The Las Vegas retail market continued to witness increased demand in the first quarter of 2014 as the sector reported positive net absorption for the fourth consecutive quarter. The retail market vacancy rate fell to 9.0 percent by the end of the first quarter, which is down 0.1 percentage point from the prior period. Compared to a year ago, the vacancy rate is down an even more substantial 1.1 percentage points.
During the quarter, one anchored retail project completed construction in the Las Vegas valley. Goodwill opened its 16,000-square-foot store in the Rainbow Place shopping center. Roughly 31,900 square feet has been completed in the center to-date.
The retail sector reported approximately 104,000 square feet of positive net absorption during the first quarter, which compares favorably to the 75,300 square feet of net move-outs witnessed in the same period one year ago. In the past year, the sector has reported roughly 633,800 square feet of net move-ins.
Construction activity continued to climb in the first quarter of the year with more than 2.1 million square feet of anchored retail projects actively under development, the highest under-construction tally since the first quarter of 2009.
Despite a vacancy rate that remains elevated, anchored retail construction activity has increased substantially in recent quarters. As developers continue to watch the foundations of consumer spending and the retail sector improve, they are beginning to offer additional retail destinations that they hope will attract consumers who are looking for a new shopping experience.
The Reno/Sparks retail market conditions continued improving during the first quarter of 2014. During the quarter, the vacancy rate decreased slightly, and the area had a positive net absorption of 76,960 square feet. With this net absorption, the market had positive net absorption in four of the last six quarters. Looking at the last several quarters, it appears that the market vacancy peaked in the second quarter of 2012 and has been generally improving since then.
During the quarter, there were 30 businesses moving into shopping centers consisting of 136,368 square feet. During the same period, 23 businesses moved out consisting of 60,939 square feet. Fitness for $10 was the largest tenant moving out of space, vacating 9,959 square feet. During the quarter, several new tenants opened including the Imax Theater and CBQ Bar & Grill in the Legends and FedEx in the South Virginia Plaza.
The line shop vacancy rate has decreased to 22.30 percent this quarter from 22.80 percent last quarter. The anchor vacancy rate was virtually the same at 13.78 percent. This is near the lowest anchor vacancy quarter rate since the third quarter in 2010. The overall vacancy rate is 17.29 percent, which is noticeably lower compared to the record high from almost two years ago of 18.84 percent. As the market stabilizes and the vacancy rates continue to decrease, 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.