Vacancies in the retail sector reported a modest quarter-over-quarter increase to 9.8 percent in the first quarter of 2013. Although up 10 basis points (0.1 percent) compared to the prior quarter (Q4 2012), vacancies remain down 60 basis points (0.6 percent) from a year ago (Q1 2012). Two projects for specific users completed construction during the quarter, adding 9,100 square feet to the market and bringing total inventory to 51.9 million square feet. A new Wendy’s in Henderson added approximately 4,000 square feet. Meanwhile, Bonefish Grill completed construction in Town Square, adding 5,100 square feet.
The retail sector reported approximately 41,100 square feet of negative net absorption during the period, while average asking rates remained relatively flat quarter-over-quarter at $1.49 per square foot per month. Retail construction activity increased modestly during the first quarter of 2013. Three projects totaling 320,600 square feet are now actively under development throughout the valley.
During the last 12 months, taxable retail sales in Southern Nevada totaled $32.2 billion, which reflected an increase of 6.5 percent compared to the prior 12-month period. The housing market also continues to strengthen with new home sales and prices experiencing upward movements. Although net demand for retail space slowed in the first quarter of 2013, the sector is expected to benefit from improving consumer spending profiles, an improving housing market and positive population growth in the coming quarters.
The Reno/Sparks retail market showed some strengthening during the 1st quarter of 2013. During the quarter, the vacancy rate decreased slightly, and the area had a modest net absorption of 16,779 square feet. With this net absorption, the market continues to move in the right direction, albeit slowly.
Much of the positive net absorption during the quarter can be attributed to four medium size tenants moving in and only three medium size tenants moving out. During the quarter, there were 37 businesses moving into shopping centers consisting of 115,770 square feet while during the same period, 32 businesses moved out consisting of 97,773 square feet. The number of new businesses moving in has been more than those moving out in three of the last five quarters.
Several new tenants opened during the quarter including Auto Zone in the McCarran Plaza, Old Navy in the Legends, Tuesday Morning in Shoppers Square, and Family Dollar in Paradise Plaza. During the quarter, tenants that vacated their space included Old Navy in Firecreek Crossing, and Old Navy and Tuesday Morning in the Sparks Crossing.
The line shop vacancy rate has decreased slightly from 23.07 percent last quarter to 22.62 percent this quarter. The anchor vacancy rate is holding virtually steady just below the record high with 14.88 percent. The overall vacancy rate is 17.99 percent, which is slightly off the record high from three quarters ago. As the market stabilizes and the vacancy rates decrease slightly, it is incrementally taking a little pressure off of landlords. However, with a continuation of high vacancy rates in the market, it remains a good market for tenants to find deals.
Go to the View Issues 2013 page and click on July 2013 to view this article with accompanying statistics.