Valley retail rents climb in 2007

Vacancy rates in Southern Nevada the lowest
in the country, almost full occupancy at 3.2

February 05, 2008 - Southern Nevada's population boom has fueled steady retail demand and expansion resulting in higher asking rents in 2007, reports Applied Analysis, a Las Vegas-based business advisory firm. Average asking rents reached $2.20 per square foot in the fourth quarter for a 21-cent increase from the previous year.

"It's a sign that the retail market is moving north, but it's also indicative of the type of available space," said Brian Gordon, principal of Applied Analysis. "A large amount of space has just entered the market."

The Las Vegas Valley had a record 4.1 million square feet of worth absorption in 2007, which is more than double the amount of the past two years combined. In the fourth quarter, 1.6 million square feet of retail was completed, including Turnberry/Centra's $750 million, 117-acre Town Square at the I-15 and Las Vegas Beltway interchange as well as several buildings inside EJM Development/Laurich Properties' $150 million, 945,000-square-foot Arroyo Market Square at Rainbow Boulevard and Badura Avenue.

It brought Southern Nevada's anchored retail inventory to 48.7 million square feet. Yet vacancy rates were still at 3.2 percent in the fourth quarter, which is essentially the equivalent of full occupancy.

"Retail vacancy rates in Las Vegas remain the lowest in the U.S.," said Craig Shute, managing director of CB Richard Ellis' Las Vegas office. "Developers and retailers have struggled to bring new retail projects online fast enough to meet the demand caused by a two decade-old population boom in Las Vegas."

Power centers such as Arroyo Market Square and Town Square commanded the valley's highest retail asking rents in the fourth quarter at $2.53 per square foot, while neighborhood centers were lowest at $2.11 per square foot. The sharp spike in rents is partly attributable to the rising development costs, including inflationary increases in land and construction.

But a softening economy and housing market downturn could raise a caution flag for the retail market.

"Consumer spending remains an area of concern for retailers and related commercial markets," Gordon said. "The impacts associated with a softer economic climate in Southern Nevada, primarily attributable to a rebalancing in the residential sectors, has the potential to adjust tenant credit profiles in the near term. However, it's worth noting the majority of new product has been pre-leased and overall supply and demand have remained fairly in balance."

Projects

Tod Little and Patricia Lopez are developing a 10-building, 58,257-square-foot industrial park at the southeast corner of Olsen Street and Dusan Way in Henderson. Builder's Capital's Steve Brockman negotiated a $5.5 million loan for construction and development of the 3.8-acre site.

The Korte Co. completed a $5 million, 58,000-square-foot office building for E&P LLC inside Beltway Corporate Center II at 8965 Eastern Ave. KKE Architects designed the three-story, concrete tilt-wall structure.

Breslin Builders is constructing the $1.17 million Meadows Bank branch inside The Park at Spanish Ridge at I-215 and Tropicana Avenue. Ed Vance & Associates is the architect. The 9,713-square-foot initial phase will finish Feb. 1. An additional 4,400 square feet of executive and corporate offices will finish in the fourth quarter.

World Market Center unveiled plans for its fourth building at the northwest corner of Grand Central Parkway and Bonneville Avenue. The 17-story, 1.1-million-square-foot "Building D" is scheduled to start construction later this year with an anticipated completion date by early 2010. It will give World Market Center more than 6 million square feet of showroom and design space.

Venture Corp. has started construction on a 24-acre, 300,000-square-foot medical office and retail complex at Durango Drive and Grand Montecito Parkway in northwest Las Vegas. Centennial Hills Center will consist of 18 buildings, including 12 single-story offices, a two-story office building, one three-story office building and four retail buildings. The project is scheduled to finish later this year.

SR Construction completed the $1 million, 8,656-square-foot Shepherd Eye Center at 2475 Horizon Ridge Parkway in Henderson. The facility, designed by Parker Scaggiari, consists of 21 exam rooms, a laboratory, offices, a lobby and reception area.

Crisci Builders is constructing a $1.5 million Bank of America branch inside McCarran Marketplace at the northwest corner of Eastern Avenue and Patrick Lane. Designed by Gensler of Nevada, the 4,800-square-foot building is scheduled to open in mid-July.

Power centers like Town Square at the Interstate 15-Las Vegas Beltway interchange commanded the valley's highest retail asking rents in the fourth quarter at $2.53-per-square-foot. COURTESY TURNBERRY ASSOCIATES