Retail registers big during third quarter

November 12, 2004 - Southern Nevada's population boom together with a robust housing market and lower taxes have propelled the valley's retail market to a low a 3.6 percent vacancy rate during the third quarter, a .2 percent improvement from a year ago, reports Applied Analysis, a Las Vegas-based economic research firm. There was 38.8 million square feet of inventory in 248 anchored centers for the quarter, with 513,000 square feet of absorption or over six times the amount recorded in 2003.

"We remain optimistic about the growth prospects for our local economy, which bodes well for the retail real estate market, says Brian Gordon, principal of Applied Analysis. "With tax cuts and historic low interest rates, there is more disposable cash available resulting in increased consumer spending."

Taxable retail sales for the 12 months ending July (most recent data available), were $28.2 billion, up 12.5 percent over last year. Significant growth was reported in eating and drinking establishments, and consumer confidence for September reached 96.8 percent, or 27.5 percent higher than in 2003.

Only one major anchored shopping center came online in the third quarter - Marathon Commercial Real Estate's new 147,000-square-foot Simmons Marketplace, located at the southwest corner of Ann Road and Simmons Street in North Las Vegas. Despite this, there was 2 million square feet of new space under construction with another 4.7 million square feet planned for future development in the Las Vegas Valley.

New retail projects underway include Montecito Companies' new $3.3 million, 46,397-square-foot Tenaya Village, located at Tenaya Way and Azure Avenue in Las Vegas; Venture Development Group's 40,000-square-foot, 4.5-acre Eastern Crossings, located at Eastern Avenue and Ione Road in Henderson; Bullseye Commercial Real Estate's $5.1 million, 22,700-square-foot Lake Mead Promenade, located at Lake Mead Boulevard and Torrey Pines Drive in Las Vegas; and Laurich Properties' $18 million, 100,000-square-foot Simmons Centre, located at Simmons Street and Ann Road in North Las Vegas.

Future projects consist of Triple Five Nevada's planned 65-acre, 2-million-square-foot regional mall near U.S. Highway 95 and Centennial Parkway in northwest Las Vegas; CENTRA/Turnberry's $300 million, 1.5-million-square-foot Town Centre, situated on 100 acres at the northwest corner of Sunset Road and Las Vegas Boulevard South; and Olympia/Simon Property Group's $750 million, Southern Highlands Center, situated on 125 acres at the southwest corner of Las Vegas Boulevard South and Cactus Avenue.

"Neighborhood shopping centers servicing dense residential areas were the strongest retail product type during the third quarter, with a 3.4 percent vacancy rate and 379,950 square feet worth of absorption," says John Restrepo, principal of Restrepo Consulting Group LLC, a Las Vegas-based economic research firm.

There have been 21,054 new home sales through September, an 18.1 percent increase over last year, reports SalesTraq, a residential tracking firm. In addition, there were 46,899 pre-owned home sales during the same time frame, a 43.2 percent improvement over 2003. With 6,000 new residents annually, home sales are expected to continue, thereby driving the demand for grocery-anchored retail centers as well as home furnishing outlets. Retail-related employment increased 5.4 percent through the third quarter for a gain of 8,400 jobs.

North Las Vegas was the strongest retail submarket during the third quarter, registering a low 1.4 percent vacancy rate, Restrepo says. The U.S. Census Bureau said North Las Vegas was the second fastest growing city in the country between 2000 and 2002 with a population increase of 17.7 percent. In May 2003, the 1,905-acre master-planned community Aliante opened in North Las Vegas. The joint-venture development by American Nevada Company and Del Webb Communities will eventually have as many as 7,500 homes and 20,000 residents.

The weakest retail submarket was downtown with a 19.4 percent vacancy rate and a $1.37-per-square-foot triple-net lease rate, which is 31 cents lower than the valley wide average.  Continue >>