Retail vacancy in Las Vegas still among lowest in country

Developers are keeping pace with a population that’s growing by 6,000 people a month, adding nearly 1.5 million square feet of retail space during the quarter, with 7.2 million square feet under construction, CB reported.

The retail vacancy rate in Las Vegas remains among the five lowest in the country at 4.57 percent, CB managing director Craig Shute said.

The southwest valley continues to be a hotbed of activity, with 2.7 million square feet of retail under construction, he said.

Among the new retail developments in the pipeline is the $750 million, 1.5 million-square-foot Town Square set to open Nov. 14 on Las Vegas Boulevard South at Sunset Road, next to Fry’s Electronics.

The joint venture project between Florida-based Turnberry Associates and Las Vegas-based Centra Properties is designed to create a sense of community, Town Square general manager Mike Wethington said. A children’s park will have a life-size playhouse, hedge maze, treehouse and pop jet fountain.

“I think we’re unique and different than everything out there in retail in Las Vegas,” Wethington said. “There’s not a separate outdoor shoppping center of our size with 22 buildings in a downtown lifestyle-type setting.”

Mixed-use projects continue to be a strong focus for developers, Shute said. A sharp rise in land prices over the last decade has forced this trend to maximize profits and appease people’s desire to shop, eat and be entertained in one location, he said.

Other large retail developments include The Arroyo in the southwest and Deer Springs Crossing in North Las Vegas. Summerlin Center and The Great Mall of Las Vegas, with a combined 3 million square feet of retail, are still in the early planning stages.

Average monthly asking lease rates are $2.08 a square foot, up from $2.04 in the previous quarter and $1.92 a year ago, CB reported.

Restrepo Consulting Group and Colliers International are showing 2.9 percent vacancy for the third quarter, compared with 3.1 percent in the second quarter and 2.8 percent a year ago. More than 417,000 square feet of space was completed, bringing total retail inventory to 39.7 million square feet.

Real estate analyst John Restrepo said he expects retail projects in the pipeline to be quickly absorbed as they are completed. Retail centers have opened with much of their space already preleased in the past couple years, leading to strong absorption ratios and reflecting the growing need for services and products to meet the growing population and business activity, he said.

“All in all, the valley’s multitenant-anchored retail market should see a tight supply-demand balance over the next year,” Restrepo said. “And despite significant additions of new space, we’ll still see very low vacancies.”

Las Vegas is positioned to be a national luxury shopping destination as high-end retailers such as Barney’s New York, Nordstrom and Crate & Barrel look to enter the market or expand their existing presence, Shute said.

A capital markets report from Marcus & Millichap Research Services said retail growth in recent years was largely supported by housing and mortgage refinancing. With low interest rates and looser underwriting standards, homeowners cashed out more than $1 trillion in equity from 2002 to 2006.

Cash-out refinancing will not be a driver, but major retailers have accounted for slower retail sales growth when preparing expansion plans, the report said. Rental rates are forecast to rise at a slower pace as consumer spending returns to more normal levels.

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