The Las Vegas Valley anchored retail vacancy rate ticked up from 11 percent in Q2, 2016 to 11.1 percent in Q3, 2016. At the end of Q3, vacancy rates were 7.8 percent in power centers, 12.8 percent in community centers and 11.2 percent in neighborhood centers. With the retail market just one point above the 10 percent stabilized rate and taxable retail sales at all-time highs (thanks to tourists), the Valley’s retail market is still relatively healthy. However, its recovery has been uneven.
Though the retail market has been relatively stable in 2016, developers still seem reluctant to build anchored retail space because of lukewarm demand. This accounts for the paltry 130,000 square feet of space currently under-construction. When planned space is taken into account, the picture gets a bit rosier. There are 692,000 square feet planned in a market that has 44.3 million square feet of anchored inventory. Net absorption in Q3 was approximately -6,000 square feet. This level of absorption brought year-over-year number to 99,500 square feet.
The 130,000 square feet of under-construction space was in one project: Silverado Promenade in University East. There were also 692,000 square feet of planned anchored centers in three projects: St. Rose Square (466,000 square feet) and Cadence Village Center (153,000 square feet) in Henderson and DC’s Plaza (73,000 square feet) in the Northwest.
Las Vegas’ retail market is being significantly reshaped by e-commerce. This reshaping is making Warehouse/Distribution centers the “retail centers” of the future.
The overall retail market in Northern Nevada for Q3, 2016 has shown modest improvement from the previous quarter. Vacancy rates dropped from last quarter’s 10.2 percent to 9.5 percent in Q3, which can be attributed to an increase in the desirability within the general retail sector, which includes mostly freestanding retail buildings. All retail markets saw a decrease in vacancy rates with the exception of power centers moving from 17.7 percent at the end of Q2 to 20.1 percent in Q3. Total net absorption was 97,036 square feet in Q3.
Although the commercial real estate market is expanding in Northern Nevada, average asking rental rates are down 6 percent from the previous quarter to $1.17 per square foot. This figure may be skewed due to lower lease rates in markets such as Carson City, Douglas, and Gardnerville.
This quarter, major retailer, Dicks Sporting Goods, opened at the Meadowood Mall and the Outlets at Sparks announced it will welcome H &M (Spring 2017) and F21 Red (Winter 2016). Several anticipated deals closed this quarter including the 45-acre lot that was once Park Lane Mall. Reno Land Development purchased the property for $26,923,683.00 ($14.60 p/sf), and plans to redevelop the now sitting dirt lot into a mixed-use property including multi-family, retail, and office.
While local developers direct their attention to Reno’s downtown and midtown, there has been an influx of outside investors and developers looking towards the greater Reno area for blighted buildings and value-add opportunities.
Southern Nevada analysis and statistics compiled by RCG Economics, Northern Nevada analysis and statistics compiled by Dickson Commercial Group.
*Does not include S. Lyon County, Douglas County, or Carson City