Las Vegas Sun

March 28, 2024

Real Estate Quarterly:

Retail recovery eludes Las Vegas marketplace

property

Ulf Buchholz

Space is available at Alec & Audrey Village in Southern Highlands.

The retail market recovery in Southern Nevada is more than nine months to a year away, and landlords will have a tough time finding tenants even though rents are declining, according to the second-quarter report from Colliers International Las Vegas.

The brokerage said it would take significant improvement in the national economy to speed up the local recovery.

Las Vegas brokerages said the retail vacancy rate exceeded 10 percent in the second quarter. Colliers reported a 10.1 percent vacancy rate, which is 7 percentage points higher than the onset of the recession in 2007’s fourth quarter.

CB Richard Ellis reports the highest rate at 11.3 percent, saying it is the first time in six months that more space was vacated than absorbed. Much of the space vacated was in the southeast valley, in particular at Warm Springs Promenade, Galleria at Sunset mall and Boulder Marketplace, the firm said.

The southwest valley had the highest vacancy rate at 15.2 percent, according to CB Richard Ellis. It also remained the most expensive at $2.02 per square foot per month.

Applied Analysis reported the average rents sought be landlords in the second quarter were $1.68 per square foot per month, down 4 cents from the first quarter. It was $2.02 per square foot per month in 2009’s second quarter, the firm said.

Rents have fallen 24 percent in the last couple of years, according to Applied Analysis. The firm said bright notes are that the vacancy rate has held in a tight range in the past 18 months and rental rate declines are slowing.

“The sector may be approaching the proverbial bottom, but this bottom could likely be a new normal,” said Applied Analysis Principal Brian Gordon, who added it could take several years before excess supply is absorbed and vacancy rates return to levels before the recession.

The retail sector is hurt by weaker than expected consumer spending and consumer confidence levels, said Jake Joyce, a project manager at Applied Analysis.

“The retail market is where consumer sentiment is ultimately realized, so as long as the economic outlook and pace of recovery appear soft, (lease rates) in the retail market will continue to correct,” Joyce said.

Only 600,000 square feet of space are under construction in the valley with most of that at Tivoli Village, a mixed-use project at Alta Drive and Rampart Boulevard. Construction is ongoing at Caroline’s Court, a Lowe’s-anchored retail center at U.S. 95 and Durango Drive, analysts said.

Of the 10.4 percent retail vacancy rate that Applied Analysis reported for the valley, North Las Vegas led the way with a 12.2 percent. That was followed by Henderson, 11.6 percent; Las Vegas, 10.7 percent; and unincorporated Clark County, 9 percent.

CB Richard Ellis forecasts that leasing will pick up through the rest of the year and into 2011 because of incentives offered by landlords.

“These incentives and the overall affordability of Las Vegas might attract national retailers that had previously postponed expansion plans,” the firm said.

Colliers reported the average lease term for retail space in 2010 is 72 months, a four-month increase from last year.

The Las Vegas Valley had 4.4 million square feet of distressed retail space in the second quarter, an increase of 446,000 square feet from the first quarter, Colliers reported.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy