Report: Retail Lease Rates Keep Rising

LAS VEGAS-Retail construction remained high and vacancy low in the region through the first three months of the year, according to a first quarter report by locally based Applied Analysis. The 42.9-million-sf Vegas retail market expanded by 507,000 sf in the first quarter but vacancy remained at 2.5%. As a result, average triple-net lease rates rose 3.5% to $1.75 per sf per month.

Following Southern Nevada’s unusually low pace of retail expansion in 2005–just over one million sf was delivered–the first quarter of 2006 represented the beginning of some significant deliveries in the coming quarters. Applied Analysis principal Brian Gordon tells GlobeSt.com that projects containing 3.7 million sf remain under construction.

Given the substantial amount of pre-leasing that has occurred in those projects, “vacancies will remain tight and additional rent increases are inevitable,” adds company principal Jeremy Aguero. “Average asking rates jumped 8% in the during the past 12 months, and increases during the coming year are anticipated to be in the 8% to 12% range due to stable demand and rising development costs.”