LAS VEGAS RETAIL MARKET OVERVIEW

STATISTICS, NEWS AND ANALYSIS OF CURRENT LAS VEGAS RETAIL VALUES

This Las Vegas Retail Market Overview was compiled by Appraisers of Las Vegas.com for Appraisals in Las Vegas, Henderson, Clark County and Nevada.

The CBRE 1st  Quarter 2007 Las Vegas Retail Market View indicates the demand or new retail development throughout the Las Vegas market area will continue to be driven by low unemployment rates and a solid job growth forecast accompanied by continue population growth.  The CB Richard Ellis report goes on to indicate that  despite a slowing housing market, the retail sector is maintaining  its steady growth with more retail space under construction and projects in the planning stages than at the same time in 2006.  The CBRE 1st  Quarter further states that the retail market should remain strong throughout 2007.

  

According to the CBRE report Las Vegas is on of four U.S. retail markets with vacancy rates of 4.4% or less, having shown a vacancy rate of 3.97% in 1st Quarter 2007.  Though up slightly from the 4th Quarter 2006 vacancy rate of about 3.71%, the current retail vacancy rate remains low for the nation.  The report revealed Net Absorption in the market as having increased Colliers International reports similar, albeit lower, vacancy in the Las Vegas retail market.

 

Per Colliers’ internet 1st Quarter Las Vegas Retail Report “the retail market has been healthy for the past six quarters, with vacancy rates ranging from a low of 2.7% to a high of only 3.0%. Retail vacancy currently stands at the aforementioned 2.7%, a decline from last quarter’s 2.8%. One year ago, retail vacancy also stood at 2.8%.”  40% over 4th Quarter 2006 with those market segments having the most housing construction and commercial development, Henderson, North Las Vegas, and the Southwest market segments, also having the most absorption. 

 

Using weighted average lease rates, CBRE reports that market-wide the asking lease rate for retail space increased $0.20 to $1.92/SF from the 2006 rate of $1.72/SF.  This is reported as a result of strong absorption creating limited availability, thus, resulting in increasing rates.  The previously cited Colliers International 1st Quarter 2007 Retail Report provides good support for the CBRE findings and indicates “asking rental rates are currently (1st Quarter 2007) $1.95 psf NNN. This is a large increase from Q4, 2006, when asking rental rates were $1.66 psf NNN.”

 

The following article from Applied Analysis Newsroom – 2006 website further addresses retail vacancy in the Las Vegas Market

 

“Demand Keeps Retail Vacancy Down, Rates Up

October 25, 2006 - LAS VEGAS - The 43.7-million-sf Las Vegas Valley retail market continued to perform well in the third quarter, with 210,000 sf of new additions offset by 188,000 sf of net absorption, keeping vacancy at 2.7%, according to a third quarter report by Applied Analysis, a locally based business advisory. Through the first nine months of the year, 1.3 million sf has been delivered and 1.2 million sf has been absorbed.

The delivery of new product is expected to pick up in 2007, as some 5.2 million sf of space is under construction. Despite that, vacancy is expected to remain low if a bit higher and rental rates should continue to rise, says Applied Analysis principal Brian Gordon.

During the past several quarters, the retail market has cautiously developed space only after significant pre-leasing requirements are met,” says Gordon. “While recent completion levels have been below average, we have noted an above-average amount of space currently under construction and in the future development pipeline. Significant construction activity signals aggressive development plans to meet what is seen as pent-up demand in some rapidly developing submarkets. Despite this wave of activity, we anticipate vacancy rates to post only modest increases while average asking rates will continue to climb.”

One existing example of this is the City of
Henderson. Vacancy in the 8.5-million-sf submarket is up to 3.6% from 2.6% this time last year. During that same period, asking lease rates have risen from $1.49 per sf per month to $2.07. By contrast, in the 2.8-million-sf North Las Vegas market, where vacancy has gone in the opposite direction, falling from 3.7% to 2.4% over the past four quarters, asking lease rates have jumped by nearly 50%, rising to $2.62 from $1.79.

In the larger markets of
Unincorporated Clark County (16.8 million sf) and the City of Las Vegas (15.6 million sf), vacancy and rates changes were much more modest. Clark County vacancy fell 40 basis points during the quarter to 2.3% while rates jumped $0.20 to $1.97. In Las Vegas proper, vacancy increased 30 basis points to 2.8% while rates gained $0.06 to $1.85.”

 

According to Colliers International website reports Retail vacancy has declined for two straight quarters, from a high of 3.0% in Q3, 2006 to a 1st Quarter 2007 vacancy rate of 2.7%. The older North Las Vegas, Downtown and West Central submarkets have the highest vacancy rates in the valley at 4.9%.  The North­west submarket has the lowest vacancy rate of 1.4%. Three other submarkets (Henderson, Southwest and University East) have vacancy rates below or at the Valley average. Among product types, Power Centers have the lowest vacancy rate (1.3%), and Neighborhood Cen­ters the highest (3.3%).

 

As previously noted, asking rental rates increased dramatically 1st Quarter 2007.  This increase is mainly attributable to newer, more expensive space entering the market and older, less expensive space leaving the market, rather than dramatic increases in the asking rental rates for existing availabilities.

 

Colliers further reports that “The Valley retail market has been adding an average of 791,000 sf per quarter for the last four quarters. New completions this quarter amounted to 942,919 sf. This newly com­pleted space was divided between Commu­nity Centers (399,600 sf) and Neighborhood Centers (543,319 sf). Most of this quarter’s new completions were in the East submarket.

 

Looking forward, there is currently 1,452,794 sf of retail space under construction in the Valley, with another 2,904,061 sf of space planned to begin construction in the next 12 months. The majority of this new space will be in the form of new Community Centers, and most of it will be completed in North Las Vegas, assuming these plans actually come to fruition.”

 

According to Colliers “Demand for retail space has generally kept pace with new completions over the past four quarters. The recent mild downturn in the residential market has not appeared to impact the retail market, at least not yet. This is not surprising given the high rate of population growth experienced by the Las Vegas Val­ley over the past decade. Given the need of large retailers to pre-position themselves to take advantage of new growth, it is likely that past growth has created enough momentum to carry the retail market while the residential market slows down. Should residential growth remain slow past the end of 2007, the retail market will likely begin to feel the pinch.”

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Below are connections to additional vital Las Vegas and Clark County, Nevada area free real estate information, news, trends, statistics and analyses.

  • Las Vegas Area Hotel and Motel Market Overview
  • Las Vegas Area Industrial Market Overview  
  • Las Vegas Area Land Market Overview
  • Las Vegas Area Office Market Overview
  • Las Vegas Area Residential Market Trends
  • Las Vegas Area Apartment Market Overview
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