The Las Vegas commercial real estate (CRE) market has continued its recovery and stabilization since emerging from the pandemic. Positive signs for Q2 2022 include reduction in vacancies, positive net absorption, increased asking rents, and the delivery of two projects adding 188,909 square feet (sq/ft) office space to the market.

Strong pre-leasing and inquiry numbers for planned and under-construction projects, along with a rise in companies looking to the Las Vegas Valley to expand or relocate operations entirely, round out the positive sentiment currently seen in the market.

For office product in particular, Las Vegas saw a Q2 of mixed results. On the back of some notable expansion in Q1 2022, Southern NV’s office market has appeared to cool at mid-year. Investment prices reached record levels, however, vacancy rates edged higher. The Southwest submarket continues to see rising rents and additional leasing activity as tenants continue to funnel to this historically popular region. 

There are currently 4,660 CRE spaces for lease in Las Vegas, amounting to 41.5 million square feet of space. Out of the 1280 commercial buildings available for sale, 505 have been leased in the past month, with 12 new listings coming onto market at time of print.

Key Takeaways

• Total inventory under construction – 468,400 square feet 
• Overall vacancy – 12.7% (a rise from 12.5% in Q1)
• Net absorption – negative 284,323 square feet
• Availability – 6.2 million square feet
• Average asking rents – $28.50 per square foot per year (a decline of $0.02 from Q1)
• Investment sales – $50.5 million (down from $75.5 million in Q1)

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There are several types of office space in the USA. These properties are classified according to their quality standards and amenities, using the classification system developed by the Building Owners and Managers Association. This system establishes three main types of office space: Class A, Class B, and Class C. Here are the defining features of each Class:

Class A Office Space

These properties are characterized as having the highest quality standards, amenities, and fixtures. Common features include top-tier HVAC and lighting systems, the latest telecommunications infrastructure, and often have unique design or architectural traits. Because of their high standards, Class A offices are typically (but not always) in new or trophy buildings with high-quality road and mass transit connections. Location also plays a role in Class A offices, as they are often located in sought-after areas such as Capitol Hill, Downtown Los Angeles, and The Loop in Chicago.

Class B Office Space

Class B properties are a middle-of-the-road option for office-based businesses. They are a step below Class A properties in terms of design, systems, and infrastructure, but they are still functional spaces that can accommodate a wide range of office operations. Depending on their location and potential, some Class B buildings are acquired by property management or investment firms and refurbished to Class A standards. Many of these offices are located in buildings that are between 10 and 20 years old.

Class C Office Space

Class C offices are typically located in older buildings (20 years+) outside of the CBD or other highly sought-after business areas. These properties may have outdated infrastructure, fixtures, and amenities, with some requiring partial renovation.

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