by NAI Alliance
The Reno/Sparks retail market saw mixed results in the fourth quarter of 2017. The total gross absorption was 51,733 square feet during the quarter with 28 tenants opening stores. The largest tenant opening was the 7,000 square foot Verity Fitness in the Northtowne Marketplace near Winco.
There was a negative net absorption of 73,122 square foot due to store closures. The overall retail vacancy rate in the market is 13.5 percent, up from 12.8 percent in the previous quarter. The anchor vacancy rate (for spaces over 20,000 square feet) is 13.8 percent. The line shop space vacancy rate (spaces under 20,000 square feet) is 13.1 percent. This is the first time in recent record keeping that the line shop vacancy dropped below the anchor vacancy. For the year, the gross absorption was 420,926 square feet and the net absorption was 121,015 square feet. There was 124,855 square feet of space vacated during the quarter from 15 tenants.
Retail investment sales continue at a healthy clip in Reno/Sparks with numerous transactions in the fourth quarter. Two of the more notable transactions include the sale of a six building portfolio in mid-town totaling 73,496 square for $16.5 million or $225 per square foot. The other sale was the Jiffy Lube on Prater that sold at a 6 percent cap rate for just over $1.6 million or $1,158 per square foot.
The Las Vegas Valley retail segment has shifted towards expansion mode with approximately 114.1 million square feet in the market. The current vacancy rate is 6.6 percent, a drop by about 10 basis points from last quarter. This drop was driven by power centers with a vacancy rate of 4 percent. The vacancy rate for neighborhood and community center is still at about 10 percent.
The average lease rate is approximately $1.34 per square foot, triple net. The lease rate for power center’s are $1.55 per square foot, community centers are at $1.30 per square foot, neighborhood centers are $1.40 per square foot and strip centers are $1.25 per square foot. The current average sale price is about $235 per square foot. Although, that number changes dramatically depending on submarket. Cap rates are at 6 percent. In 2017, 4.4 million square feet traded hands.
There were 70,000 square feet worth of projects delivered in the fourth quarter with 500,000 square feet still under construction. Projects include Mountains Edge Marketplace, a 130,000 square foot community center; a 170,000 square foot Walmart Center in the southwest and a 500,000 square foot, Costco-anchored power center being developed along St. Rose. Construction is ramping up with an estimated $18 billion in construction projects planned over the next several years.