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Years After The Downturn, Where Does Las Vegas Commercial Real Estate Stand?

Northern Nevada is booming as massive business developments are transforming an economy that once relied on gaming.

Telsa, Amazon and other companies are building or leasing massive industrial buildings as the north is enjoying and economic revival.

Like everything else in the country, commercial real estate, which refers to real estate that is not residential, took a huge hit during the Great Recession. 

It is a good indicator of a healthy economy. Strip malls that are full of open businesses means more jobs and more money in the economy. 

Here in Southern Nevada experts tell KNPR's State of Nevada that overall the commercial real estate business is improving but there are still sectors that are struggling and sections of the Las Vegas valley that are below healthy occupation levels.

Charles Van Geel is the president of NAIOP of Southern Nevada. He said office buildings, industrial space and retail areas are signs of a diversifying. 

"In my opinion, commercial development is economic development," Van Geel said.

Van Geel said one of the biggest problems facing the region is a scarcity of land for industrial development. He said 2,000 acre industrial area is needed. 

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He envisions an area south of Las Vegas far from homes.  

"School buses and semi-trucks don't match," Van Geel said, "So, you need to identify land that is strictly industrial it is away from, in many cases, the residential community."

In Southern Nevada, the area of development that is still lagging is office space, according to Van Geel and he says it is a sign "employment growth."

"For every 100 jobs that are created, I would say 20 percent or 20 jobs... creates an office demand," Van Geel explained.

He said developments that were stopped during the recession are getting back on track, but often in a different way than originally intended. Van Geel believes that now that the economy is improving more developers will spend money.

"It's hard to spend money when the light at the end of the tunnel is not very bright," he said.

The improving economy also means more banks are willing to lend money, said Van Geel. 

"Yes, money is available for development but it is much harder today than it was pre-recession to get a loan," Van Geel said, "All of your numbers have got to add up. And you have to demonstrate a high probability that you're going to fill that product type."

Shawn Danoski is a co-founder for DC Building Group. He said the problem he sees in the Las Vegas market is the size of the projects that are being built.

"There is a market where developers are building really big projects and there's becoming a lack of the smaller projects," he said. "The 100,000 square feeter, the 20,000 square foot project and there is becoming a demand for that."

But he said there are still a lot of advantages to setting up shop in Southern Nevada.

"I think Las Vegas provides an opportunity that some of the costs are more beneficial than maybe some of the surrounding areas such as California," Danoski said. 

Guests

Charles Van Geel, president, NAOIP Southern Nevada; Shawn Danoski, co-founder, DC Building Group

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