Las Vegas Commercial Real Estate Retail Market Report

2. COMMERCE REAL ESTATE SOLUTIONS is a regional real
estate firm dedicated first and foremost to our clients. With
the industry’s premier professionals, and industry leading
technology, our mission is toexceed our clients’ expectations
throughservice excellence.
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3. RETAIL MARKET INDICATORS
Change Since
Current 4Q09 4Q08 LAS VEGAS
RETAIL MARKET OVERVIEW
Vacancy 13.02%
Lease Rates $1.85 NNN
Net Absorption * (306,722)
Construction N/A
*The arrows are trend indicators over the specified time period, and do not represent a positive or negative
value. (e.g., absorption could be negative but still represent a positive trend over a specified period.)
RETAIL MARKET OVERVIEW
AT A GLANCE By end of the year vacancies reached new highs with
approximately 7.28 million square feet of vacant product
Vacancy Rates Reached New Highs coming online. This equates to a 13.02% vacancy factor.
Overall vacancy rates reached another high during the quarter at 13.02%. This is a
2.8% jump from third quarter 2009 and a 5.62% raise from a year ago. Anchorless Above-average vacancies were noted in the North Las Vegas
Strip product type is showing the highest vacancy rates at 18.66%. Vacancy increases (17.43%), Central East (15.44%), East (15.37%) submarkets.
during the year were impacted by several store closings due to the current economic
conditions.
By product type Strip Centers (18.66%) and Neighborhood
Centers (18.05%) retail buildings posted the highest vacancies
Rents Remained Stable at the end of the quarter as discretionary spending pulled back,
As Landlords are faced with a “Tenant” market, they are seeing many retailers further impacting the viability of small business owners. The
renegotiating for lower rents and asking for more concessions as their leases come up
retailers that are pulling through the recession have enjoyed
for renewal. Negotiations like these and more up-front incentives help stabilize and even
lower the overall average lease rates. Currently, the Las Vegas market is showing annual the current vacancy and the old time saying “location, location,
averages lease rates at $1.85 per square feet (psf). This is a drop from last quarter at location” really means something right now to the retailers that
$1.92 psf and higher of a drop from a year ago when rates where at $2.18 psf.
can make the move to a more premier locations as rental rates
are lowered and become more affordable.
Challenging Outlook for Las Vegas Continues
Looking forward, the retail sector is expected to continue to face challenges posed by
According to a report in Time magazine the new rage in retail
a troubled employment market, low consumer confidence levels and a still struggling
housing market. Vacancy rates are expected to continue upward into the foreseeable
leasing are what is called “pop-up shops” Pop-up stores, or
future. The task of identifying tenants who have a need for space in some of the larger
temporary retail outlets, are one way for landlords to fill an ever
units and filling more than 6.9 million square feet of available product will be difficult
in the next year. growing amount of retail vacancy. According to Mike Kraus,
“pop-ups are an opportunity for both entrepreneurs and big
brands to make some money without having to worry about
the overhead of a five-year lease.” Pop-ups are not just for mom
and pop operations. According to the report Toys “R” Us is looking to replace the former KB Toys, by opening 350 holiday express toy
outlets during the holiday season. Other retails that have dabbled in the pop-up concept include American Eagle, Gap, JC Penny, Ann
Taylor and Gucci. With long vacancy times Landlords are looking for some part time foot traffic and retailers gain opportunities to
create buzz on special products and/ or short term sales during important shopping months.
Pricing (Average Asking Rents)
Weak consumer spending and troubled employment is forcing many businesses to close and the demand for retail space is shrinking.
This activity has lowered the average asking rents around the valley. Average asking rents witness a decline to $1.85 per sf/mo NNN
during 4th quarter 2009, which was slightly below the $1.92 per sf/mo NNN reported in the preceding quarter (Q3 2009) and further
below the $2.18 per sf/mo NNN reported one year ago. The amount of product available at year-end represented an all-time high,
which will likely contribute to continue softening in retail prices.
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4. OUTLOOK
As the winter months approach the temperatures are not the only
thing dropping around the valley. Turbulent debt markets and a
LAS VEGAS
slowing economy have finally hit the commercial real estate market. RETAIL MARKET OVERVIEW
According to a Federal Reserve official, “The strong headwinds
that are facing financial institutions in the United States will likely
continue for some time and struggles for the commercial real estate
market are far from over.” Prices of existing commercial properties
have declined sharply from their record highs and will likely continue
to decline. Market conditions are expected to remain sluggish all
throughout 2010 as the economy works it way out of the recession.
Also affecting a faster recovery in the retail market comes from a
combination of all-time low levels of consumer confidence and
the highest unemployment numbers that we have seen in 26 years. The current 10% national unemployment rate equates to 15.7
million workers that remain jobless. According to the Labor Department “the largest job losses were in construction (down 62,000),
manufacturing (down 61,000) and retail (down 40,000). Chief economist, Alan Levenson stated that “It’s not surprising to see
continuing job losses in the retail sector because too many stores were built in response to overzealous consumer spending fueled by
borrowing.” Although most economists report that the recession ended sometime in June, people are still afraid to spend money as
unemployment keeps going up.
As the Holiday shopping season comes to a close, the negative sales that were forecasted during third quarter ended up being a positive
shopping season. Last year at this time retail sales fell 3.4%, however even as shoppers continue to worry about credit card debt and
sky high unemployment rates, retail sales actually rose 3.6% from November 1st through December 24th. According to an Associated
Press article, “ A large increase was seen in internet shopping, which SpendingPulse said was up 15.5% over last year.”
Looking forward, incremental job growth is anticipated to be limited, with nearly every sector pointing toward continued contraction
in 2010. Income and spending levels are also likely to remain depressed, as consumers pull pack in the face of uncertainty. These
conditions will force retailers to shift their business models Nevada | pre-boom era, a change that can be difficult to achieve. That
Las Vegas, back to the Commerce
said, opportunities for those seeking expansion or entrance into the Las 2009 market over the next several years should be attractive
Fourth Quarter Vegas
from a pricing perspective.
Las Vegas Retail Overview 2005-2009 YTD
9,000,000 18.00%
8,000,000 16.00%
7,000,000 14.00%
13.02%
6,000,000 12.00%
Square Feet
Vacancy
5,000,000 10.00%
4,000,000 7.40% 8.00%
3,000,000 6.00%
4.31%
3.71%
2,000,000 3.90% 4.00%
1,000,000 2.00%
0 0.00%
Year
2005 2006 2007 2008 2009 YTD
Ave Lease Rate
$1.75 $1.92 $2.04 $2.15 $1.85
Base * Sf Millions
44.50 48.73 50.06 50.40 55.88
Built Vacant Inventory Vacancy
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5. Commerce CrG
Las Vegas retail market report Q4 2009
inventory vacancy Demand & Supply Pricing
No. of existing Under Const. Planned Vacancy Net Gross New asking rent (NNN)
Bldgs. SF SF SF SF rate absorption Spaced Supply Low High avg.
Central east
Community Centers 21 3,470,953 - - 543,162 15.65% (84,048) 8,843 - $0.75 $3.50 $1.57
Freestanding 8 257,490 - - 32,125 12.48% 13,891 13,891 - $1.00 $2.75 $1.46
Neighborhood Centers 6 399,098 - - 126,622 31.73% (4,600) 1,100 - $0.90 $4.00 $2.44
anchorless Strip 35 1,365,424 - - 146,378 10.72% 5,893 36,288 - $0.65 $3.00 $1.39
total 70 5,492,965 - - 848,287 15.44% (68,864) 60,122 - $0.65 $4.00 $1.63
Central west
Community Centers 34 5,827,422 - - 674,069 11.57% (78,656) 13,282 400,000 $0.50 $3.23 $1.42
Freestanding 2 90,320 - - 4,950 5.48% - - - $0.75 $1.60 $1.19
Neighborhood Centers 19 1,418,919 - - 179,188 12.63% (49,443) 6,929 - $0.90 $2.50 $1.48
anchorless Strip 40 1,440,320 - - 197,797 13.73% (2,573) 30,623 - $0.31 $2.50 $1.29
total 95 8,776,981 - - 1,056,004 12.03% (130,672) 50,834 400,000 $0.31 $3.23 $1.35
east
Community Centers 17 2,637,089 - - 352,400 13.36% (177,521) 100,447 - $0.80 $4.50 $1.60
Freestanding 3 135,234 - - 50,000 36.97% 1,910 49,058 - $1.40 $1.75 $1.58
Neighborhood Centers 3 243,177 - - 30,324 12.47% (90) - - $1.50 $4.50 $2.40
anchorless Strip 12 402,940 - - 92,789 23.03% (13,883) 15,291 - $0.99 $2.25 $1.41
total 35 3,418,440 - - 525,513 15.37% (189,584) 164,796 - $0.80 $4.50 $1.75
Green valley
Community Centers 35 7,275,457 - - 546,273 7.51% (68,345) 44,024 - $0.50 $3.50 $2.04
Freestanding 4 189,929 - - 58,491 30.80% (3,045) - - $0.99 $1.85 $1.61
Neighborhood Centers 21 2,128,629 - - 430,437 20.22% (26,230) 56,294 55,000 $0.21 $7.50 $2.23
anchorless Strip 23 789,884 - - 206,459 26.14% (3,124) 27,630 - $0.40 $3.25 $1.61
total 83 10,383,899 - - 1,241,660 11.96% (100,744) 127,948 55,000 $0.21 $7.50 $1.87
Henderson
Community Centers 10 1,843,893 - - 289,315 15.69% 41,893 64,851 42,175 $0.75 $4.00 $1.98
Freestanding 3 115,059 - - - 0.00% - - -
Neighborhood Centers 3 295,539 - - 7,400 2.50% - - - $1.75 $2.25 $2.11
anchorless Strip 4 232,564 - - 69,252 29.78% 4,601 4,601 - $1.70 $3.50 $2.57
total 20 2,487,055 - - 365,967 14.71% 46,494 69,452 42,175 $0.75 $4.00 $2.22
Nellis
Community Centers 8 1,235,823 - - 74,602 6.04% (8,014) 8,668 - $0.85 $2.55 $1.41
Freestanding 3 170,340 - - 6,003 3.52% 32,532 32,532 - $1.75 $1.75 $1.75
Neighborhood Centers 11 908,002 - - 164,255 18.09% 49,075 64,075 - $0.75 $3.25 $1.81
anchorless Strip 15 458,204 - - 38,671 8.44% 54,617 54,800 - $0.70 $3.50 $1.67
total 37 2,772,369 - - 283,531 10.23% 128,210 160,075 - $0.70 $3.50 $1.66
North las vegas
Community Centers 24 4,817,384 - - 708,695 14.71% 17,936 92,636 115,425 $0.99 $4.00 $2.32
Freestanding 1 22,200 - - 22,200 100.00% - - - $0.25 $3.50 $1.88
Neighborhood Centers 16 1,429,455 - - 306,467 21.44% (160,788) - - $0.90 $4.00 $1.91
anchorless Strip 10 381,659 - - 121,610 31.86% 24,200 45,085 - $0.49 $3.50 $1.52
total 51 6,650,698 - - 1,158,972 17.43% (118,652) 137,721 115,425 $0.25 $4.00 $1.91
Northwest
Community Centers 18 3,574,266 - - 282,380 7.90% 2,613 26,928 - $0.21 $3.17 $1.70
Freestanding - - - - - #DIV/0! - - -
Neighborhood Centers 11 721,010 - - 224,528 31.14% (34,389) 24,237 - $0.99 $4.00 $1.91
anchorless Strip 6 162,765 - - 20,057 12.32% 16,404 17,244 - $1.00 $3.25 $2.18
total 35 4,458,041 - - 526,965 11.82% (15,372) 68,409 - $0.21 $4.00 $1.93
Southwest
Community Centers 17 4,661,095 - - 541,241 11.61% 64,342 70,000 - $1.00 $4.00 $2.18
Freestanding 1 26,218 - - 1,500 5.72% - - - $2.25 $2.25 $2.25
Neighborhood Centers 10 962,756 - - 131,931 13.70% (38,609) 23,803 - $1.25 $3.00 $2.13
anchorless Strip 41 1,509,686 - - 362,803 24.03% 124,819 169,974 - $0.75 $5.00 $1.84
total 69 7,159,755 - - 1,037,475 14.49% 150,552 263,777 - $0.75 $5.00 $2.10
Summerlin
Community Centers 17 3,253,457 - - 106,760 3.28% 19,729 25,549 - $0.75 $5.00 $2.58
Freestanding - - - - - 0.00% - - -
Neighborhood Centers 9 604,612 - - 43,306 7.16% (2,799) 201 - $1.45 $3.25 $2.31
anchorless Strip 13 429,521 - - 82,954 19.31% (25,020) - - $1.00 $3.75 $1.74
total 39 4,287,590 - - 233,020 5.43% (8,090) 25,750 - $0.75 $5.00 $2.12
las vegas total
Community Centers 201 38,596,839 - - 4,118,897 10.67% (270,071) 455,228 557,600 $0.21 $5.00 $1.88
Freestanding 25 1,006,790 - - 175,269 17.41% 45,288 95,481 - $0.25 $3.50 $1.67
Neighborhood Centers 109 9,111,197 - - 1,644,458 18.05% (267,873) 176,639 55,000 $0.21 $7.50 $2.07
anchorless Strip 199 7,172,967 - - 1,338,770 18.66% 185,934 401,536 - $0.31 $5.00 $1.72
total 534 55,887,793 - - 7,277,394 13.02% (306,722) 1,128,884 612,600 $0.21 $7.50 $1.85
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6. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce
Fourth Quarter 2009
Retail: Quarterly Vacancy
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
5
6
6
6
6
7
7
7
7
8
8
8
8
9
9
9
9
20
30
40
10
20
30
40
40
10
20
30
40
10
20
30
40
10
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Retail: Quarterly Absorption (SF)
2,000,000
1,000,000
-
(1,000,000)
(2,000,000)
(3,000,000)
(4,000,000)
7
8
8
5
6
6
6
6
7
7
7
8
8
9
9
9
9
30
40
10
20
30
40
40
10
20
30
40
10
20
30
40
10
20
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
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7. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce
Fourth Quarter 2009
Retail: Inventory (SF) and Vacancy Rate (%)
60,000,000 14.0%
55,000,000 12.0%
10.0%
50,000,000
8.0%
45,000,000
6.0%
40,000,000
4.0%
35,000,000 2.0%
30,000,000 0.0%
7
8
8
5
6
6
6
6
7
7
7
8
8
9
9
9
9
30
40
10
20
30
40
40
10
20
40
10
20
30
40
10
20
30
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Retail: Vacancy (%) and Ave. Lease Rates
20.00% $2.50
18.00% $2.22
$1.93
16.00% $1.75 $2.10 $2.12 $2.00
14.00% $1.63 $1.87 $1.91
12.00% $1.66 $1.50
10.00% $1.35
8.00% $1.00
6.00%
4.00% $0.50
2.00%
0.00% $0.00
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8. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce
Fourth Quarter 2009
Retail Space Vacancy Rates
Central East,
Sum m erlin, 5.43%
15.44%
Southw est, 14.49%
Central West,
12.03%
Northw est, 11.82%
East, 15.37%
North Las Vegas,
17.43%
Green Valley,
Nellis, 10.23% 11.96%
Henderson, 14.71%
Retail Vacancy by Type
Freestanding,
Anchorless Strip,
17.41%
18.66%
Com m unity
Centers, 10.67%
Neighborhood
Centers, 18.05%
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9. LAs VEgAs | RETAIL SUBMARKET MAP
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10. COMMERCE | fULL sERVICE COMMERCIAL REAL EsTATE sOLUTIOns
Commerce Real Estate Solutions has been among the top commercial real estate brokerage firms in the Intermountain West for
30 years. From our headquarters in Salt Lake City and offices in Provo/Orem, Park City, Clearfield and St. George, Utah and
Las Vegas, Nevada we offer a full range of brokerage services, valuation and consulting, client representation and property/facility
management. Our alliance with Cushman & Wakefield extends our reach worldwide.
CUshMAn & WAKEfIELd ALLIAnCE
A number of Cushman & Wakefield offices, including Commerce Real Estate Solutions, are independently owned and connected
with the company by way of an international alliance. Cushman & Wakefield concentrates on larger markets like Los Angeles and
New York, and alliance members like Commerce Real Estate Solutions concentrate on developing secondary markets.
Together the geographic coverage is nearly universal. This enables Cushman & Wakefield to provide comprehensive services
for clients with local requirements as well as for those with more expansive national or international portfolios. In either case,
Cushman & Wakefield’s services are supported by the full integrated resources of the entire alliance.
Cushman & Wakefield is the world’s largest privately-held commercial real estate services firm. Founded in 1917, it has 230 offices
in 58 countries and more than 15,000 employees. The firm represents a diverse customer base ranging from small businesses to
Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including
tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment
management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate
strategies for large corporations and property owners, and Consulting Services, including business and real estate consulting.
A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online
Knowledge Center at www.cushmanwakefield.com.
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