Rapid Las Vegas population growth and rising median household incomes are keeping the Las Vegas retail market healthy through the first half of the year. Las Vegas fell to No. 19 from No. 12 in 2005 in a report from Marcus & Millichap brokerage firm that ranked 42 cities based on a series of supply-and-demand indicators such as population, employment, retail construction and vacancy rates.
Part of the problem is that retail developers have not been able to compete with Las Vegas home builders for 10 and 15 acre potential retail sites, Hank Gordon of Las Vegas-based Laurich Properties said.
The market is still enjoying healthy retail sales growth and tightening vacancy rates among retail properties, said Christopher LoBello, regional manager of Marcus & Millichap in Las Vegas.
Marcus & Millichap projects 1.7 million square feet of retail inventory will be added to the market, which stands at 42.2 million square feet. About two-thirds of it is coming in the fast-growing southwest and northwest areas around the Las Vegas Beltway.
Among the larger projects under construction is the 940,000-square-foot Arroyo Market Square being jointly developed by Laurich and EJM near the Las Vegas Beltway and Rainbow Boulevard. The $150 million project is expected to be completed in second quarter of 2007. It will be anchored by a 207,000-square-foot Wal-Mart, Home Depot and Sam’s Club.
American Nevada Co. is developing the 20-acre Aliante MarketPlace shopping center at Aliante Parkway and the Beltway in North Las Vegas.
Neighborhood shopping center vacancy is expected to drop 250 more basis points to 3.5 percent by year’s end and below 3 percent in the Green Valley area. Rents will be pushed as high as $25 a square foot in the southeast submarket, LoBello said.
The valley’s overall average asking rent is forecast to increase 3.4 percent to an average of $21.73 a foot as lower vacancy allows property owners to raise rents.
Interest in Las Vegas retail assets has surged over the past year, led by out-of-state investors, mostly from California. Median prices for multitenant properties have climbed to more than $200 a foot for both strip centers and larger properties. Green Valley is up to $278 a foot.
San Diego and Orange County, Calif., maintained their 1-2 rankings in the index from last year due to strong retail market fundamentals. Oakland, Calif., jumped seven places to No. 3, while New York City-Manhattan and Phoenix round out the index’s top five markets.
Marcus & Millichap’s retail index shows some of the most dramatic shifts in market positions in several years.
Source:LV Review Journal
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Healthy Las Vegas retail market for 2006.