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Real estate industry

Las Vegas Retail Market Sluggish Amid High Unemployment and Tight Consumer Spending

Strategic Insights

— 2 min read

The Las Vegas retail market continues to struggle, with high unemployment and tight consumer spending hindering any chance of economic recovery. The market's retail performance dipped again in the second quarter, with 345,000 square feet of space returned to the market, equivalent to the size of three or four Wal-Mart Supercenters. Vacancy rates rose to 10.1 percent, compared to 7.9 percent in the year-ago quarter, with Clark County averaging $82,583 in taxable sales per retail employee during the recession, down from $90,329 before the recession.

Key Takeaways:

  • The Las Vegas retail market saw 345,000 square feet of space returned to the market in the second quarter, a significant increase from the year-ago quarter.
  • Vacancy rates rose to 10.1 percent, a 2.2 percentage point increase from the same quarter last year.
  • Asking rents have decreased to $1.66 a square foot per month, down from $1.89 in the second quarter of 2009.
  • The average taxable sales per retail employee in Clark County dropped to $82,583 in the recession, down from $90,329 in the pre-recession period.
  • The County's taxable sales dropped to $77,448 in the first quarter, a significant decline from the $90,329 average in the pre-recession period.
  • Delinquency rates on commercial mortgage-backed securities (CMBS) continued to set new historic highs.
  • Commercial property prices declined again after showing signs of moving up in recent months.
  • No new retail space has been completed this year, with the only major retail development under construction being Tivoli Village.
  • Leasing volume has reached nearly 1 million square feet, with significant leases signed by Big Lots and dd's in the southwest and central east markets, respectively.
  • National anchors have put their deals on hold, with in-line tenants struggling to access equity and capital to open new businesses.

Statistics:

  • Vacancy rate: 10.1% (Q2 2010), 7.9% (Q2 2009)
  • Asking rent: $1.66 a square foot per month (Q2 2010), $1.89 (Q2 2009)
  • New completions: 0 square feet (2010), 532,000 square feet (2009)
  • Net absorption: -345,219 square feet (Q2 2010), 125,108 square feet (Q2 2009)
  • Clark County average taxable sales per retail employee: $82,583 (recession), $90,329 (pre-recession)
  • Delinquency rates on CMBS: new historic highs
  • Commercial property prices: declined after showing signs of moving up in recent months

Sources:

  • Hubble Smith, "Las Vegas retail market Q2 2010," Las Vegas Review-Journal, 2010
  • Colliers International, "Second Quarter Retail Market Report," 2010
  • Marcus & Millichap, "Second Quarter Retail Market Report," 2010
  • CB Richard Ellis, "Second Quarter Retail Market Report," 2010
  • Urban Land Institute, "Commercial Real Estate Trends," 2010

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