Retail sales have been up and down quarter by quarter for some time. Q1 was down by 50 percent from Q4 but volume overall was consistent with averages when looking at the last 12 months. Two major deals made up over 55 percent of the total volume for the quarter which helped keep the numbers up. The first quarter had a volume of $43 million and a total of 19 sales. The most notable sale was 115-195 W Plumb Lane which sold for over $12 million. Additionally, 2970-2990 Northtowne Lane sold for $7.1 million to a local investor.
The start of the first quarter of 2020 saw a healthy demand on the leasing side. The vacancy rate was at 5.6 percent, which is less than half of 2012’s all-time peak at the start of its second quarter. The largest leasing transaction so far this year was for Toro De Oro Market. They leased just under 10,000 square feet at 558 N. McCarran Blvd. in Sparks, previously occupied by Shoe Dept. Steinway Piano Gallery & Not Just Furniture renewed their lease at 500 Moana Lane for a combined 18,063 square feet. There were just over 50 new leases executed this quarter.
At the start of 2020, employment growth in Reno was among the highest in the nation. Due to COVID-19, the shutdown of many non-essential retailers has caused an impact on this growth. The first quarter ended as the shutdown launched, we will see the effects of said shutdown next quarter.
The arrival of the COVID-19 pandemic has created an economic shock that has likely pushed the global economy and the U.S. into recession. Retail establishments, restaurants, passenger transportation, schools and leisure activities have almost all grinded to a halt while customers self-quarantine and practice social distancing.
In southern Nevada, the overall vacancy rate was 7.8 percent for retail in the first quarter, the central east submarket posted the highest vacancy rate at 11.5 percent. The overall net absorption for the period was -293,312 square feet. The region saw approximately 448,603 square feet under construction for Q1 with the overall asking rent at $1.55 per square feet (NNN). Key lease transactions included a 32,000 square feet renewal from Ross in Central East and a 30,000 square feet and 18,000 square feet renewal for Burlington and Planet Fitness, respectively, in the northwest. Key sales transactions for the quarter included 51,986 square feet purchased by Maryland Crossing in central east and 43,646 square feet and 38,931 square feet purchased by DeColores and Jenel Management, respectively, in central west.
Given the way events have unfolded it’s expected that the second quarter of 2020 will see one of the largest real GDP declines in U.S. history. What is less clear is what the economic trajectory will be following Q2. Hopeful signs are emerging that policy steps to “flatten the curve” are beginning to work in certain areas, but many unknowns remain.