LAS VEGAS-The local retail market continued to sizzle during the first three months of the year, with 1.8 million sf of new deliveries offset by just over 1.8 million sf of leasing activity. The result was a 2.5% vacancy rate as of the end of March, down from 2.7% at the end of the year and 2.6% one year ago, according to research by Applied Analysis, a local advisory services firm. To accommodate demand, another 4.8 million sf is under construction and about three times that total is on the drawing board.
“The latest figures demonstrate the relaitve health of the retail real estate sector as substantial pent-up demand during the past two years was fulfilled,” says Applied Analysis principal Brian Gordon. “A lack of new inventory prior to this quarter was partially driven by an overheated residential market that had land owners seeking high-density residential builders rather than commercial space developers. A more balanced land distribution is likely to prevail in the coming quarters.”
The market wide average vacancy rate was held down by unincorporated Clark County, where average vacancy is 1.8%, and North Las Vegas, where vacancy stands at 2.1%. Net absorption in those two markets totaled approximately 1.6 million sf during the quarter. Pulling the average up were the City of Las Vegas and the City of Henderson, where average vacancy in the first quarter was 3% and 3.2%, respectively. Net absorption in those two markets totaled slightly more than 200,000 sf.
While the average retail vacancy rate has remained steady the average asking rate has not. In the past year, the average asking rate has gone from $1.75 per sf to $2.08, an increase of 19%. Breaking it down by submarket, the most significant increase in rents occurred in the City of Henderson. Rents there have risen 57% since this time last year and now stand at $2.42. The highest average asking rent, $2.66 per sf, is in North Las Vegas, where one year ago the asking rent was $2.50. The lowest average asking rent, $1.70 per sf, was in the City of Las Vegas, up from $1.64 one year ago.