After a small first quarter increase of 0.3 points from 10.5 percent vacancy in the Las Vegas retail market held firm at 10.8 percent in Q2. The Valley’s anchored retail market is generally stabilized, though there remains room for improvement. Some submarkets have fared better than others, such as the Northeast with a 5.8 percent vacancy rate. At the other end of the spectrum is the Downtown submarket with 22.2 percent vacancy.
Net absorption in Q2 was improved at 9,254 square feet, though this did little to make up for Q1’s losses of -110,806 square feet. Still, the year-over-year total remained positive at 180,762 square feet.
Development in the anchored retail market continues to pick up with one completion in Q2: Green Valley Crossing Phase 2, a 34,000 square feet community center. Space under construction has increased from Q1 to 374,943 square feet, with planned space at 821,550 square feet, bringing the total forward-supply to well over one million square feet.
The 374,943 square feet of under-construction space is on two projects: Mountain’s Edge Marketplace, a 250,000 square feet Community Center and Smith’s at Skye Canyon, a 124,943 square feet neighborhood center. The 821,550 square feet of planned Anchored space is in four projects: St. Rose Square (466,000 square feet), Cadence Village Center (153,000 square feet) in Henderson, DC’s Plaza (72,550 square feet) and Silverado Promenade (130,000 square feet).
Having dropped a total of 0.9 percent vacancy since the end of Q1 and a total of 1.6 percent over the last year to end Q2 at 8.0 percent, the Reno/Sparks retail market continues to gain a modest but ever increasing traction in the national marketplace. The drop in vacancy over this last quarter was largely due to three major lease signings totaling just under 100,000 square feet of big-box retailers in Sparks. Q2 absorbed 302,468 net square feet, 213,735 square feet more than that of Q1, and an average lease rate of approximately $1.30 per square foot in all retail sectors. However, lease rates vary drastically depending on the submarket and the age of construction.
The general retail sector remains the most active with an average vacancy rate of 4.1 percent. Shopping centers are not far behind with a drop in the vacancy rate of 1.2% in Q2. A total vacancy of 10 percent and 170,000 absorbed this quarter. Power center vacancy remains the highest in the Northern Nevada market with 14.8 percent vacancy and only 14,470 square feet absorbed in Q2.
Retail development in Northern Nevada has seen a slight increase since the start of 2017 with just under 25,000 square feet of new construction delivered. As of this quarter, just under 100,000 square feet is under construction.
As developers continue to redevelop blighted properties and new construction continues across the Nevada market, there will be a gradual rise in lease rates.