2. COMMERCE CRG is a regional real estate firm dedicated first
and foremost to our clients. With the industry’s premier
professionals, and industry leading technology, our mission is to
exceed our clients’ expectations through service excellence.
C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
3. RETAIL MARKET INDICATORS
Change Since
Current 3Q09 3Q08 LAS VEGAS
RETAIL MARKET OVERVIEW
Vacancy 12.74%
Lease Rates $1.92 NNN
Net Absorption * (2.5 million)
Construction N/A
*The arrows are trend indicators over the specified time period, and do not represent a positive or negative
value. (e.g., absorption could be negative but still represent a positive trend over a specified period.)
RETAIL MARKET OVERVIEW
AT A GLANCE By end of third quarter, vacancies reached new highs with
approximately 6.9 million square feet of available product
Vacancy Rates Reached New Highs coming online. This equates to a 12.74% vacancy factor. Above-
Overall vacancy rates reached another high during the quarter at 12.74%. This is a
3.25% jump from second quarter 2009 and a 6.74% raise from a year ago. Freestanding average vacancies were noted in the Southwest (19.43%), North
product type is showing the highest vacancy rates at 21.92%. Vacancy increases during Las Vegas (16.70%), Nellis (15.40%) submarkets. By product
the year were impacted by several store closings due to the current economic
conditions.
type Strip Centers (21.87%) and Freestanding (21.92%) retail
buildings posted the highest vacancies at the end of the quarter
Rents Remained Stable as discretionary spending pulled back, further impacting the
As Landlords are faced with a “Tenant” market, they are seeing many retailers viability of small business owners. The retailers that are pulling
renegotiating for lower rents and asking for more concessions as their leases come
through the recession have enjoyed the current vacancy. The
up for renewal. Negotiations like these and more up-front incentives help stabilize and
even lower the overall average lease rates. Currently, the Las Vegas market is showing old time saying “location, location, location” really means
annual averages lease rates at $23.04 per square feet (psf). This is a drop from last something right now to the retailers that can make the move to
quarter at $23.64 psf and higher of a drop from a year ago when rates where at $26.16
more premier locations as rental rates are lowered and become
psf.
more affordable.
Challenging Outlook for Las Vegas Continues
According to a report in Time magazine the new rage in retail
Looking forward, the retail sector is expected to continue to face challenges posed by
a troubled employment market, low consumer confidence levels and a still struggling
leasing is something called “pop-up shops.” Pop-up stores, or
housing market. Vacancy rates are expected to continue upward into the foreseeable
temporary retail outlets, are one way for landlords to fill an ever
future. The task of identifying tenants who have a need for space in some of the larger
growing amount of retail vacancy. According to Mike Kraus,
units and filling more than 6.9 million square feet of available product will be difficult
in the next year. “pop-ups are an opportunity for both entrepreneurs and big
brands to make some money without having to worry about
the overhead of a five-year lease.” Pop-ups are not just for mom
and pop operations. According to the report Toys “R” Us is looking to replace the former KB Toys, by opening 350 holiday express toy
outlets during the holiday season. Other retails that have dabbled in the pop-up concept include American Eagle, Gap, JC Penny, Ann
Taylor and Gucci. With long vacancy times Landlords are looking for some part time foot traffic and retailers gain opportunities to
create buzz on special products and/ or short term sales during important shopping months.
Pricing (Average Asking Rents)
Weak consumer spending and troubled employment is forcing many businesses to close and the demand for retail space is shrinking.
This activity has lowered the average asking rents around the valley. Average asking rents witness a decline to $1.92 per sf/mo NNN
during 3rd quarter 2009, which was slightly below the $1.97 per sf/mo NNN reported in the preceding quarter (Q2 2009) and further
below the $2.18 per sf/mo NNN reported one year ago. The amount of product available at year-end represented an all-time high,
which will likely contribute to continue softening in retail prices.
C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
4. OUTLOOK
As the winter months approach the temperatures are not the only thing
dropping around the valley. Turbulent debt markets and a slowing
LAS VEGAS
economy has finally hit the commercial real estate market. According RETAIL MARKET OVERVIEW
to a Federal Reserve official, “The strong headwinds that are facing
financial institutions in the United States will likely continue for some
time and struggles for the commercial real estate market are far from
over.” Prices of existing commercial properties have declined sharply
from their record highs and will likely continue to decline. Market
conditions are expected to remain sluggish all throughout 2010 as the
Las Vegas, Nevada | Commerce CRG
economy works it’s way out of the recession. Also effecting a faster
Third Quarter 2009
recovery in the retail market come from a combination of all-time
low levels of consumer confidence and the highest unemployment
numbers that we have seen in 26 years. The current 10.2% (SF) and Vacancy Rate (%) equates to 15.7 million workers that remain
Retail: Inventory national unemployment rate
jobless. According to the Labor Department “the largest job losses were in construction (down 62,000), manufacturing (down 61,000)
60,000,000 14.0%
and retail (down 40,000). Chief economist, Alan Levenson stated that “It’s not surprising to see continuing job losses in the retail sector
12.0%
because too many stores were built in response to overzealous consumer spending fueled by borrowing.” Although most economists
55,000,000
report that the recession ended sometime in June, people are still afraid to spend money as unemployment 10.0% going up.
keeps
50,000,000
As the Holiday shopping season fast approaches, negative sales forecast are already hitting the news. Last 8.0% at this time retail sales
year
45,000,000
fell 3.4% and this year is looking no different as shoppers continue to worry about credit card debt and sky high unemployment rates.
6.0%
Intense price wars and early “Black Friday” specials is the approach many retailers are taking to prepare for the Holiday season. With
40,000,000
fewer spending dollars and a consumer mind set of buying only products that they need, Retailers will have to prepare for the holiday
4.0%
consumer spending war.
35,000,000 2.0%
Looking forward, incremental job growth is anticipated to be limited, with nearly every sector pointing toward continued contraction
30,000,000 0.0%
in 2010. Income and spending levels are also likely to remain depressed, as consumers pull pack in the face of uncertainty. These
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conditions will force retailers to shift their business models back to the pre-boom era, a change that can be difficult to achieve. That
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said, opportunities for those seeking expansion or entrance into the Las Vegas market over the next several years should be attractive
from a pricing perspective.
Retail: Vacancy (%) and Ave. Lease Rates
25.00% $2.50
$2.22
$1.95 $2.29 $2.19
20.00% $2.09 $2.00
$2.03
$1.62
$1.82
15.00% $1.57 $1.50
$1.45
10.00% $1.00
5.00% $0.50
0.00% $0.00
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C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
6. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce CRG
Third Quarter 2009
Retail: Quarterly Vacancy
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
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Retail: Quarterly Absorption (SF)
2,000,000
1,000,000
-
(1,000,000)
(2,000,000)
(3,000,000)
(4,000,000)
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C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
7. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce CRG
Third Quarter 2009
Retail: Inventory (SF) and Vacancy Rate (%)
60,000,000 14.0%
55,000,000 12.0%
10.0%
50,000,000
8.0%
45,000,000
6.0%
40,000,000
4.0%
35,000,000 2.0%
30,000,000 0.0%
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Las Vegas, Nevada | Commerce CRG
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Third Quarter 2009
Las Vegas Retail Overview 2005-2009 YTD
Retail: Vacancy (%) and Ave. Lease Rates
9,000,000 18.00%
8,000,000 16.00%
25.00% $2.50
7,000,000 $2.22 12.74%
14.00%
$1.95 $2.29 $2.19
20.00%
6,000,000 $2.09 $2.00 12.00%
$2.03
$1.62
Square Feet
$1.82
Vacancy
5,000,000 $1.57 10.00%
15.00% $1.50
4,000,000 $1.45 8.00%
10.00%
3,000,000
7.40% $1.00 6.00%
3.71% 4.31%
2,000,000 4.00%
5.00% 3.90% $0.50
1,000,000 2.00%
0.00% $0.00
0 0.00%
Year
2005 2006 2007 2008 2009 YTD
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Ne
$1.75 $1.92 $2.04 $2.15 $1.92
hw
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Base * Sf Millions
s
No
44.50 48.73 50.06 50.40 54.52
nt
So
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rth
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Built Vacant Inventory Vacancy
C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
8. LAs VEgAs | RETAIL GRAPHS
Las Vegas, Nevada | Commerce CRG
Third Quarter 2009
Retail Space Vacancy Rates
Central East,
Sum m erlin, 5.30% 14.17%
Southw est, 19.42%
Central West,
11.07%
Northw est, 10.95% East, 9.62%
Green Valley,
North Las Vegas, 11.04%
16.70%
Henderson, 10.88%
Nellis, 15.40%
Retail Vacancy by Type
Freestanding, Anchorless Strip,
21.92% 21.87%
Com m unity
Neighborhood Centers, 10.15%
Centers, 14.81%
C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
9. LAs VEgAs | RETAIL SUBMARKET MAP
C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
10. COMMERCE CRg | fULL sERVICE COMMERCIAL REAL EsTATE sOLUTIOns
Commerce CRG has been among the top commercial real estate brokerage firms in the Intermountain West for 30 years. From
our headquarters in Salt Lake City and offices in Provo/Orem, Park City, Clearfield and St. George, Utah and Las Vegas, Nevada
we offer a full range of brokerage services, valuation and consulting, client representation and property/facility management. Our
alliance with Cushman & Wakefield extends our reach worldwide.
CUshMAn & WAKEfIELd ALLIAnCE
A number of Cushman & Wakefield offices, including Commerce CRG, are independently owned and connected with the
company by way of an international alliance. Cushman & Wakefield concentrates on larger markets like Los Angeles and New
York, and alliance members like Commerce CRG concentrate on developing secondary markets.
Together the geographic coverage is nearly universal. This enables Cushman & Wakefield to provide comprehensive services
for clients with local requirements as well as for those with more expansive national or international portfolios. In either case,
Cushman & Wakefield’s services are supported by the full integrated resources of the entire alliance.
Cushman & Wakefield is the world’s largest privately-held commercial real estate services firm. Founded in 1917, it has 230 offices
in 58 countries and more than 15,000 employees. The firm represents a diverse customer base ranging from small businesses to
Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including
tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment
management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate
strategies for large corporations and property owners, and Consulting Services, including business and real estate consulting.
A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online
Knowledge Center at www.cushmanwakefield.com.
230 Offices in 58 Countries
Europe
Austria Bulgaria Channel Islands France Ireland Norway Russia
Vienna* Pleven* Jersey* Lyon Cork* Drammen* Moscow
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Plovdiv*
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Paris Dublin* Oslo*
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Calgary Winnipeg* St. John's* Denmark
Dusseldorf Milan Warsaw
Edmonton* Copenhagen* Serbia
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Vancouver Moncton* Birmingham Munich Slovakia
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Detroit*
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San Antonio*
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Ft. Lauderdale
Corning/Elmira* Caracas Chennai
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Palm Beach Gardens Salt Lake City*
N.Y. Downtown Mumbai – Suburbs
Tampa St. George* Vietnam
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Rochester* Ho Chi Minh City C&W Owned Offices
Atlanta Syracuse Fredicksburg*
Indonesia
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Honolulu
Watertown* Norfolk/Virginia Beach* Japan AS OF MARCH 2009
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Washington
Charlotte*
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C o m m e r C e C r G | t h i r d Q ua r t e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w