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4th Quarter Retail Report09
 

4th Quarter Retail Report09

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    4th Quarter Retail Report09 4th Quarter Retail Report09 Document Transcript

    • COMMERCE REAL ESTATE SOLUTIONS is a regional real estate firm dedicated first and foremost to our clients. With the industry’s premier professionals, and industry leading technology, our mission is toexceed our clients’ expectations throughservice excellence. C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • RETAIL MARKET INDICATORS Change Since Current 4Q09 4Q08 LAS VEGAS RETAIL MARKET OVERVIEW Vacancy 13.02% Lease Rates $1.85 NNN Net Absorption * (306,722) Construction N/A *The arrows are trend indicators over the specified time period, and do not represent a positive or negative value. (e.g., absorption could be negative but still represent a positive trend over a specified period.) RETAIL MARKET OVERVIEW AT A GLANCE By end of the year vacancies reached new highs with approximately 7.28 million square feet of vacant product Vacancy Rates Reached New Highs coming online. This equates to a 13.02% vacancy factor. Overall vacancy rates reached another high during the quarter at 13.02%. This is a 2.8% jump from third quarter 2009 and a 5.62% raise from a year ago. Anchorless Above-average vacancies were noted in the North Las Vegas Strip product type is showing the highest vacancy rates at 18.66%. Vacancy increases (17.43%), Central East (15.44%), East (15.37%) submarkets. during the year were impacted by several store closings due to the current economic conditions. By product type Strip Centers (18.66%) and Neighborhood Centers (18.05%) retail buildings posted the highest vacancies Rents Remained Stable at the end of the quarter as discretionary spending pulled back, As Landlords are faced with a “Tenant” market, they are seeing many retailers further impacting the viability of small business owners. The renegotiating for lower rents and asking for more concessions as their leases come up retailers that are pulling through the recession have enjoyed for renewal. Negotiations like these and more up-front incentives help stabilize and even lower the overall average lease rates. Currently, the Las Vegas market is showing annual the current vacancy and the old time saying “location, location, averages lease rates at $1.85 per square feet (psf). This is a drop from last quarter at location” really means something right now to the retailers that $1.92 psf and higher of a drop from a year ago when rates where at $2.18 psf. can make the move to a more premier locations as rental rates are lowered and become more affordable. Challenging Outlook for Las Vegas Continues Looking forward, the retail sector is expected to continue to face challenges posed by According to a report in Time magazine the new rage in retail a troubled employment market, low consumer confidence levels and a still struggling housing market. Vacancy rates are expected to continue upward into the foreseeable leasing are what is called “pop-up shops” Pop-up stores, or future. The task of identifying tenants who have a need for space in some of the larger temporary retail outlets, are one way for landlords to fill an ever units and filling more than 6.9 million square feet of available product will be difficult in the next year. growing amount of retail vacancy. According to Mike Kraus, “pop-ups are an opportunity for both entrepreneurs and big brands to make some money without having to worry about the overhead of a five-year lease.” Pop-ups are not just for mom and pop operations. According to the report Toys “R” Us is looking to replace the former KB Toys, by opening 350 holiday express toy outlets during the holiday season. Other retails that have dabbled in the pop-up concept include American Eagle, Gap, JC Penny, Ann Taylor and Gucci. With long vacancy times Landlords are looking for some part time foot traffic and retailers gain opportunities to create buzz on special products and/ or short term sales during important shopping months. Pricing (Average Asking Rents) Weak consumer spending and troubled employment is forcing many businesses to close and the demand for retail space is shrinking. This activity has lowered the average asking rents around the valley. Average asking rents witness a decline to $1.85 per sf/mo NNN during 4th quarter 2009, which was slightly below the $1.92 per sf/mo NNN reported in the preceding quarter (Q3 2009) and further below the $2.18 per sf/mo NNN reported one year ago. The amount of product available at year-end represented an all-time high, which will likely contribute to continue softening in retail prices. C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • OUTLOOK As the winter months approach the temperatures are not the only thing dropping around the valley. Turbulent debt markets and a LAS VEGAS slowing economy have finally hit the commercial real estate market. RETAIL MARKET OVERVIEW According to a Federal Reserve official, “The strong headwinds that are facing financial institutions in the United States will likely continue for some time and struggles for the commercial real estate market are far from over.” Prices of existing commercial properties have declined sharply from their record highs and will likely continue to decline. Market conditions are expected to remain sluggish all throughout 2010 as the economy works it way out of the recession. Also affecting a faster recovery in the retail market comes from a combination of all-time low levels of consumer confidence and the highest unemployment numbers that we have seen in 26 years. The current 10% national unemployment rate equates to 15.7 million workers that remain jobless. According to the Labor Department “the largest job losses were in construction (down 62,000), manufacturing (down 61,000) and retail (down 40,000). Chief economist, Alan Levenson stated that “It’s not surprising to see continuing job losses in the retail sector because too many stores were built in response to overzealous consumer spending fueled by borrowing.” Although most economists report that the recession ended sometime in June, people are still afraid to spend money as unemployment keeps going up. As the Holiday shopping season comes to a close, the negative sales that were forecasted during third quarter ended up being a positive shopping season. Last year at this time retail sales fell 3.4%, however even as shoppers continue to worry about credit card debt and sky high unemployment rates, retail sales actually rose 3.6% from November 1st through December 24th. According to an Associated Press article, “ A large increase was seen in internet shopping, which SpendingPulse said was up 15.5% over last year.” Looking forward, incremental job growth is anticipated to be limited, with nearly every sector pointing toward continued contraction in 2010. Income and spending levels are also likely to remain depressed, as consumers pull pack in the face of uncertainty. These conditions will force retailers to shift their business models Nevada | pre-boom era, a change that can be difficult to achieve. That Las Vegas, back to the Commerce said, opportunities for those seeking expansion or entrance into the Las 2009 market over the next several years should be attractive Fourth Quarter Vegas from a pricing perspective. Las Vegas Retail Overview 2005-2009 YTD 9,000,000 18.00% 8,000,000 16.00% 7,000,000 14.00% 13.02% 6,000,000 12.00% Square Feet Vacancy 5,000,000 10.00% 4,000,000 7.40% 8.00% 3,000,000 6.00% 4.31% 3.71% 2,000,000 3.90% 4.00% 1,000,000 2.00% 0 0.00% Year 2005 2006 2007 2008 2009 YTD Ave Lease Rate $1.75 $1.92 $2.04 $2.15 $1.85 Base * Sf Millions 44.50 48.73 50.06 50.40 55.88 Built Vacant Inventory Vacancy C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • Commerce CrG Las Vegas retail market report Q4 2009 inventory vacancy Demand & Supply Pricing No. of existing Under Const. Planned Vacancy Net Gross New asking rent (NNN) Bldgs. SF SF SF SF rate absorption Spaced Supply Low High avg. Central east Community Centers 21 3,470,953 - - 543,162 15.65% (84,048) 8,843 - $0.75 $3.50 $1.57 Freestanding 8 257,490 - - 32,125 12.48% 13,891 13,891 - $1.00 $2.75 $1.46 Neighborhood Centers 6 399,098 - - 126,622 31.73% (4,600) 1,100 - $0.90 $4.00 $2.44 anchorless Strip 35 1,365,424 - - 146,378 10.72% 5,893 36,288 - $0.65 $3.00 $1.39 total 70 5,492,965 - - 848,287 15.44% (68,864) 60,122 - $0.65 $4.00 $1.63 Central west Community Centers 34 5,827,422 - - 674,069 11.57% (78,656) 13,282 400,000 $0.50 $3.23 $1.42 Freestanding 2 90,320 - - 4,950 5.48% - - - $0.75 $1.60 $1.19 Neighborhood Centers 19 1,418,919 - - 179,188 12.63% (49,443) 6,929 - $0.90 $2.50 $1.48 anchorless Strip 40 1,440,320 - - 197,797 13.73% (2,573) 30,623 - $0.31 $2.50 $1.29 total 95 8,776,981 - - 1,056,004 12.03% (130,672) 50,834 400,000 $0.31 $3.23 $1.35 east Community Centers 17 2,637,089 - - 352,400 13.36% (177,521) 100,447 - $0.80 $4.50 $1.60 Freestanding 3 135,234 - - 50,000 36.97% 1,910 49,058 - $1.40 $1.75 $1.58 Neighborhood Centers 3 243,177 - - 30,324 12.47% (90) - - $1.50 $4.50 $2.40 anchorless Strip 12 402,940 - - 92,789 23.03% (13,883) 15,291 - $0.99 $2.25 $1.41 total 35 3,418,440 - - 525,513 15.37% (189,584) 164,796 - $0.80 $4.50 $1.75 Green valley Community Centers 35 7,275,457 - - 546,273 7.51% (68,345) 44,024 - $0.50 $3.50 $2.04 Freestanding 4 189,929 - - 58,491 30.80% (3,045) - - $0.99 $1.85 $1.61 Neighborhood Centers 21 2,128,629 - - 430,437 20.22% (26,230) 56,294 55,000 $0.21 $7.50 $2.23 anchorless Strip 23 789,884 - - 206,459 26.14% (3,124) 27,630 - $0.40 $3.25 $1.61 total 83 10,383,899 - - 1,241,660 11.96% (100,744) 127,948 55,000 $0.21 $7.50 $1.87 Henderson Community Centers 10 1,843,893 - - 289,315 15.69% 41,893 64,851 42,175 $0.75 $4.00 $1.98 Freestanding 3 115,059 - - - 0.00% - - - Neighborhood Centers 3 295,539 - - 7,400 2.50% - - - $1.75 $2.25 $2.11 anchorless Strip 4 232,564 - - 69,252 29.78% 4,601 4,601 - $1.70 $3.50 $2.57 total 20 2,487,055 - - 365,967 14.71% 46,494 69,452 42,175 $0.75 $4.00 $2.22 Nellis Community Centers 8 1,235,823 - - 74,602 6.04% (8,014) 8,668 - $0.85 $2.55 $1.41 Freestanding 3 170,340 - - 6,003 3.52% 32,532 32,532 - $1.75 $1.75 $1.75 Neighborhood Centers 11 908,002 - - 164,255 18.09% 49,075 64,075 - $0.75 $3.25 $1.81 anchorless Strip 15 458,204 - - 38,671 8.44% 54,617 54,800 - $0.70 $3.50 $1.67 total 37 2,772,369 - - 283,531 10.23% 128,210 160,075 - $0.70 $3.50 $1.66 North las vegas Community Centers 24 4,817,384 - - 708,695 14.71% 17,936 92,636 115,425 $0.99 $4.00 $2.32 Freestanding 1 22,200 - - 22,200 100.00% - - - $0.25 $3.50 $1.88 Neighborhood Centers 16 1,429,455 - - 306,467 21.44% (160,788) - - $0.90 $4.00 $1.91 anchorless Strip 10 381,659 - - 121,610 31.86% 24,200 45,085 - $0.49 $3.50 $1.52 total 51 6,650,698 - - 1,158,972 17.43% (118,652) 137,721 115,425 $0.25 $4.00 $1.91 Northwest Community Centers 18 3,574,266 - - 282,380 7.90% 2,613 26,928 - $0.21 $3.17 $1.70 Freestanding - - - - - #DIV/0! - - - Neighborhood Centers 11 721,010 - - 224,528 31.14% (34,389) 24,237 - $0.99 $4.00 $1.91 anchorless Strip 6 162,765 - - 20,057 12.32% 16,404 17,244 - $1.00 $3.25 $2.18 total 35 4,458,041 - - 526,965 11.82% (15,372) 68,409 - $0.21 $4.00 $1.93 Southwest Community Centers 17 4,661,095 - - 541,241 11.61% 64,342 70,000 - $1.00 $4.00 $2.18 Freestanding 1 26,218 - - 1,500 5.72% - - - $2.25 $2.25 $2.25 Neighborhood Centers 10 962,756 - - 131,931 13.70% (38,609) 23,803 - $1.25 $3.00 $2.13 anchorless Strip 41 1,509,686 - - 362,803 24.03% 124,819 169,974 - $0.75 $5.00 $1.84 total 69 7,159,755 - - 1,037,475 14.49% 150,552 263,777 - $0.75 $5.00 $2.10 Summerlin Community Centers 17 3,253,457 - - 106,760 3.28% 19,729 25,549 - $0.75 $5.00 $2.58 Freestanding - - - - - 0.00% - - - Neighborhood Centers 9 604,612 - - 43,306 7.16% (2,799) 201 - $1.45 $3.25 $2.31 anchorless Strip 13 429,521 - - 82,954 19.31% (25,020) - - $1.00 $3.75 $1.74 total 39 4,287,590 - - 233,020 5.43% (8,090) 25,750 - $0.75 $5.00 $2.12 las vegas total Community Centers 201 38,596,839 - - 4,118,897 10.67% (270,071) 455,228 557,600 $0.21 $5.00 $1.88 Freestanding 25 1,006,790 - - 175,269 17.41% 45,288 95,481 - $0.25 $3.50 $1.67 Neighborhood Centers 109 9,111,197 - - 1,644,458 18.05% (267,873) 176,639 55,000 $0.21 $7.50 $2.07 anchorless Strip 199 7,172,967 - - 1,338,770 18.66% 185,934 401,536 - $0.31 $5.00 $1.72 total 534 55,887,793 - - 7,277,394 13.02% (306,722) 1,128,884 612,600 $0.21 $7.50 $1.85 C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • LAs VEgAs | RETAIL GRAPHS Las Vegas, Nevada | Commerce Fourth Quarter 2009 Retail: Quarterly Vacancy 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 20 30 40 10 20 30 40 40 10 20 30 40 10 20 30 40 10 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Retail: Quarterly Absorption (SF) 2,000,000 1,000,000 - (1,000,000) (2,000,000) (3,000,000) (4,000,000) 7 8 8 5 6 6 6 6 7 7 7 8 8 9 9 9 9 30 40 10 20 30 40 40 10 20 30 40 10 20 30 40 10 20 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • LAs VEgAs | RETAIL GRAPHS Las Vegas, Nevada | Commerce Fourth Quarter 2009 Retail: Inventory (SF) and Vacancy Rate (%) 60,000,000 14.0% 55,000,000 12.0% 10.0% 50,000,000 8.0% 45,000,000 6.0% 40,000,000 4.0% 35,000,000 2.0% 30,000,000 0.0% 7 8 8 5 6 6 6 6 7 7 7 8 8 9 9 9 9 30 40 10 20 30 40 40 10 20 40 10 20 30 40 10 20 30 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Retail: Vacancy (%) and Ave. Lease Rates 20.00% $2.50 18.00% $2.22 $1.93 16.00% $1.75 $2.10 $2.12 $2.00 14.00% $1.63 $1.87 $1.91 12.00% $1.66 $1.50 10.00% $1.35 8.00% $1.00 6.00% 4.00% $0.50 2.00% 0.00% $0.00 n st y l in s t t t lis st es as es ll e so ga we Ea l er Ne hw lE lW Va er Ve m rth nd ra ut m ra en s No nt So He Su La nt re Ce Ce G rth No C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • LAs VEgAs | RETAIL GRAPHS Las Vegas, Nevada | Commerce Fourth Quarter 2009 Retail Space Vacancy Rates Central East, Sum m erlin, 5.43% 15.44% Southw est, 14.49% Central West, 12.03% Northw est, 11.82% East, 15.37% North Las Vegas, 17.43% Green Valley, Nellis, 10.23% 11.96% Henderson, 14.71% Retail Vacancy by Type Freestanding, Anchorless Strip, 17.41% 18.66% Com m unity Centers, 10.67% Neighborhood Centers, 18.05% C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • LAs VEgAs | RETAIL SUBMARKET MAP C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w
    • COMMERCE | fULL sERVICE COMMERCIAL REAL EsTATE sOLUTIOns Commerce Real Estate Solutions has been among the top commercial real estate brokerage firms in the Intermountain West for 30 years. From our headquarters in Salt Lake City and offices in Provo/Orem, Park City, Clearfield and St. George, Utah and Las Vegas, Nevada we offer a full range of brokerage services, valuation and consulting, client representation and property/facility management. Our alliance with Cushman & Wakefield extends our reach worldwide. CUshMAn & WAKEfIELd ALLIAnCE A number of Cushman & Wakefield offices, including Commerce Real Estate Solutions, are independently owned and connected with the company by way of an international alliance. Cushman & Wakefield concentrates on larger markets like Los Angeles and New York, and alliance members like Commerce Real Estate Solutions concentrate on developing secondary markets. Together the geographic coverage is nearly universal. This enables Cushman & Wakefield to provide comprehensive services for clients with local requirements as well as for those with more expansive national or international portfolios. In either case, Cushman & Wakefield’s services are supported by the full integrated resources of the entire alliance. Cushman & Wakefield is the world’s largest privately-held commercial real estate services firm. Founded in 1917, it has 230 offices in 58 countries and more than 15,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, and Consulting Services, including business and real estate consulting. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com. 230 Offices in 58 Countries Europe Austria Bulgaria Channel Islands France Ireland Norway Russia Vienna* Pleven* Jersey* Lyon Cork* Drammen* Moscow Canada Belgium Plovdiv* Sofia* Czech Republic Paris Dublin* Oslo* Stavanger* Scotland Brussels Prague Germany Italy Edinburgh Alberta Manitoba Newfoundland Berlin Bologna Poland Glasgow Calgary Winnipeg* St. John's* Denmark Dusseldorf Milan Warsaw Edmonton* Copenhagen* Serbia New Brunswick Nova Scotia Frankfurt Rome Portugal Belgrade* British Columbia Fredericton* Halifax* England Hamburg Luxembourg Lisbon Vancouver Moncton* Birmingham Munich Slovakia Ontario Luxembourg* Saint John* London-City Romania Bratislava Greece United States London Newmarket London-West End Athens Macedonia Bucharest Spain Manchester Skopje* Timisoara Ottawa Barcelona Thames Valley Hungary Toronto Central Budapest The Netherlands Madrid Toronto East Amsterdam Alabama Sweden Maine Toronto West Birmingham* Northern Ireland Stockholm Portland Quebec Belfast* Mobile Switzerland Maryland Montreal Central Basel* Arizona Montreal Suburban Phoenix Baltimore Geneva* Tempe Bethesda Zurich* Tucson* Massachusetts Turkey California Boston Istanbul Carlsbad Michigan Inland Empire Ohio L.A. Detroit* Grand Rapids* Cincinnati* Middle East/Africa L.A. South Bay Grosse Point Cleveland* Israel South Africa United Arab Emirates L.A. West Kalamazoo* Columbus* Tel Aviv* Cape Town* Dubai Marin/Sonoma Cty Lansing* Toledo* Durban* Oakland Muskegon* Lebanon Oregon Johannesburg* Orange County Beirut* Portland Pretoria* Sacramento Minnesota San Diego - Downtown Minneapolis Minneapolis Suburban Pennsylvania San Diego - Eastgate Philadelphia San Francisco Missouri Philadelphia Suburban San Jose Kansas City* Pittsburgh* Australia/Asia Pacific Walnut Creek St. Louis* Puerto Rico Australia Malaysia Colorado Nevada San Juan* Adelaide* Kuala Lumpur* Colorado Springs* Latin America Las Vegas* Melbourne* South Carolina New Zealand Denver Reno Sydney Charleston* Auckland* Connecticut Argentina Ecuador China Wellington* New Hampshire Greenville/Spartanburg* Buenos Aires Quito Hartford Manchester Beijing Stamford Tennessee Chengdu Pakistan Brazil Mexico New Jersey Guangzhou Karachi* Memphis* Manaus Ciudad Juarez Delaware East Rutherford Nashville* Rio de Janeiro Guadalajara* Hong Kong Philippines Wilmington Edison São Paulo Mexico City Shanghai Manila* District of Morristown Texas Monterrey Shenzhen Columbia Austin* Chile Singapore New York Dallas Santiago* Peru Fiji* Washington, D.C. South Korea Albany* Lima Houston Colombia India Busan Florida Binghamton* San Antonio* Buffalo* Bogota* Venezuela Bangalore Seoul Ft. Lauderdale Corning/Elmira* Caracas Chennai Ft. Myers* Utah Gurgaon Taiwan Jacksonville Islandia Clearfield/Ogden* Taipei* Ithaca* Hyderabad Miami Park City* Kingston* Kolkata Thailand Orlando Provo/Orem* Melville, LI Mumbai – City Bangkok* Palm Beach Gardens Salt Lake City* N.Y. Downtown Mumbai – Suburbs Tampa St. George* Vietnam N.Y. Midtown New Delhi Georgia Virginia Pune Hanoi Rochester* Ho Chi Minh City C&W Owned Offices Atlanta Syracuse Fredicksburg* Indonesia Syracuse* McLean Hawaii Jakarta C&W Alliance/Associate Offices Utica* Newport News* Honolulu Watertown* Norfolk/Virginia Beach* Japan AS OF MARCH 2009 Illinois Westchester County Richmond* Tokyo Chicago Roanoke* Chicago Suburban North Carolina Washington Charlotte* Indiana Bellevue Greensboro/Winston-Salem* Indianapolis* Seattle Raleigh/Cary Kentucky Raleigh/Durham* Wisconsin Louisville* Tarboro* Milwaukee* C o m m e r C e | F o U T H Q Ua r T e r - 2 0 0 9 | r e ta i l m a r k e t r e v i e w