The Las Vegas Valley Anchored Retail vacancy rate remained unchanged at 11.9 percent in the second quarter. At the end of Q2, vacancy rates ranged from 9.2 percent in Power Centers to 13.2 percent in Neighborhood Centers. The second quarter ends two consecutive quarters of increasing vacancy rates. With the retail market near the 10 percent stabilized rate and taxable retail sales at all-time highs, the market appears fairly healthy. However, the market’s recovery has been uneven. There were no completions in the second quarter and the Valley’s total anchored retail space remained 44.3 million square feet.
Net absorption in Q2 was 15,200 square feet. This level of absorption was just enough to keep the year-over-year absorption positive at 1,600 square feet. Two of the three product types had positive year-over-year absorptions. Power centers were the stronger of the two with 166,200 square feet and neighborhood centers added 37,100 square feet. However, community centers lost 201,600 square feet over the year to wipe-out most of the absorption gains. This was due to the closure of several Office Depot locations. We expect absorption to continue to improve, but the market may continue to receive occasional shocks, such as the shuttering of every Food4Less in Q1 and a number of Office Depots in Q4, 2014.
Space under construction in Q2 was 138,700 square feet in one project: Phase 2 of Green Valley Crossing (138,700 square feet) in Henderson. There is one planned project as well: Phase 2 of the Target Shopping Center at Decatur and U.S. 95 (140,000 square feet) in the Northwest submarket.
The Reno/Sparks second quarter retail market continued to improve slowly. Vacancy rates have stayed much the same from the first quarter of 2015. The more notable completed leases in the second quarter are Legends at Sparks, which signed leases with Oakley Vault, and the openings of Uniforms Factory and Jimmy John’s. Metro PCS, a cell phone store, opened another store on Oddie Blvd. Finally, Chase International signed a lease for 5,300 square feet, at D ‘Andrea Marketplace and Jersey Mike’s 1,400 square feet, at Redfield Promenade.
Northern Nevada continues to improve in the retail market with further recovery anticipated. The market is currently showing an overall vacancy of 12 percent. This includes a 14.54 percent shopping center vacancy, an 18.02 percent vacancy in power centers and an 8.44 percent general retail (freestanding) vacancy. Lease rates range from $1.10 to $2.50 triple net.
It is expected that Northern Nevada will continue to show signs of improvement, although at a slow pace. The market will continue to see national and regional retailers show interest in the area.
With housing sales improving and good retail locations still available, the third quarter of the year still should show signs of improvement in the Reno/Sparks. Rates will stay the same for 2015 and vacancy will continue to stay the same through next year.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.