The retail market is the biggest area where the lack of supply has come up, industry watchers said.

Few retail centers were completed during the first quarter, which brought a scant 500,000 square feet to the market, research firm Applied Analysis reported.

The handful of centers completed during the first part of 2006 included a Lowe's anchored center at the northwest corner of Craig Road and Jones Boulevard, and an 86,000-square-foot center, the Cheyenne Marketplace, in North Las Vegas, the firm reported.

The retail vacancy rate dropped to around 3 percent, the valley's brokerage and research firms reported.

John Restrepo, principal at Restrepo Consulting Group, said a vacancy number so low isn't healthy for the market in the long term.

"You don't want to be too empty or too full," he said.

A silver lining is on the horizon however, with 1.3 million square feet of retail space under construction and another 3.3 million square feet of space planned, Restrepo said.

Kit Graski, senior vice president at Voit Commercial Brokerage, said the market is very tight, and that the current lack of supply could be a deterrent in the future.

"It could become a problem, but it hasn't to date," Graski said. "It could happen and may happen."

Graski said a company may be less likely to come to town if it can only open one site.

Graski said the projects in planning may help deter that possibility, but land prices have kept the number of proposed projects low.

"Retailers aren't willing to pay what land owners want. Retailers pay 'X' and not one dollar over 'X,' " he said.

Even though more than 1 million square feet of new industrial space was added to the Las Vegas market during the first quarter 2006 and another 3 million square feet of industrial space is scheduled for completion during the year, it will do little to satisfy the market demand, Grubb & Ellis Las Vegas reported.

The real estate brokerage firm reported that the amount of new construction may drop in coming years as less land becomes available for the development of large industrial buildings.

Lease rates have gone up as the industrial market becomes tighter and as developers struggle to find land.

The average asking lease rate reached 76 cents per square foot in the first quarter 2006 compared to 59 cents in the year-ago quarter — an increase of almost 26 percent, Applied Analysis reported.

Restrepo said the industrial market is almost too strong right now because there isn't enough space to satisfy all the demand.

"Consequently we are running out of for-lease industrial space," he said. "There is a looming shortage."

Restrepo tracked the industrial market's first quarter vacancy at 3.9 percent, which he said is basically full occupancy.

The office market is the one market sector in which there could be a softening in future vacancy rates, industry experts said.

Local firms are tracking more than 7 million square feet of office space under construction or in the planning stage. While all of the planned space won't get built, the possibility is there.

If it were, it would take three years for the space to be leased up, Restrepo said.

"Some of it will go away, but it's enough that it's something we will have to monitor carefully," he said.

In the interim, space is at a premium, and is demanding premium pricing.

Brad Peterson, senior vice president at CB Richard Ellis, Las Vegas, said office space near freeways remains popular with tenants. Peterson said rental rates for such properties has skyrocketed in the past two years.

"My first 20 years here rents were fairly flat; they went up slowly," he said. "The last two years rents have gone up tremendously; I've seen a 30 percent rise to rental rates in last couple years."

While new buildings in prime locations continue to enjoy the ride of Las Vegas' growth, older offices in the inner core, often referred to as "class c" space, continues to suffer, he said.

Peterson said he isn't too concerned about the volume of office space that is poised to come onto the market in the next couple of years. The current desire for space, along with the valley's growth are all indicators that demand will continue.

"In my 22 years, we've always been able to keep pace with inventory and we've been able to handle the development," he said.