Due to rapid home appreciation in recent years, high home prices have left many residents with less disposable income for retail purchases. Combined with the drop in cash-out refinancing, retail sales growth has declined.

However, retail developers continue to respond to the metro's robust population growth by increasing deliveries of new store sites. Preleasing activity remains strong and vacancy is expected to stay around 4.2 percent this year, Marcus & Millichap regional manager John Vorsheck said.

"Investors will continue to be attracted to the impressive and strengthening fundamentals in the Las Vegas retail market," he said.

Institutional buyers are raising their holdings, accounting for about half of retail transactions in Las Vegas last year.

Christina Roush of CB Richard Ellis said offerings in Las Vegas are typically more attractive than properties on the market in other places. In March, she helped a group of Northern California investors purchase a $23 million grocery-anchored retail center in Henderson.

"Bay Area buyers are generally accustomed to much lower cap rates than buyers from other parts of the country," Roush said.

Other significant findings from the Marcus & Millichap retail report include:

• In 2007, local employers will add 32,300 jobs, an increase of 3.5 percent.

• Developers are on track to deliver 3.2 million square feet of space by the end of the year, up from 2.1 million square feet last year.

• Thriving tenant demand is driving rents higher in Las Vegas. Year over year, asking rents have increased 6.2 percent to $22.63 a square foot, while effective rents gained 6 percent to $20.50 a foot.

• Investors should focus on single-tenant properties in the northwest submarket of Las Vegas. The majority of the metro's expanding population is expected to settle in this submarket, attracted to the area's more affordable single-family housing.

"Despite the recent slowdown in the Las Vegas housing market, retail construction is continuing to grow strongly, especially in market segments such as the southwest that until recently have been underserved," said Matt Ryba, chief executive officer of TWC Construction in Las Vegas. "Thousands of people continue to move to Las Vegas every month and they all require retail services."

TWC is building a $4.2 million retail center for Blackstone Capital Group at 5105 S. Fort Apache Road.

Roush said she continues to see interest from out-of-state investors. Besides having an attractive pricing model, particularly when compared to California, many properties in Southern Nevada have experienced 20 percent to 25 percent rent growth over the past 18 months, she said.

She thinks that trend will continue given the consistent pattern of 6,000 to 7,000 people a month moving to Las Vegas and that there is more than $30 billion worth of development planned or under way on the Strip.

The economic throw-off effect of the Strip development alone should buoy the Las Vegas economy well into the next decade, Roush said.