearly 3.2M SF, most of which was leased in newer industrial products. This represents a notable deceleration from 2023, when the year-end total was 6.4M SF. However, this still marks the 43rd straight quarter with positive net absorption activity. Although both net absorption and leasing activity are below last year’s levels, both figures remain positive and relatively solid compared to longterm pre-COVID averages.
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