Wednesday, October 15, 2008

Las Vegas, Nevada Metro Market Retail Report: Retail Faces Empty Spaces

From the Fresh & Easy Buzz Editor's Desk: Tesco's Fresh & Easy Neighborhood Market opened three new Fresh & Easy grocery and fresh foods stores on Wednesday, October 12 in Las Vegas, Nevada, bringing the grocery chain's total store count to 22 in the Las Vegas Metropolitan region market.

Those three new Las Vegas Fresh & Easy Markets are located at the following addresses in Clark County:

>Eastern & Fremont
>Las Vegas & Pecos
>Las Vegas & Lake Mead

Tesco also opened another new Fresh & Easy small-format, convenience-oriented grocery and fresh foods market today in Las Vegas, at Vegas & Buffalo.

In addition, the grocer plans to open two more Fresh & Easy stores in Clark County this month on October 29 -- one at Eastern & Wigwam and the other at Vegas & Jones.

This will bring the retailer's total Las Vegas Metropolitan market store count to 25 by the end of October, 2008.

There are currently 93 Fresh & Easy markets located in Southern California, the Las Vegas Metro region and in the Phoeniz, Arizona Metropolitan East and West Valley regions.

Hubble Smith, a business and real estate staff writer for the daily Las Vegas Review-Journal newspaper has a story in today's edition about the state of the retail, commerical real estate market in Las Vegas and the surrounding Metro region. The piece includes comments on Tesco's Fresh & Easy Neighborhood Market and other food and grocery retailers in the market. It also includes a market analysis by the firm CB Richard Ellis.

Read Hubble Smith's story below:

Market sees rising vacancies, negative absorption in quarter

Las Vegas commercial real estate markets have not escaped the turmoil of the national credit and housing crises, a third-quarter retail market report from CB Richard Ellis showed.

The retail market shows the strain of the economic downturn with steadily increasing vacancies and the first quarter of negative absorption, or the amount of new space taken by tenants, in a decade.

Vacancy ran 6.32 percent in the third quarter for nearly 59 million square feet of retail space in Las Vegas, up from 5.82 percent in the previous quarter and up 1.75 percentage points from a year ago, CB Richard Ellis reported.

Asking lease rates have remained steady throughout the year, dropping a penny in the third quarter to $2.20 a square foot. Lease rates dropped 40 cents a foot in the northwest submarket and about a nickel in the Nellis and southwest submarkets.

There are some bright spots in the retail outlook for Las Vegas, including more location choices and more negotiating power for tenants, CB Richard Ellis retail broker Penny Mendlovic said.

The market provides certain businesses with the opportunity to expand and take advantage of exceptional deals on both the lease and sales sides, she said.

Hispanic grocers have grown and that has affected traditional grocers, Mendlovic said. Specialty food stores such as the Buy Low market in the redevelopment area around Owens Avenue and H Street and Sunflower Markets in the southwest valley have found their niche in Las Vegas.

"The grocery component in general nationally is doing well," she said. "The price and value concepts are doing better than others. People have to spend their money as far as it goes. Between gas and groceries, people are spending on necessities. Big Lots, Dollar Tree ... they're all doing well."

Angela Ohira knows it's probably not a good time to start a new business. Consumer spending has declined and retail analysts are forecasting a glum holiday season.

Nonetheless, she and business partner Tanya Takahashi opened Love Bug Baby, an apparel store at Eastern Crossing shopping center in Henderson. They signed a three-year lease on about 1,150 square feet for $96,600, or $2.33 a square foot.

"We saw the need in our area for what we do," said Ohira, who owned a specialty and gift business for nearly three years. "There's a baby boom going on and another one coming. I know everybody is very skeptical, but looking at the numbers, we're fully comfortable with it."

Ohira said she's "very simple and smart" with her money and didn't need outside financing for the venture.

Fundamentals within the Las Vegas retail sector continue to wane and the impacts associated with a global financial crisis provide little relief in the near term, Applied Analysis research firm principal Jeremy Aguero said in his third-quarter retail market report.

Applied Analysis showed a 6.3 percent retail vacancy rate in Las Vegas, compared with 6.1 percent in the second quarter and 3.7 percent in the same quarter a year ago. Asking rates dropped to $2.16 a square foot from $2.18 in the previous quarter.

Power centers, or larger centers anchored by big-box retailers, had the lowest vacancy rate of 3.7 percent, while neighborhood shopping centers had the highest rate at 8.5 percent.

Major completions during the quarter include Lake Mead Crossing anchored by Target in the southeast; Foothills Plaza anchored by Fresh & Easy Neighborhood Market; and Commerce Commons in North Las Vegas, also anchored by Fresh & Easy.

Retail employment posted a gain of 4,500 positions during the third quarter, a 2.6 percent increase from last year, Applied Analysis reported. It is likely that several of the recent retail closures have yet to be reported in the latest employment figures, Aguero said.

"Despite elevated vacancy rates, population growth continues, albeit at a slower pace, and a new bottom is expected in the coming quarters," Aguero said. "Time will be the critical factor before Southern Nevada witnesses a material improvement in the commercial retail supply-demand equation."

[Fresh & Easy Buzz Editor's Note: Click here to view a complete data graphic of the 'Third Quarter, 2008 Las Vegas Retail Market Analysis' conducted by the CB Richard Ellis commercial real estate firm.]

No comments: