(For more retail coverage, click GlobeSt.com/RETAIL.)
LAS VEGAS-A recent report focused on the local retail industry points to a continued robust market. Key indicators from the report released by Marcus & Millichap suggest the "market is enjoying healthy retail sales growth and tightening property vacancy," and much of that bullishness is being spurred by job and population growth.
"The local retail sector continues to expand, following in the footsteps of residential growth," says Christopher E. LoBello, regional manager of the firm's Las Vegas office. "The job market remains strong, and gains in median household income are supporting growth in retail sales."
While the market continues to grow, the pace is slowing from a year ago. In 2005, job growth held a healthy 6.8% increase. This year, the number is expected to slow to 3.8% growth. That slower growth is reflected in Marcus & Millichap's annual National Retail Index, which takes a snapshot analysis in ranking "42 retail markets based on a series of 12-month forward-looking supply and demand indicators. The report had Las Vegas' rank fall from the No. 7 spot in 2005 to No. 19 this year.
The market will expect to see 34,000 new jobs this year, with some 9,500 coming from the construction sector. Those construction jobs will contribute to bringing 1.7 million sf of new retail product to the market, according to the report. Even with that level of new inventory in the pipeline, new construction is not meeting the demand in the market.
According to Phillip Baca, a retail specialist in Las Vegas with NAI Horizon and affiliate of NAI Global, the imbalance has caused a tight market. Baca tells GlobeSt.com that the price for raw land has exploded over the past two years, going from around $18 per sf to $25 per sf. He says that along Blue Diamond Highway it's even hit $35 per sf. According to the Marcus & Millichap report "median prices for multi-tenant properties have climbed to more than $200 per sf for both strip centers and larger properties."
With the market remaining strong, Baca says the local retail industry is not without its challenges. "The biggest challenge is positioning, finding the right 20-25 acres that will be available," Baca adds. "We're all vying (for the same type of space), asking 'where's Main and Main going to be next' and looking to find it at the right price."
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