The overall vacancy rate for the Las Vegas Valley anchored retail market in the fourth quarter of 2014 was 11.4 percent. The vacancy rate increased 0.4 points, from 11 percent in the third quarter. However, vacancies were down 0.3 points, from 11.7 percent compared to the same time in 2013. While the vacancy rate rose, the general trend still shows that the market is improving by declining during the previous four quarters.
Completions during the quarter were 222,000 square feet, all in one project. This marked the first quarter of new anchored retail space coming to market since 2012. The completed project is the Sahara Center community center in the northwest submarket. This increased total anchored retail inventory to 44.3 million square feet.
Despite the rise in vacancy, net absorption remained positive for the quarter with 38,600 square feet of newly occupied space. Absorption was 323,300 square feet, year-over-year. Power centers led the way with 310,500 square feet of net absorption. Neighborhood centers also posted growth with 147,300 square feet of absorption. However, a decline in net absorption among community centers of 310,500 square feet erased most of the gains in the rest of the anchored retail sector.
Space under construction in fell to 278,700 square feet. Two projects comprise this space: Phase 2 of the Target Shopping Center (140,000 square feet) in the northwest submarket and Phase 2 of Green Valley Crossing (138,700 square feet) in Henderson, both of which are community centers. Work on these sites is intermittent, however, and progress is slow.
The Reno/Sparks Retail market has shown some signs of improvements this year. Lease rate have shown a slight uptick from last year and overall interest in the area is up. Starbucks, Jimboys Taco, Raising Cane’s, Dunkin Donuts, and others are all looking to open new stores in the market. Larger new leases signed such as Hobby Lobby, Natural Grocers, and Nordstrom Rack show the market is improving when compared to the last few years.
Investors are also showing confidence as there were some notable sales of retail properties this year.Stanford Crossing, the former Heritage Bank Building, and 6395 S. McCarran (5 Guys Burgers) Longley Town Centre, and Longley West Town Center.
The overall vacancy in the market is 12.7 percent. In addition the shopping center vacancy is 14.6 percent and the power center vacancy is 20.4 percent. General retail (freestanding vacancy stands at 9.2% and lease rates range from $1.10 to $2.25 NNN.
Downtown Reno will be an area that will continue to see growth. Reno Provisions, The Bridge, the re-location of Starbucks opening downtown and the re-development of the former Heritage Bank building will all contribute to that growth among other opportunities. Retail space in locations downtown will continue to be in demand.
With housing sales improving in the area and good retail locations still available, 2015 should show signs of improvement in the market. Rates and vacancies are expected to stay the same for 2015