The Las Vegas Valley anchored retail vacancy rate declined from 11.3 percent to 11 percent in the past 12 months. At the end of Q2, vacancy rates were 7 percent in power centers, 12.5 percent in community centers and 11.8 percent in neighborhood centers. With the retail market just 1 point above the 10 percent stabilized rate and taxable retail sales at all-time highs, the Valley’s anchored market is still relatively healthy. However, its recovery has been uneven. Some submarkets continue to perform drastically better than others, with Downtown vacancy (21.6 percent) at the high end and vacancy in the Northeast (4.9 percent) at the low.
Though the retail market saw modest improvement in the second quarter of 2016, developers still seem a bit reluctant to build anchored retail space as demand in the market has been lukewarm. This accounts for the paltry 301,000 square feet of space currently under construction. When planned space is taken into account, the picture gets a bit rosier. There are 671,000 square feet planned in a market that has 44.3 million square feet of anchored inventory.
Space under construction in Q2 encompassed three projects: Silverado Promenade in University East and the Caroline’s Court and Decatur 215 expansions in the northwest. The 671,000 square feet of planned anchored centers covered four projects: St. Rose Square and Smith’s Marketplace in Henderson, DC’s Plaza in the Northwest and the Edge in the Southwest.
Since January of 2016, Northern Nevada has provided homes to many new and emerging businesses, placing Reno/Sparks on the map as a prominent retail hub. The second quarter of 2016 saw modest market activity with net absorption at a positive 66,629 and overall drop in vacancy rates to 10.0 percent.
The retail market has seen an increase of rental rates averaging around $1.34 per square foot in Reno/Sparks. There is a high demand and little inventory for restaurant spaces in the area, therefore landlords are able to charge a higher price for spaces with a grease interceptor and/or a hood already in place. Regardless of the retailer, we are going to see lease rates continue to rise throughout the year.
While there were no finished products delivered this quarter, the last four quarters have seen a total of 104,566 square feet of newly completed retail projects and 7,000 square feet under construction in Spanish Springs.
With Nevada’s business friendly environment and the area’s growing economy, Northern Nevada is seeing a lot of new, out-of-state retailers and plenty of local boutique shops opening their doors. Meadowood Mall will add two tenants to their directory this year. Dicks Sporting Goods is currently under construction with over 50,000 square feet and a Cinemark Movie Theater of over 53,000 square feet will follow. Small and local boutiques will be opening their doors closer to the urban core in downtown and midtown Reno.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis provided by Dickson Commercial Group.