Research & Forecast Report

Research & Forecast Report Q1 2019 Las Vegas Economic Review Glossary Industrial Definitions Incubator: Multi-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and bay sizes lower than 3,500 square feet. Light Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of less than 15,000 square feet. Light Industrial: Multi- or single-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and, in the case of multi-tenant buildings, bay sizes of at least 3,500 square feet. Multi- or single-tenant buildings without dock-high loading doors with parking ratios in excess of 3.5/1,000 Flex: square feet. Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of at least 15,000 Warehouse/Distribution: square feet. Office Definitions Class A Office: Buildings with steel frame construction, high end exterior finish, distinctive lobbies featuring upgraded finishes, amenities including on-site security, state-of-the-art communications and data infrastructure and covered parking. Class A buildings are usually multi-story. Class B Office: Buildings with steel frame, reinforced concrete or concrete tilt-up construction. Class B buildings contain common bathrooms and hallways, and their lobbies may have granite and hardwood detailing. Class B buildings are often multi-story. Class C Office: Buildings of wood frame construction. Class C buildings are often garden-style and are built around courtyards. Retail Definitions Community Center: Retail centers anchored by supermarkets, drug stores and discount department stores. Tenants include off- price retailers selling apparel, home improvements/furnishings, toys, electronics or sporting goods. Neighborhood Center: Retail centers anchored by supermarkets and drug stores. Neighborhood centers are intended for convenience shopping for day-to-day needs of consumers. Power Center: Retail centers dominated by several large anchors including discount department stores, off-price stores, warehouse clubs or “category killers”. Power centers generally do not include much inline space. Strip Center: Unanchored retail centers that are 20,000 square feet in size or larger. Multifamily Definitions Class A Multifamily: Buildings constructed in the last 5 years Class B/C Multifamily: Buildings constructed more than 5 years ago General Definitions Vacant SF: Space in a building that is unoccupied and offered for lease by the owner of the company. Sublease SF: Space in a building that is offered for sublease by the primary tenant. This space may or may not be occupied. Net Absorption: Difference in occupied square footage from one period to another. 2 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Table of Contents Economic Review So Far, So Good Southern Nevada’s economic renaissance, which began in 2013, rolled into 2019 largely intact. One cannot avoid discussion of possible recession in the press these days, so it pays to scrutinize, but at this point Southern 4 Nevada’s economy appears to be on the right track. Industrial Review A Quick Start in 2019 After a strong 2018, Southern Nevada’s industrial market was fast out the gate in 2019, posting 1.1 million square 8 feet of net absorption, more than one year ago. Office Review Office Vacancy Hits New Low Southern Nevada’s office market continued to improve in the first quarter of 2019, with net absorption of 345,715 14 square feet and vacancy decreasing to 12.9 percent. Retail Review Expansion in the Air for Vegas Retail After a strong finish in 2018, Southern Nevada’s retail market continued that trend into 2019. Net absorption was 263,918 square feet, a significant improvement over the negative net absorption experienced in the first quarter of 20 2018. Multifamily Demand Strong, Supply Stronger According to statistics provided by REIS, multifamily vacancy in Southern Nevada increased to 4.0 percent in the 27 fourth quarter of 2018 (the most recent quarter of available data) Medical Office Medical Office Market Slows Demand for medical office space in Southern Nevada remained in growth mode in the first quarter of 2019, with 32 net absorption of 44,125 square feet Hospitality Hospitality Sector Shows Improvement When the dust settled on 2018, Southern Nevada’s hospitality market appeared to have peaked in 2017 37 Land Land Sales Increase After a very strong year of land sales in 2018, Southern Nevada got off to a good start in the first quarter of 2019. 42 This report and other research materials may be found on our website at www.colliers.com/LasVegas. This quarterly report is a research document of Colliers International | Las Vegas. Questions related to information herein should be directed to the Research Department at +1 702 836 3781. Information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. ©2018 Colliers International 3 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International Research & Forecast Report LAS VEGAS | ECONOMIC REVIEW Q1 2019 So Far, So Good > Southern Nevada’s economic growth continued into 2019 > Commercial real estate investment decreased in the first quarter > The big year may be ahead of us in 2020 Southern Nevada’s economic renaissance, which began in 2013, rolled into 2019 largely intact. One cannot avoid discussion of possible recession in the press these days, so it pays to scrutinize, but at this point Southern Nevada’s economy appears to be on the right track. Unemployment in the Las Vegas-Paradise MSA was 4.7 percent in January 2019, down from 5.4 percent in January 2018. Unemployment Clark County Economic Data peaked in Southern Nevada at 14 percent in January 2011. The region’s Year Ago Current previous low unemployment rate was 3.7 percent in December 2005. The latest national unemployment figure was 4.0 percent in January Employment (1000s) (Jan 2019) 983.3 1,014.0 2019, down from 4.1 percent in January 2018. The national labor force Visitor Volume YTD (Jan 2019) 3.39 MM 3.46 MM participation rate decreased to 63.2 percent in January 2019. January 2019’s labor force participation rate was 0.5 points higher than it was Gaming Revenue YTD (Jan 2019) $892.1 MM $860.8 MM in January 2018. Taxable Sales YTD (Jan-Dec 2018) $41.5 BB $44.3 BB From January 2018 to January 2019, employment in Southern Nevada increased by 30,700 jobs to 1,014,000 jobs. There were more than the Commercial Occupancy (Q1-19) 91.9% 93.6% 26,100 jobs added from January 2018 to January 2019. After adding Source: The Center for Business & Economic Research, UNLV; Colliers International 35,275 new jobs in 2015, employment growth has slowed in Southern Nevada. Employment growth in 2018 had the potential to end that trend and add more jobs to the Valley than 2017, but did not quite make it. Photo from On a year-over-year basis, the majority of new jobs created in Employment Change Southern Nevada were in professional and business services (+7,300 (January 2018 - January 2019) jobs), construction (+6,800 jobs), leisure and hospitality (+6,000 jobs), education and health services (+4,900 jobs), financial activities (+2,100 jobs), transportation and warehousing (+2,100 jobs), manufacturing (+1,300 jobs), wholesale (+1,200 jobs) and other services (+1,100 jobs). Other sectors experiencing job growth were government (+800 jobs) and natural resources and mining (+100 jobs). The information sector lost 100 jobs, while the retail sector lost 3,000 jobs. While the current construction employment of 66,500 jobs lags behind the 111,300 construction jobs the Valley had in August of 2006, it has improved significantly since the low of 34,800 construction jobs in early 2012. Southern Nevada is seeing new construction projects in industrial, multifamily, retail, office, hospitality, sports and infrastructure, and the word from construction companies is that Southern Nevada Commercial Real Estate Recovery Index the region is as many as 10,000 construction workers short for the projects that are planned. According to Home Builders Research, 611 new homes sold in January 2019, a 13.2 percent decrease from January 2018. New home sales totaled 10,416 units in 2018, which represented a 12.8 percent increase from 2017. The median price for new homes increased, year- over-year, by 6.5 percent in January 2019, to $375,996. According to the Greater Las Vegas Association of Realtors, 1,823 existing homes sold in January 2019, a 19.4 percent decrease from January 2018. Existing home sales totaled 32,639 units in 2018, which represented a 7.0 percent decrease from 2017. The median price for existing homes increased, year-over-year, by 13.2 percent in January 2019, to $300,000. Visitor volume in Southern Nevada, which was on the decline through much of 2018, showed some signs of recovery towards the end of the year; year-over-year visitor volume growth was as high as 5.4 percent in November 2018. In January 2019, 3.5 million people visited Southern Nevada, a 2.1 percent increase from January 2018. Gaming revenue totaled $860.8 million in January 2019, which was down 3.5 Jobs Added YEAR 2011 2012 2013 2014 2015 2016 2017 2018 2019 Jobs Added* 4,650 16,833 24,292 34,025 35,275 30,458 28,900 28,298 30,700 * Based on average number of jobs per month over the course of the year; data from NDETR 5 Las Vegas Research & Forecast Report | Q1 2019 | Economic Review | Colliers International percent from January 2018.

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