It is really good news that the developers and builders are reporting that there is good construction growth in commercial real estate development, and at last there is steady growth in Nevada business. With the developers and builders reporting full workloads they are working with high morale and confidence and are determined to meet their challenges ahead and make things happen as they want.
More people are being employed now leading to community growth. It is giving us more confidence and boosts our morale in what the developers and builders are finding the indication of a strong market. Many commercial contracting and general management companies are reporting good growth in the retail, recreation center, manufacturing, restaurant, industrial, multi-family housing sectors and there is no doubt the Construction sector is seeing a good growth in Nevada business. Some of the leading developers and builders in southern Nevada are swarmed with projects and are not looking for new clients. It seems that they are more focused on clearing the backlogs and completing the commercial real estate projects they are having now.
The Overview of the commercial real estate in Nevada and Construction Growth
The commercial real estate market is growing fast in Nevada now. The projects that were put on hold during the great recession are being revived now. Though the industrial and retail sectors of the Nevada business in real estate seems to be picking up speed the office sector is yet to pick up momentum.
The vacancies in the office space are remaining high and the occupancy rate seems to be lagging. But it is a good sign that more and more new products are going up and the retail centers are being re-positioned. But there is a considerable increase in the new projects in the commercial real estate like large arenas, stadiums and sports complexes. This is providing work for everyone in the real estate sector of the Nevada business.
There is a steady growth of construction jobs in the Silver State reaching about 85, 200 while that in Vegas MSA has recorded a growth of over 55% growth in the number of construction jobs than that was in March 2013. The Reno Sparks MSA has offered more than 16,940 jobs that was a whopping 76 percent increase over the period March 2012.
Now the commercial real estate market in Nevada is very active with more investors. Businesses are showing more interest in the commercial construction business. More businesses are searching to find space for purchasing properties and there seems to be good inflow of investments by developers and builders that is a good indication of growth of the overall Nevada business.
This is now playing a major role in the recovery of the construction and development industry in Nevada now. The development that is taking place now in construction sector of Nevada business is pretty mature and sustainable as most of the developers and builders are putting more capital on the commercial real estate market that will sustain the present level of growth for the next few years.
The present day commercial real estate market in Nevada is mostly build to suit the end user- driven projects that are way different than that were in 1996 to 2006 and are mostly happening in the industrial world.
Struggle of the Nevada business in the construction Industry
Though there are many issues plaguing the commercial real estate industry in Nevada, it is giving clean signals that it will come out of all of them in a stronger way. The labor shortage and lack of skilled individuals and the aging workforce poses a serious problem for the commercial real estate sector in Nevada. Despite that of so much work today in Southern Nevada, it is only having just about 60% of the workforce than that it had in pre- recession days. This makes it impossible to put all the required men in each of the projects that are waiting to be started.
This is one of the main challenges faced by the developers and builders and along with this the rising costs of everything connected with the construction industry like labor, materials and land along with rising interest rates contribute to the escalation of overall project costs.
Add to this the additional cost incurred due to the rise in the cost of lumber, aluminium, steel oil etc are making the planning a project difficult. Due to this many projects are being postponed leaving the developers and builders concerned. These upward tariff changes are sure to have a negative impact on the commercial real estate projects.
The land is also becoming scarce or in shortage and this adding to the challenges that the present day developers and builders have to face in Nevada. This artificial supply shortage of land could be remedied only if the U.S. Bureau of Land Management releases meaningful quantities of the land it owns. As of now a fierce battle is being waged between the commercial real estate developers and those in the residential sector.
Due to all these the developers and builders are forced to save each and every dollar they can in their projects to keep the projects within the reach of the customers.
Competition in the commercial real estate sector
In Nevada national companies are focusing on larger projects and the local developers and builders are taking small to medium projects, and due to this there is more competition for smaller projects.
What to Expect from the Developers and builders of commercial real estate
Developers and builders will remain busy for the next one to two years as the expectation is that the Nevada commercial real estate market will remain strong for some time to come and continue to grow at healthy rate.