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Oct. 14, 2008
Copyright © Las Vegas Review-Journal

Slumping economy hurts Las Vegas commercial real estate markets

By HUBBLE SMITH
REVIEW-JOURNAL

Las Vegas commercial real estate markets have not escaped the turmoil of the national credit and housing crises, a third-quarter retail market report from CB Richard Ellis showed.

The retail market shows the strain of the economic downturn with steadily increasing vacancies and the first quarter of negative absorption, or the amount of new space taken by tenants, in a decade.

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    • The vacancy rate ran 6.32 percent in the third quarter for nearly 59 million square feet of retail space in Las Vegas, up from 5.82 percent in the previous quarter and up 1.75 percentage points from a year ago, CB reported.

    Asking lease rates have remained steady throughout the year, dropping a penny in the third quarter to $2.20 a square foot. Lease rates dropped 40 cents a foot in the northwest submarket and about a nickel in the Nellis and southwest submarkets.

    There are some bright spots in the retail outlook for Las Vegas, including more location choices and more negotiating power for tenants, CB retail broker Penny Mendlovic said.

    The market provides certain businesses with the opportunity to expand and take advantage of exceptional deals on both the lease and sales sides, she said.

    Hispanic grocers have grown and that has affected traditional grocers, Mendlovic said. Specialty food stores such as the Buy Low market in the redevelopment area around Owens Avenue and H Street and Sunflower Markets in the southwest valley have found their niche in Las Vegas.

    Fundamentals within the Las Vegas retail sector continue to wane and the impacts associated with a global financial crisis provide little relief in the near term, Applied Analysis research firm principal Jeremy Aguero said in his third-quarter retail market report.

    Applied Analysis showed 6.3 percent retail vacancy in Las Vegas, compared with 6.1 percent in the second quarter and 3.7 percent in the same quarter a year ago. Asking rates dropped to $2.16 a square foot from $2.18 in the previous quarter.

    Power centers, or larger centers anchored by big-box retailers, had the lowest vacancy rate of 3.7 percent, while neighborhood shopping centers had the highest vacancy at 8.5 percent.

    Major completions during the quarter include Lake Mead Crossing anchored by Target in the southeast; Foothills Plaza anchored by Fresh & Easy; and Commerce Commons in North Las Vegas, also anchored by Fresh & Easy.

    Retail employment posted a gain of 4,500 positions during the third quarter, a 2.6 percent increase from last year, Applied Analysis reported. It is likely that several of the recent retail closures have yet to be reported in the latest employment figures, Aguero said.

    “Despite elevated vacancy rates, population growth continues, albeit at a slower pace, and a new bottom is expected in the coming quarters,” Aguero said. “Time will be the critical factor before Southern Nevada witnesses a material improvement in the commercial retail supply-demand equation.”

     

    Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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    charlie wrote on October 14, 2008 08:22 PM: If you guys think things are bad now, just wait until the population triples from where it is now.


    K. Hardgrove wrote on October 14, 2008 06:26 PM: Hahah ,

    Laughable comments from the uneducated hispanics that so desperately try to act as if they know something.


    Ben Dekko wrote on October 14, 2008 05:10 PM: J. Hose A. Smith

    In reference to your comment to K. Hardgrove;

    Why don't you slap some sense into one of your unruly little anchor babies?

    It's no secret that Hispaniacs have destroyed the Education system in Clark County.

    When you slap in their face, use a close fist. Remember it's "Hi how are you." Not "How high are you." pooota.


    J. Smith wrote on October 14, 2008 03:29 PM: K. Hardgrove,

    You deserve to be slap in your face with an open hand for such a stupid comment, ask your mom to do this for you!! Please educate yourself and get out of your 2 inch box. Trust me that the world is a lot bigger than where you live in North Las Vegas.

    :)


    K. Hardgrove wrote on October 14, 2008 03:05 PM:

    The problem with the hispanic growth is nobody wants to live next to, or close to them. I know as I work with their children, and most do very little to teach or discipline them, and are rude and obnoxious to responsible citisens.


    RealtorBait wrote on October 14, 2008 03:01 PM:

    Corupt Realtors and the BOard of Realtors allowing them to scam eveyone and doing nothing about places like NRS realty services cant help.


    2zero wrote on October 14, 2008 12:35 PM: Hispanic grocers have grown......chop shops and tattoo parlors are also a bright spot.

    Will the last american to leave Vegas; please bring the flag?


    WPH wrote on October 14, 2008 11:27 AM: Perhaps this will put the brakes on the plans to destroy one of the oldest golf courses and neighborhoods - The National Golf Course. Just what this valley needs another unsold, half-empty, foreclosed upon, unwanted and unneeded cookie-cutter tract.


    What the are odds Lake Mead runs dry? wrote on October 14, 2008 11:15 AM: Couldn't this be GOOD news for Lake Mead, because the Scripps Oceanography Institute had warned that there was a 50% probability that Lake Mead would run completely dry by 2020. ("Water story makes big splash;Doomsday predictions for Lake Mead, Las Vegas get world's attention ", by Henry Brean, Las Vegas Review Journal, April 14, 2008, at http://www.lvrj.com/news/17654274.html)

    City leaders have allowed uncontrolled growth in the Valley to expand beyond the capacity of our natural resources, so it's fitting that market forces are correcting the overshoot.


    Tom Best wrote on October 14, 2008 10:35 AM: No surprise in Henderson. Giant new shopping center on Lake Mead Pkwy near Fiesta is mostly empty. Another new one on Lake Mead just before Lake Las Vegas is also quietly empty. Funny, commercial development always follows after residential development, but this time, the residential was falling apart before they started construction, but they still started construction. Guess they think things will improve. And the Vantage Lofts white elephant on Gibson doesn't seem to have revived, either. Good luck.....