The recovery of the retail real estate market remains elusive, but the bottom is in sight, a California brokerage and research firm says.
An increase in tourism and tourism-related job growth has improved retail sales in Las Vegas even though the depressed housing market continues to be an anchor, Marcus & Millichap reported. Retail sales rose 5.1 percent year-over-year after dropping 6.1 percent in the previous 12 months.
By the end of the year, the vacancy rate is projected to be 11.6 percent, up from 10.9 percent at the end of 2010. Most of that increase has taken place in the first quarter, the firm noted.
For the remainder of 2011, retail properties near the Strip will benefit from that growth in tourism and increase in leasing, the firm said.
Retailers in the western valley, particular in Summerlin, will also fare better than the rest of Las Vegas because of the higher incomes in the area and because the western valley wasn’t as overbuilt with retail.
That means the southwest and northwest valleys will continue to struggle because retailers are going to stay away from areas with too many empty homes, the firm said.
The vacancy rate in neighborhood centers reached 12.8 percent. The southwest had the highest vacancy rate at 15.8 percent but concessions have helped lower that from 17.5 percent a year ago.
Shopping centers in those areas constructed between 2000 and 2009 have an average vacancy rate of more than 20 percent, which means property owners will continue to offer concessions through at least 2012.
Asking annual rents are expected to fall 1.1 percent to $20.94 per square foot by the end of the year and the effective rents will drop to $17.70 per square foot, the firm said.