The retail market here expanded by 1 million sf in the first quarter, while market demanded (or absorbed) 371,000 sf of space. In addition, recent market conditions, including the performance in the residential sector, prompted the closing of various regional and national outlets throughout the valley, including CompUSA, Levitz Furniture and Rite-Aid stores. Additional closures are likely for retail centers that are currently occupied by Wickes Furniture, which is in the process of winding down their operations, according to the report.

"It is clear that retailers, particularly those tied to the residential market, have been impacted by the latest slowdown in the overall economy," Aguero says. "Not only do taxable sales activity reports confirm the current performance, but recent retail outlet closures are a clear signal of instability. Consumer spending levels are coming off unsustainable highs, propped up by home equity extractions and record-low home interest rates. Retail inventory growth was tracking this trend, and the combination of high residential vacancies and reduced consumer spending is an unfavorable condition for retailers and retailer space developers."

Retailers have been quick to react, Aguero says, and will be much more cautious with expansion plans in the near-term, awaiting signs of improvement in the core fundamentals. "High levels of pre-leasing and quality-credit tenants will be required at many planned retail sites before lenders are willing to fund construction in emerging areas within the Las Vegas valley," he says.