Consumer demand driving furniture warehouse growth

Jennifer Shubinski

Thursday, Nov. 18, 2004 | 10:59 a.m.

Walker Furniture, citing increased demand at its retail store, has more than doubled its warehouse space in North Las Vegas, while industry experts said more furniture companies are looking for industrial space -- but not just for storage.

Walker Furniture has been expanding both its retail and warehouse space over the past couple years trying to meet the demands of Las Vegas' rapidly growing population.

"Because of our concept and our newly expanded facility that we have here, and our aggressive price strategy with values, we have seen the biggest increase in business that we could not even anticipate it," said Larry Alterwitz, Walker Furniture chief executive.

Walker's 200,000-square-foot retail store at Martin Luther King Boulevard near Interstate 15 and U.S. 95 is the company's only furniture store. Alterwitz said the concept of one "superstore" furniture store in a central location allows him to offer more selection and better prices than if he had several smaller stores around the valley.

Alterwitz said specials on items used to sell about 12 in a day -- making it a successful item. But now the store sells 120 units of a special item in a weekend.

Alterwtiz said that means they need more of the product on hand to satisfy customers.

So Alterwitz decided to more than double the company's warehouse space, from 178,000 square feet to 420,0000 square feet. The distribution center also will include a racking storage system that will allow furniture to be stacked, increasing the usable space.

But in Las Vegas that type of space does not come easy -- or cheap -- as land prices and demand for residential housing have made large blocks of industrial land hard to find.

Although in Alterwitz's case, one might say luck was on his side.

Across the street from Walker Furniture's old warehouse location in North Las Vegas, Dallas-based Trammell Crow Co. had completed its first project in the Las Vegas market -- a 420,000-square-foot building built on a speculative basis, meaning they built it without a signed tenant. Industry brokers said the building is the largest such building built on a speculative basis.

"We had a strategy to demise (breakup) the space if we had to, but it always was our intention to look for a large distribution center out there in the marketplace," said Ryan Martin, leasing agent with Trammell Crow.

Martin said if anything, the leasing of the building in the Cheyenne Distribution Center shows that there are companies out there who want and need that large space in Las Vegas.

"The users could be out there, the dilemma out there is construction costs and land prices are pushing this type of product out of the market," he said. "We could find more coming to the market in this size range, should the buildings be available."

Martin said it's hard to find such large industrial buildings because of the costs, which he said have gone up 30 percent since the distribution center was built. In that time land prices have doubled, he said.

Dan Doherty, senior vice president in Colliers International, Las Vegas industrial division, said there have been a number of industrial deals in the last few months.

"One take I have on it is the people who know Las Vegas see this industrial opportunity, and see this window closing," he said. "The smart ones are gobbling up a little more space than they need because six, eight, 12 months from now it will be hard to find and it will cost them more."

While the price of industrial space is going up so are costs for other commercial space, such as retail space. That is causing some retailers to look for alternatives. Many are using part of their warehouse space as retail showrooms.

"They can combine a distribution center and retail center under one roof and it's typically cheaper," said Scot Marker, vice president in Colliers International, Las Vegas retail division.

Carl Ross' Safari Business Park on Industrial Road is one of the more prominent industrial parks where furniture retailers are mixing industrial and showroom uses.

"The reason they do it, is because furniture stores need so much space to display their goods," Ross said. "They can't pay $2.50 per foot in rent that they would pay in a shopping center. They come out here and pay 75 cents a foot. That's why they do it."

Ross said he now has five warehouse/retailers at the Safari Business Park and has plans for two or three more in his second 285,000-square-foot phase, set to open Feb. 1.

Ross said having retail space in an industrial center hasn't deterred shoppers.

"They don't come here for a cup of coffee, they come for furniture," he said.