The Las Vegas Valley anchored retail vacancy rate dropped slightly to 11.4 percent in Q3, 2015. At the end of Q3, vacancy rates ranged from 9.3 percent in power centers to 13.2 percent in neighborhood centers. With the retail market just above the 10 percent stabilized rate and taxable retail sales at all-time highs, the Valley’s anchored market remains fairly healthy. However, its recovery has been uneven, with some submarkets doing better than others. The major factors holding retail vacancy above 10 percent are the lack of good quality vacant space and the generally flat wages of workers.
Developers seem to be holding out on new anchored retail construction and that’s why only 210,000 square feet were under construction at the end of Q3. And, there is only 225,000 square feet planned in a market that has 44.3 million square feet of anchored inventory.
Net absorption in Q3 was approximately 238,000 square feet. This level of absorption was just enough to keep the year-over-year absorption positive at around 38,200 square feet. Two of the three product types had negative year-over-year absorptions. Neighborhood centers saw negative absorption of nearly 215,000 square feet, year-to-date, and community centers saw -124,000 square feet.
Space under construction in Q3 was 210,000 square feet in two projects: Silverado Promenade in University East and Durango Arby Plaza in the Southwest. There was also 225,000 of planned anchored centers in two other projects: Decatur 215 and DC’s Plaza both in the Northwest.
The Reno/Sparks Retail market has defiantly improved this quarter. With new construction of retail sites in the last few months the market’s vacancy numbers have stayed the same even though leasing activity has increased. a Lease rate have improved from last quarter and there is interest from national tenants along with local tenants expanding.
UFC Gym, Dunkin Donuts, Nutrishops, Grateful Gardens, Full Pedal Indoor Cycling, Jimmy Johns and others are all looking to open new stores in the market. Larger new leases signed such as Smart and Final, Petco, Sleep Number Mattress, Chick Fil-A also shows that national tenants are back looking at the market. Investors are also showing confidence as there were some notable sales of retail properties this year.
The market showed an overall vacancy rate of 11.7 percent. Shopping center vacancy was at 14.4 percent, power centers were at 17.4 percent and the general freestanding retail vacancy rate was at 7.9 percent in the third quarter. Lease rates for Reno’s retail market ranged from $1.35 to $3.00, triple net.
Reno/Sparks will now see a steady growth in retail and new development starting. In the case of Legends at Sparks Marina the exterior pads are expected to be developed. With housing sales up in the area and good retail locations still available, rates will increase this year and vacancy will continue to go down through next year.
The market is improving, but there is still a ways to go to absorb some of the vacancy that is out there. Store closings will be slower than they have been.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.