COLUMN: Local commercial market robust

A story in last Tuesday's Wall Street Journal online reported that commercial real estate is in a slump nationwide.

The story said the first quarter 2001 report by Torto Wheaton Research, a unit of Los Angeles real estate firm CB Richard Ellis Services Inc., shows the amount of occupied office space in the first quarter dropped 17 million square feet across 72 U.S. markets. On the industrial and warehouse side, the amount of occupied space dropped by 14.4 million square feet.

Raymond Torto, managing director of Torto Wheaton, said not only technology- oriented markets are being hit, but also cities that weren't driven by the high-tech boom, such as Chicago, Indianapolis, Phoenix and Kansas City, Mo.

It was time for a few phone calls to my sources in commercial real estate, a sector of the Las Vegas market that usually hums along.

Because commercial real estate closely reflects the growth in gaming and home building, it is a good barometer of the industry.

Tim Snow, president of Thomas & Mack Development Co., whose main project has been the development of McCarran Center, said commercial real estate is in great shape in Las Vegas.

"We're not overbuilt," Snow said. "We've not seen the fallout they have in other cities where you build and there's nobody to occupy the space.

"We have a good balance of supply and demand."

While Snow said business interest from out of town has slowed a bit, he said the local growth going into the next quarter is good and supply should meet the demand.

Snow's prognosis was echoed by Don Haze, head of the local office of Grubb & Ellis.

"I think we're in good shape and the industry here is very stable," Haze said. "We cautiously watch what's going on, but I'm bullish about the market because vacancies are dropping."

Haze and Snow agreed most vacancies were caused by fallout in the dot com market, which has adversely affected areas such as San Francisco and Atlanta.

"We're all watching the national tea leaves," Snow said. "But our market is much more balanced than the Atlantas or even around the Washington, D.C., area."

Dan Doherty of Colliers International said he had read the story in the Wall Street Journal and was unhappy that the Las Vegas picture wasn't included.

"The market is so strong here, quite unlike what is going on in the rest of the country," Doherty said.

Haze said the caution displayed by lending institutions has kept the market tight in Las Vegas. "Most lenders hate to be out of the herd. ... The lenders are more cautious than we are.

"Las Vegas commercial developers certainly are building to the need," he pointed out. "The industrial vacancy rate is 8.6 percent and the office vacancy rate is 9.6 percent."

He said rents have been quite stable and he expects them to stay fairly stable, especially in the industrial market.

"The lack of space offers an opportunity for office development and industrial development," Haze said. "Overall, I think we're in good shape."

Snow said because the McCarran Center is nearly built out, Thomas & Mack is starting to build its commercial product in the northwest.

That construction and expansion of product wouldn't be going on if the commercial market was weakening in Las Vegas.

There may be some panic in the commercial real estate industry nationwide, but the people involved in that sector in Las Vegas are confident that business is great and will continue that way.

Carmel Hopkins, real estate product manager for the Las Vegas Review-Journal and Las Vegas Sun, can be reached at 380-4574. Her e-mail address is Carmel_Hopkins@ lasvegasnewspapers.com. Snail mail is P.O. Box 70, Las Vegas, NV 89125.

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