Retail had another strong quarter with Q2 total sales at nearly $48 million over 23 total sales. The average price per square foot in the first quarter was $356.76 with two sales over $1,000 per square foot. No neighborhood centers have traded hands in the first two quarters of 2021. The market has limited inventory and single tenant net leased deals priced under $5 million are still seeing strong buyer interest. The buyer demand for well-priced product with credit tenants remains very high.
Reno’s retail leasing market continues to remain steady from the first quarter, with an overall vacancy rate of 6.3 percent. Curbside and delivery services have been extremely beneficial to local and national restaurant sales since the start of the pandemic. Due to this, a lot of smaller restaurant operators (and food truck owners) are actively looking for restaurant space under 1,500 SF. A few sit-down restaurants that closed down this quarter, including Midtown Eats, Rapscallion and Food + Drink. Their spaces are north of 2,000 SF, which are not in strong demand in the market currently.
The largest lease transaction this quarter, 19,370 SF, was for The Salvation Army which will occupy a former Big Lots location within the McCarran Plaza Shopping Center. They will be joining $0.99 Only, AutoZone, McDonalds and Pizza Hut within this center.
By Avison Young
Although it has been experiencing new delta variant-induced setbacks, Las Vegas is open for business. As employees return to work and tourists venture back, the retail sector is becoming more robust. At 5.9 percent, the vacancy rate has been reduced by just over one basis point since Q1 2021. To give some perspective, this is still favorable – three years ago the area saw a vacancy rate hovering around 10 percent. Over the last 12 months, retail rents have grown 4.5 percent overall (per CoStar).
While retail located on the Las Vegas Strip will continue to improve in parallel with hotel occupancies and reemerging entertainment venues, the housing market is experiencing a historical high for pricing and record high demand for new home construction due to in-migration. As retail follows rooftops, submarkets outside of the core are strong overall for the sector. In particular, grocery stores and quick service restaurants (QSRs) with drive-thrus have been experiencing the highest demand. Sporting goods stores and dollar stores are also doing quite well.
Overall, Q2 2021 didn’t have a lot of activity on the leasing or sales side. For sales, there is a dearth of inventory. On the leasing side, affluent suburban areas like Summerlin are seeing the most activity. Experts are optimistic that the second half of this year will experience an increase in retail activity as Las Vegas picks up momentum.