David Jewkes, managing director of Burnham Real Estate's Las Vegas office, believes the synergy being created with new mixed-use development in high-profile projects is transforming Las Vegas from the "entertainment capital of the world" to the "retail capital of the world."
"Over the next two years, we expect low retail vacancy rates to continue and asking rents to remain stable with modest increases in prime locations and high traffic core locations," he said. Currently, retail vacancy stands at 3.5% with average asking rents at $1.91 per sf per month.
The report also projects increased demand for office space and industrial/distribution space to serve Las Vegas' growing resort, convention and retail industries. Jewkes says office rental rates should remain at current levels as a significant amount of office space completed this year waits to be absorbed. Industrial asking rental rates, on the other hand, will continue to increase from the pressure being created by limited supply and lack of significant new development opportunities, he says.
Currently, the Las Vegas office market reports 10.4% vacancy with average asking rental rates of $1.94 per sf. Industrial vacancy stands at 3.8% with average triple net asking rates of $0.71 per sf.
With regard to apartments, Jewkes said residents looking for apartments can expect to pay an average of $931 a month for a two-bedroom unit in a mid-range community (and $796 per month for a one-bedroom unit). "With vacancy currently at 5.2%, multifamily rents will continue to rise as the demand created by new population growth gradually outpaces supply," he said.
The population growth is being spurred by job growth. More than $30 billion in new development along the Las Vegas Strip over the next three years is generating a surge in construction jobs in the near term, and setting the stage for more job growth in the long-term, according to the report.
"The new retail services, restaurants, casinos and 38,800 hotel rooms that will open between now and 2011 lays the foundation for more permanent service jobs in the long-term," said Jewkes. The first phase of Project CityCenter by MGM Mirage will employ an estimated 12,000 people when it opens in 2009.
While single-family residential construction in Las Vegas has slowed like the rest of the nation, "the wave of development and subsequent job creation will boost Clark County's population to over two million in 2007, creating more demand for traditional single-family homes and helping to normalize this sector of the market by year-end 2007," Jewkes said. "[Las Vegas] is a magnet for people who recognize the financial benefits the area offers with no corporate or personal income tax; no unitary, franchise or inventory tax; no inheritance or estate tax; and no gift and chain store tax."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
