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IRR-Las Vegas Mid-Year Viewpoint 2015 Local Market Report - Retail

08/04/2015
Published By: Integra Realty Resources

Market Commentary

Overall, results were mixed in the past year for the retail market as occupancies have inched up with positive absorption indications in many submarkets.  Rents have decreased moderately in the Community Center segment while exhibiting some moderate positive absorption.  There is an upward rental trend in Neighborhood Centers and an even stronger upward trend in larger Power Centers as many replacement tenants have now occupied once vacant junior and anchor box spaces and have fostered rental growth in the in-line segment of these centers.  The market is still not completely recovered and is contending with small pockets of higher opportunity adding space in strong income/strong tourist volume areas while other areas continue to languish if they are an older submarket and/or have lower level incomes or demographic growth metrics.

Newer centers with strong anchor tenants tend to be healthy whereas older centers with expiring anchor leases are the most likely candidates for lease termination and Kroger (parent of Smith's and Food 4 Less) as well as Albertson's and Von's which are combining as a result of a merger between Albertson's LLC and Safeway.  This shake-up could disturb centers that are impacted by closings or re-brandings of grocery anchors and where multiple brands compete in the discount big box, bulk price, ethnic food, and organic food spaces.  

We would like to see the entire market register stable or increasing rental metrics before upgrading the retail market within the market cycle phase.  Major new projects added include the Linq project on the Las Vegas Strip (200,000 sq. ft.), the Summerlin Master Plan now known as Downtown Summerlin  (1,600,000 sq. ft. outdoor anchored mall), the Sahara Center (220,000 sq. ft. of neighborhood retail), and Tivoli Village Phase 2 (300,000 sq. ft. of specialty retail and mixed use space).   These examples make economic sense due to growing demographics and higher incomes in these areas and represent pockets of opportunity in an otherwise challenging market.  The Las Vegas Perspective noted an increase of 1.24% per year in average income from 2014 to 2015 while registering a -0.36% decline in median income from 2014 to 2015.  The growth in occupied housing units from 2013 to 2014 is indicated at 1.9%.  Although positive, these metrics are not capable of accelerating an overall retail space recovery in this local market.    Peak market growth of 4%-7% and growth in incomes of 3-5% or higher would drive a move from recovery to expansionary market conditions.  At present, we do not see evidence or expectations of such growth.  As a result, market expectations in the Las Vegas Retail Market remain subdued with anticipation of continued slow and steady improvement.

 

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Download the full version PDF of this Local Market Report below. It includes graphs and tables.

IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.

Release Date08/04/2015 - 13:45

Source

Integra Realty Resources

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