Las Vegas Sun

February 12, 2012

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Real estate quarterly:

Retail market struggles as vacancies inch upward

By Buck Wargo

Fri, Jan 15, 2010 (3 a.m.)

Two brokerage firms and a consultant said the retail vacancy rate in Las Vegas rose in the fourth quarter.

The latest numbers released by Colliers International, Commerce CRG and Restrepo Consulting contrast with a report released this month by CB Richard Ellis that said the retail vacancy rate fell in the fourth quarter to 12.3 percent, down from 13.1 percent in the third quarter.

Penny Mendlovic, a retail analyst with CB Richard Ellis, said one reason for a discrepancy is her firm tracks space from 10,000 to 20,000 square feet, whereas other firms might focus on larger developments. When that space is filled, it lowers the vacancy rate, she said.

Colliers International reported the lowest vacancy rate at 8.8 percent, up from 8.4 percent in the third quarter. Commerce CRG reported the highest vacancy rate at 13 percent, and Restrepo Consulting Group said the vacancy rate is 10.3 percent when including sublease space.

By Restrepo’s calculations, the vacancy rate has more than tripled from 3.3 percent at the end of 2007.

In the fourth quarter, 650,000 square feet of retail space was completed with 113,000 square feet of that space being absorbed, Restrepo said.

That has forced down rents to $1.65 a square foot in the fourth quarter, 10 cents lower than the third quarter. Two years ago, the monthly rents requested by landlords was $2.17, the firm reported.

Retailers struggled because consumer spending dropped 19 percent from October 2008 to last October, Restrepo Consulting Principal John Restrepo said.

The pressure on the retail market isn’t expected to let up soon, he said. Consumer confidence has to return to lower vacancy rates and justify any development, he said.

Those retail centers without an anchor face the biggest challenge, according to Commerce CRG. They have a vacancy rate of 18.6 percent.

By Commerce CRG’s count, Summerlin had the lowest retail vacancy rate at 5.4 percent. North Las Vegas has the highest at 17.4 percent. Henderson has a 14.7 percent vacancy rate and Green Valley has 11.9 percent.

Colliers reported that the amount of retail space that is considered in distress financially totaled 2.7 million square feet in the fourth quarter, an increase of 844,000 square feet from the third quarter.

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