Net Absorption Keeps Q2 Retail Vacancy Low

LAS VEGAS-Retail vacancy in the Las Vegas Valley stayed below 3% during the second quarter thanks to strong net absorption, according to the latest market report from Applied Analysis, a locally based research and consulting firm. Approximately 780,000 sf of retail was added to the Vegas Valley during the quarter but was offset by approximately 690,000 sf of net absorption. The result was a 20 basis point rise in vacancy to 2.8%.

The new deliveries, including the second phase of Montecito Marketplace and a portion of Southwest Marketplace, brought the six-month total to 2.6 million sf, well above the historical 10-year historical average of 1.9 million sf, according to the report. Net absorption through the first six months of the year was 2.5 million sf.

“The Las Vegas commercial retail sector continues to respond to continued population growth and increasing development opportunities,” says Jeremy Aguero, a principal of Applied Analysis. “While reporting some signals of slower growth, a substantial number of residents continue to seek out Las Vegas as their future home.”

That having been said, Aguero adds that the economics in the residential sector remain a concern for the retail sector. “Improvements may prevail by mid-2008,” he says.

Power centers registered the lowest vacancy rate at 1.3%, according to the report. Neighborhood centers posted the highest average vacancy at 3.8%. As for future deliveries, the report found 4.4 million sf under construction and another 14.1 million sf further back in the planning process.

Another second quarter retail market report, by the locally based Restrepo Group and Colliers International, recorded approximately the same net absorption figure and a slightly higher new delivery total. That report puts the overall retail vacancy rate at 3.3%.

“While current vacancy remains above 2000, our best year, the Valley’s anchored spec retail market continues to have a vacancy rate that is effectively near full occupancy,” says Vic Donovan, managing director of the local Colliers office.