Report: Las Vegas’ retail real estate market slowing

Kevin Ferguson

Thursday, July 19, 2001 | 11:19 a.m.

The northwest area of the Las Vegas Valley should be a booming market for retail developers in the coming years, fueled by an abundance of affluent residential communities that have been developed lately, said a local commercial real estate expert.

But nevertheless, a report issued Wednesday by Colliers International showed the local retail market valleywide has hit a lull, causing asking lease rates to drop 18 percent in the second quarter, ended June 30.

Scot Marker, of Colliers' retail division, said the West Charleston-Durango corridor should emerge as one of the biggest retail growth areas in the next five years.

"That's because Summerlin is so underserved for retail services and restaurants," Marker said. "(Area residents) are forced to hop on U.S. 95 or go to the Lake Mead (Boulevard) and Rainbow corridor for these services."

Major retail projects are already under way in the West Charleston-Durango area, which include two large shopping centers, anchored by Costco and an Albertson's grocery store.

Boise, Idaho-based Albertson's Inc. announced Wednesday morning plans to close 165 stores in 25 states in a cost-cutting and restructuring move, but the company declined to say if those shutdowns would spread to Southern Nevada.

The local retail market recorded a 1.9 percent decline in retail vacancy in the second quarter, the Colliers report states.

The average monthly asking lease rate also dropped this quarter to $1.49 a square foot from $1.78. During last year's comparable quarter, the asking lease rate was $1.69 per square foot.

Despite a stagnant retail market and a sluggish economy nationwide, growth in the number of new residents to the Las Vegas Valley remains high. The area recorded 7,028 new residents in June, based on out-of-state licenses turned in to the Department of Motor Vehicles.

Experts say the increase in residents generally results in more retail growth to serve the needs of new arrivals.

Colliers' Marker said the local retail market is in a down cycle, which he predicts will turn around once a number of construction projects are completed.

"Construction is under way and a lot of land is being absorbed, but it's not being leased, yet," Marker said. "By the time it's completely constructed, it'll be leased."

Excessive rents have contributed to a slowdown in growth among some anchor retailers, and especially among smaller, independent retailers. The high rents could lead to a number of bankruptcies in the local retail sector, the Colliers report warns.

Meanwhile the Las Vegas industrial market showed signs of possible overbuilding in the second quarter.

The Las Vegas industrial market vacancy rate rose by 0.08 points to 6.3 percent in the second quarter due to the high volume of completed projects.

The Henderson industrial market posted the highest industrial vacancy -- 11.4 percent -- while the lowest was in the Las Vegas Valley's west-central market, which had a 2.2 percent vacancy rate.

Vacancy rates for local office buildings also have risen. In the second quarter, that rate rose to 9.5 percent, which is just one percentage point below the vacancy rate in the comparable quarter a year ago.

David Afromsky, of Colliers' office division, said construction of office and medical buildings are on the rise in Green Valley and Summerlin.

Completions of office space this quarter totaled 251,000 square feet. That is significantly down from last quarter, which had 660,000 square feet of space completed.

archive