Average vacancy over the past decade is 3.8%. Last year at this time, vacancy was 6.3%. Between now and then, nearly 4.5 million square feet has been added to the market.

"The impact of a recession that has spanned 18 months, a weakening housing market and a fragile job market all put downward pressure on consumer spending...causing many retailers to adjust their business models," says AA principal Brian Gordon. "Unfortunately, it appears that contraction is likely to continue through the balance of 2009."

There are currently 33 distressed retail properties in Las Vegas. The properties' combined square footage is 5.8 million square feet while their combined value is estimated at $1.7 billion. Nationally, retail distress now totals $31.1 billion, according to RCA.

AA project manager Jake Joyce says pricing remains a release valve that may be used by landlords to spur demand and capture a portion of relatively weak market demand. "The impact on landlords [through the back half of 2009] will be significant and those with properties recently constructed or acquired that are carrying a higher relative basis, may be impacted more severely. Banks' ability and willingness to work-out alternative loan structures will play a key role as market fundamentals seek out a stabilized environment."

Tami Lord, a retail broker with Voit Commercial tells GlobeSt.com she's seeing more retail center owners of working more cooperatively with tenants than in the recent past. "Malls have always taken the approach of looking at what the tenant can achieve in sales and then working backwards to come up with rent while neighborhood and power centers has always tried to achieve the highest and best use and rent," she says. "A lot more often now they are saying 'show me what you can do and how it will trend and we'll work together'"

With the mass closings having worked their way through the system – Rite Aid, Albertson's, Vons, Circuit City, Linens N' Things—Lord expects to start seeing come net absorption. "Now, just like the housing inventory, we'll have to work through it," she says.

Available retail spaces reported average asking rents of $2.06 per square foot, which represented a 5.5% decrease from the $2.18 reported during the same period of the prior year, according to AA. The range is $1.98 per square foot for community centers and $2.18 per square foot for power centers.

"While asking rents are down modestly, effective rents are down more steeply," states the report. "Increased concessions have effective (or economic) rents down well into double-digit percentages."

Lord says rental rates for neighborhood centers is more in the $1.75 per square-foot range, but adds that rents and concessions these days can change significantly from property to property, with less leveraged center owners more able to be creative with tenants than heavily leveraged ones.

"In centers that have lost their anchor, any landlords with any sense of self-preservation will do what they can to retain the other tenants until it can replace the anchor, such as switching rent from a flat rate to a percentage of sales," she says.

While no new construction was delivered in the second quarter there is 1.5 million square feet under construction. A portion of the total has stalled because of the economy but there are still a few developments that are expected to enter the market in the near term.

One of them is a 150,000-square-foot Target located near the intersection of Interstate 215 and Decatur in North Las Vegas. The developer, Weingarten, has put everything but the Target on hold. Another Target-anchored center, at the southwest corner of Horizon and Green Valley Parkway in the Henderson market area, is under construction. Target and a grocery anchor are expected to open on time while the 30,000 square feet to 40,000 square feet of shop space will be phased in over time.