During the fourth quarter of 2009, the Las Vegas commercial retail market remained stressed. Vacancies remained elevated while declines in average asking rents continued to accelerate. Vacancies during the fourth quarter of 2009 were 10.0 percent of inventory and compared to the prior year (Q4 2008) vacancies remain up 2.5 points from 7.5 percent. For comparison purposes, the historical 10-year average vacancy rate in anchored retail centers is 4.5 percent, well below current levels. As vacancies remain elevated, average asking rents continued to downshift during the fourth quarter. The average price per square foot per month fell to $1.84, a 13.6-percent decrease from $2.13 witnessed just one year ago.
By the end of 2009, the retail market reported 51.8 million square feet of inventory, consistent with the preceding quarter (Q3 2009) as no material projects completed construction during the past three months. For the year, the market added 1.3 million square feet of inventory, the lowest reported annual total since 2005. During the fourth quarter of 2009, the retail market reported negative net absorption of 49,900 square feet, suggesting more tenants moved out than moved in. During the entirety of 2009, the market reported negative net absorption of 71,300 square feet. Not unlike other sectors of the market, the past year reflects the first time annual absorption turned negative since we began tracking the market in the early 1990s.
Projects that remain actively under construction totaled approximately 809,800 square feet and include a Lowe’s-anchored center in the northwest and Tivoli Village at Queensridge. Plans for 6.7 million square feet remain on the drawing board.
The retail market in Northern Nevada, like most of the Nation, continued to show softness. Overall vacancy rates ticked up throughout the year and ended at another all-time high of 16.37% compared to 2008’s year-end figure of 14.05%. Of the 15.4 million square feet of retail space tracked by Colliers, line-shops were the most challenging, especially in un-anchored centers, with 1.7 million square feet available. This represents approximately 500 storefronts that have gone dark or have never been leased, being caught in the downturn. The year recorded 18 anchor spaces over 25,000 square feet and 16 junior anchor spaces from 10,000 to 24,999 square feet, representing 1.3 million square feet of space on the market. The good news of the year was the opening of 308,000 square feet in Legends at Sparks Marina and the 63,000 square foot expansion of Shopper’s Square. These projects pushed the net absorption numbers up to 126,000 square feet compared to the negative 60,000 square feet recorded in the fourth quarter of 2009. Christmas sales also brought a bit of holiday cheer. Same store sales for the month of December rose 2.8% over December 2008. This was the strongest monthly sales gain since April 2008. Tenants in the Reno trade area that posted noteworthy gains include TJ Maxx, Ross, Costco, Marshall’s, GameStop and Dollar Tree.
A top priority for landlords and brokers alike is holding onto current tenants. If there is a common mantra for 2009 and 2010, it would be to “hold on to your tenants and work with those with a viable business model”. There are fewer and fewer users to back-fill empty spaces and it is not cheap for landlords.
Southern Nevada Analysis and statistics compiled by Applied Analysis, Northern Nevada Analysis and statistics compiled by Colliers International Reno