LAS VEGAS-The Las Vegas retail market will remain prosperous in 2007 and in the years to come, according to new information released by the local offices of Marcus & Millichap Real Estate Investment Services and CB Richard Ellis. Robust population growth has new retail developments under construction and retailers preleasing significant amounts of space, which is keeping vacancy low and rates high, the reports conclude.

Local employers are expected to add a total of 32,300 jobs in 2007, an increase of 3.5% from 2006, while developers are on track to deliver 3.2 million sf of space by year end, up from 2.1 million sf last year, according to the M&M report. Despite the new development, vacancy is forecast to remain unchanged at 4.2% throughout 2007 thanks to strong retailer demand, which has the majority of space coming online already leased.

With demand meeting supply, both asking and effective rents are forecast to increase 5.6% in 2007. Much of the growth is being driven by healthier retailer demand and the influence of newer, more expensive developments, according to the M&M report.

Christina Roush, who heads up CB Richard Ellis’ private client group in Vegas, says the local investment market here has attracted a lot of Bay Area investors recently. “Bay Area buyers are generally accustomed to much lower cap rates than buyers from other parts of the country,” says Roush, who works with fellow CBRE broker Charles Moore. “As a result, our offerings in Las Vegas are typically more attractive than properties on the market in Northern California.”

In 2007, Roush and Moore continue to see interest from Bay Area investors. Besides having an attractive pricing model compared to California, many well located properties in Southern Nevada have experienced 20-25% rent growth over the past 18 months, they say.

With some 6,000 people moving to Vegas every month and more than $30 billion worth of development underway on Las Vegas Boulevard, “the economic throw-off effect of the Strip development alone should buoy the Las Vegas economy well into the next decade,” Roush says.

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