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Commerce Retail 1st qtr_2010 Commerce Retail 1st qtr_2010 Document Transcript

  • 1ST QTR RETAIL MARKET REPORT 2010 LAS VEGAS, NV Commerce Real Estate Solutions • 3800 Howard Hughes Pkwy, Suite 1200 • Las Vegas, NV 89169
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com 15% National and State Employment and Unemployment 13% Overview 11% Las Vegas – 13.9% Nevada – 13.2% 9% National unemployment rates reached a 28 year high at US – 9.7% 15% 10.4%, roughly 11 7% million unemployed workers that are 13% 5% Unemployment rates 1Q10 now drawing unemployment insurance benefits. In February 11% Las 3% alone, 27 states recorded unemployment rate increases. The 1% 9% Ne US highest regional jobless rates were in the Western part of -1% 7% 1Q07 3Q07 1Q08 4Q08 2Q09 4Q09 2Q07 4Q07 2Q08 3Q08 1Q09 3Q09 1Q10 the country, while the Northeast recorded the lowest rates. 5% Un Michigan again recorded the highest unemployment rate 3% among the states, 14.1 percent in February. The states with 1% -1% the next highest rates were Nevada, 13.2 percent; Rhode 1Q07 3Q07 1Q08 4Q08 2Q09 4Q09 2Q07 4Q07 2Q08 3Q08 1Q09 3Q09 1Q10 Island, 12.7 percent; California and South Carolina, 12.5 percent each; and Florida, 12.2 percent. The Las Vegas economy continues to be impacted by downturns and high employment rate, currently 13.9%, in all major sectors, At A Glance including gaming, construction, financial and real estate. Vacancy Rates Reached New Highs The recession will most likely be a “jobless recovery.” Overall vacancy rates reached another high during the quarter at 13.64%. Since World War II there have been a total of 11 recessions This is a 0.62% jump from 4th quarter 2009 and a 6.24% raise from a and in the most recent recessions before the 2007 recession, year ago. Anchorless Strip product type is showing the highest vacancy job growth lagged long after the recession. In fact it took rates at 21.15%. Vacancy increases during the year were impacted by several store closings due to the current economic conditions. several years for the unemployment rate to return back to prerecession levels. Employment growth is critical to future Rents Fall Again economic growth and the return to a healthy commercial As Landlords are faced with a “Tenant” market, they are seeing many market which may take several years to accomplish. retailers renegotiating for lower rents and asking for more concessions as their leases come up 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 averages lease rates at $1.74 per square foot (psf). This is a drop from last quarter Retail Market Indicators at $1.85 psf and higher of a drop from a year ago when rates where at Change $2.15 psf. Current Since 1Q10 1Q09 Challenging Outlook for Las Vegas Continues Vacancy 13.64% Looking forward, the retail sector is expected to continue to face Lease Rates (NNN) $1.74 NNN challenges posed by a troubled employment market, low consumer Net Absorption* (446,568) confidence levels and a still struggling housing market. Vacancy rates Construction N/A are expected to continue upward into the foreseeable future. The task *The arrows are trend indicators over the specified time period and do of identifying tenants who have a need for space in some of the larger not represent a positive or negative value. (e.g., absorption could be units and filling more than 7.4 million square feet of available product negative, but still represent a positive trend over a specified period.) will be difficult in the next year. Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowledge, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com Las Vegas Market Overview As we start the New Year, the big question on everyone’s The Federal Government is also monitoring the weakness minds is what is going to happen next and will the signs of of the commercial real estate market. The Feds believe that recovery start to show and what will it look like for the Las the weakness of commercial loans is a very serous problem Vegas Market. Experts around the nation believe that recovery because the whole economy could be hit, much like the housing will start to show by early 2011 and in some areas may have bust has caused. Troubled commercial real estate loans could already hit rock bottom. UNLV Economics Department be the primary force behind bank failures this year. Elizabeth Chairman, Dr. Stephen Miller says “improvements in taxable Warren, chair of the TARP Congressional Oversight panel sales, gaming revenue and McCarran Airport passenger stated that “around half of all commercial mortgages will be counts are good indicators of an improving economy (for the underwater by the end of 2010, posing a very serious problem Las Vegas market).” Miller goes on to state that “a lot of things for the economy over the next three years.” are happening locally that are suggestions that the economy is trying to reach bottom and turn around.” While Southern The Las Vegas Retail Market Nevada’s local economy may be starting to see the bottom Vacancy of the commercial recession period, some experts are still By end of the quarter, analyzing declining property values, maturing commercial vacancies reached new loans, ownership vs. leasing, the benefit of receiverships and highs with approximately the local business activity. 7.48 million square feet of vacant product coming According to Kenneth P. Riggs, President and CEO of RERC, online. This equates to a “The past decade has served up some tough lessons about 13.64% vacancy factor. acting on our gut instincts and about what makes sense and Above-average vacancies what simply does not fit with sustainable practices. But for were noted in the North Las Vegas (19.74%), Central East investors seeking to seize market opportunities, 2010 is time (14.70%), and Henderson (27.31%) submarkets. By product to gear up for a possible once-in-a-lifetime opportunity to type, Strip Center (21.15%) and Neighborhood Center snag key long-term investments in commercial real estate.” (14.37%) retail buildings posted the highest vacancies at In 2010, with leasing activity lagging, we are seeing more the end of the quarter as discretionary spending pulled back, landlords willing to hang “For Lease” and “For Sale” signs further impacting the viability of small business owners. on their buildings. John Kulper, president of Commercial Summerlin at 7.24% and Central West at 8.93% posted the Alliance of Realtors, wrote “While lenders generally are lowest vacancy rates. The retailers that are pulling through avoiding investment real estate, owner-occupied commercial the recession have enjoyed the current vacancy and the real estate is beginning to look attractive again.” Real old time saying “location, location, location” really means Capital Analytics also agrees stating that “owner-occupied something right now to the retailers that can make the move purchase now represent almost 10% of global transactions to more premier locations as rental rates are lowered and and will be involved in a greater share of property deals.” become more affordable. In a recent study, most commercial brokerage firm’s executives believe that “real estate prices now make it more financially advantageous to buy rather than lease.” In the Las Vegas market, commercial property values and asking rates continued to fall this quarter which may help with the decision to either buy or lease. Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com Retail Space Vacancy Rates Retail: Quarterly Vacancy Retail Space Vacancy Rates 15% 14% Central East, Sum m erlin, 7.24% 14.70% 13% Central East, 12% Southw est, 13.45% Central West, Sum m erlin, 7.24% 14.70% 11% 8.93% 10% Southw est, 13.45% Central West, 9% 8.93% 8% Northw est, 12.57% 7% 6% Northw est, 12.57% East, 15.74% 5% East, 15.74% 4% 3% 2% North Las Vegas, 1% 19.74% 0% North Las Vegas, Green Valley, 19.74% 12.96% Green Valley, 6 6 6 6 7 7 7 7 8 8 9 0 8 8 9 9 9 20 30 40 10 20 30 40 11 10 20 30 40 10 20 30 40 10 12.96% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Nellis, 10.71% Henderson, 27.31% Nellis, 10.71% Henderson, 27.31% Retail Vacancy by Type Freestanding, Retail Vacancy 2.37% by Type Freestanding, Retail: Quarterly Absorption (SF) 2.37% 2,000,000 Neighborhood 1,000,000 Centers, 14.37% Anchorless Strip, Neighborhood 21.15% Centers, 14.37% Anchorless Strip, - 21.15% (1,000,000) (2,000,000) (3,000,000) (4,000,000) Com m unity 8 8 6 6 6 6 7 7 7 7 8 8 9 9 9 9 0 Centers, 12.23% 30 40 10 20 30 40 11 10 20 30 40 10 20 30 40 10 20 Q Q Q Q Q Q Q Com m unity Q Q Q Q Q Q Q Q Q Q Centers, 12.23% Retail: Vacancy (%) and Ave. Lease Rates Retail: Inventory (SF) and Vacancy Rate (%) 60,000,000 16.0% 30.00% $2.50 14.0% 55,000,000 25.00% $1.99 $1.94 $2.00 12.0% $2.03 $1.64 $1.92 50,000,000 20.00% $1.49 $1.82 10.0% $1.67 $1.54 $1.50 15.00% $1.33 45,000,000 8.0% $1.00 6.0% 10.00% 40,000,000 4.0% 5.00% $0.50 35,000,000 2.0% 0.00% $0.00 30,000,000 0.0% n st y s l in t t t lis st es as es ll e so ga we Ea l er Ne hw lE lW Va er Ve m 6 6 6 6 7 7 7 7 8 8 rth 8 8 9 9 9 9 0 30 40 10 20 30 40 11 nd 10 20 30 40 10 20 30 40 10 20 ra ut m ra en s Q Q Q Q Q Q Q No Q Q Q Q Q Q Q Q Q Q nt So He Su La nt re Ce Ce G rth No Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com Outlook Retail: Quarterly Vacancy 15% In the coming months we expect commercial real estate prices 14% 13% to decline further and not see any true recovery until the end 12% 11% 10% of the year to early next year. The market will continue to 9% 8% be impacted by cautious consumer and company activity, 7% 6% causing vacancies to remain elevated and most likely continue 5% 4% to increase. Rents will also continue to be impacted by the 3% 2% 1% current economy and will continue to fall. In a report produced 0% by UNLV’s CBER, “Southern Nevada business will continue 6 6 6 6 7 7 7 7 8 8 9 8 8 9 9 9 0 to struggle with the after effects of the deepest recession in the 20 30 40 10 20 30 40 11 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 US since the Great Depression. To date, Southern Nevada has Pricing (Average Asking Rent) not enjoyed the same level of increase in business activity as the rest of the US.” The local economy will not pick up until Weak consumer spending and troubled employment we see robust growth in hiring and according to the survey, continues to force many businesses to close and the demand with only 10% of businesses anticipated to hire more workers, for retail space is shrinking. This activity has lowered the the recovery will be very slow for the Las Vegas area. We average asking rents around the valley. Average asking rents are optimistic going into 2010 that the bottom is near and witnessed another decline to $1.74 per sf/mo NNN during 1st compared to last year, vacancy is not rising and lease rates are quarter 2010, which was slightly below the $1.82 per sf/mo not falling as fast or as far as we were witnessing. NNN reported in the preceding quarter (Q4 2009) and further below the $2.15 per sf/mo NNN reported one year ago. The Looking forward, incremental job growth is anticipated to be amount of product available at year-end represented an all- limited, with nearly every sector pointing toward continued time high, which will likely contribute to continue softening contraction in 2010. Income and spending levels are also in retail prices. likely to remain depressed, as consumers pull pack in the face of uncertainty. These conditions will force retailers to shift New Supply (Completions) and Market Demands their business models back to the pre-boom era, a change that can be difficult to achieve. That said, opportunities for those Developers have halted many projects resulting in no new seeking expansion or entrance into the Las Vegas market over construction completions during first quarter. With the the next several years should be attractive from a pricing continued hesitation of developers to build product, due to perspective. scarce construction financing and weak rents, we also don’t expect much of the planned product to come online any time Las Vegas Retail Overview 2005-2010 YTD soon. Future new supply levels will continue to shrink as 9,000,000 18.00% market corrections are underway. It may take another five 8,000,000 7,000,000 13.64% 16.00% 14.00% years for the housing market to become stable, credit to start 13.02% 6,000,000 12.00% Square Feet flowing and employment to become active again before any Vacancy 5,000,000 10.00% 4,000,000 7.40% 8.00% rise in construction numbers. For a smart recovery, the retail 3,000,000 3.71% 4.31% 6.00% 3.90% market needs to solve the imbalance of supply and demand 2,000,000 4.00% 1,000,000 2.00% by allowing existing vacant space to be absorbed and wait out Year 0 2005 2006 2007 2008 2009 2010 0.00% this business cycle before any major growth should happen. Ave Lease Rate $1.75 $1.92 $2.04 $2.15 $1.85 $1.74 Base * Sf Millions 44.50 48.73 50.06 50.40 55.88 54.91 Built Vacant Inventory Vacancy Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com Rules for Market Review Only existing properties, for lease >=20,000 square feet are included in the market reviews TYPE REGIONAL MALL ...............................................ENCLOSED MALL REGIONAL CENTER ............................................>= 350,000 SF COMMUNITY CENTER .......................................>= 100,000 AND <= 349,999 SF NEIGHBORHOOD CENTER ...............................>= 50,000 AND <= 99,999 SF ANCHORLESS STRIP ...........................................<=49,999 SF FREESTANDING ..................................................FREESTANDING Las Vegas Retail Submarket Map Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce CRG Las Vegas Retail Market Report Q1 2010 Commerce | Las Vegas, NV www.comre.com 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 20 3,341,495 - - 458,228 13.71% 59,805 74,032 - $0.75 $3.00 $1.55 Freestanding 6 232,766 - - - 0.00% 24,000 24,000 - Neighborhood Centers 6 492,815 - - 99,232 20.14% 16,790 16,790 - $0.90 $4.00 $1.97 Anchorless Strip 39 1,478,030 - - 257,827 17.44% (92,724) 5,435 - $0.50 $3.00 $1.39 Total 71 5,545,106 - - 815,287 14.70% 7,871 120,257 - $0.50 $4.00 $1.64 Central West Community Centers 29 4,980,163 - - 367,701 7.38% 230,338 253,243 - $0.50 $3.23 $1.32 Freestanding 6 512,437 - - 1,200 0.23% 2,400 2,400 - $1.00 $1.60 $1.46 Neighborhood Centers 17 1,300,033 - - 123,508 9.50% 55,680 86,382 - $0.60 $2.50 $1.44 Anchorless Strip 41 1,458,720 - - 244,262 16.74% (46,465) 24,061 - $0.31 $2.50 $1.11 Total 93 8,251,353 - - 736,671 8.93% 241,953 366,086 - $0.31 $3.23 $1.33 East Community Centers 16 2,532,242 - - 419,042 16.55% (94,219) 28,888 - $0.49 $4.50 $1.52 Freestanding 2 77,234 - - - 0.00% - - - Neighborhood Centers 2 181,777 - - - 0.00% 1,080 1,080 - Anchorless Strip 12 402,940 - - 83,685 20.77% 9,104 13,854 - $0.50 $2.50 $1.45 Total 32 3,194,193 - - 502,727 15.74% (84,035) 43,822 - $0.49 $4.50 $1.49 Green Valley Community Centers 32 6,907,293 - - 747,258 10.82% (210,177) 120,965 - $0.50 $4.00 $2.09 Freestanding 3 263,856 - - 26,974 10.22% 9,181 36,155 - $0.83 $0.83 $0.83 Neighborhood Centers 22 2,055,795 - - 320,891 15.61% 5,281 57,996 - $1.00 $7.50 $2.14 Anchorless Strip 24 779,738 - - 202,075 25.92% (3,344) 21,057 - $0.50 $3.00 $1.61 Total 81 10,006,682 - - 1,297,198 12.96% (199,059) 236,173 - $0.50 $7.50 $1.67 Henderson Community Centers 10 1,954,454 - - 584,491 29.91% (295,176) 54,054 - $0.75 $4.00 $1.88 Freestanding - - - - - - - - Neighborhood Centers 3 295,539 - - 9,818 3.32% (2,418) - - $1.75 $2.25 $2.10 Anchorless Strip 7 347,623 - - 115,171 33.13% (45,919) 6,481 - $0.50 $3.50 $1.98 Total 20 2,597,616 - - 709,480 27.31% (343,513) 60,535 - $0.50 $4.00 $1.99 Nellis Community Centers 8 1,235,823 - - 89,731 7.26% (15,129) 2,899 - $0.85 $2.55 $1.38 Freestanding 2 100,340 - - - 0.00% - - - Neighborhood Centers 11 908,002 - - 133,960 14.75% 30,295 42,796 - $0.90 $3.25 $1.73 Anchorless Strip 16 528,204 - - 73,260 13.87% (28,586) 419 - $0.70 $3.50 $1.52 Total 37 2,772,369 - - 296,951 10.71% (13,420) 46,114 - $0.70 $3.50 $1.54 North Las Vegas Community Centers 24 4,817,384 - - 784,308 16.28% (75,613) 15,356 - $0.50 $3.75 $2.11 Freestanding - - - - - - - - Neighborhood Centers 16 1,444,702 - - 376,229 26.04% (47,562) 6,787 - $0.75 $4.00 $1.77 Anchorless Strip 12 423,059 - - 159,036 37.59% (14,898) 32,924 - $0.49 $3.50 $1.59 Total 52 6,685,145 - - 1,319,573 19.74% (138,073) 55,067 - $0.49 $4.00 $1.82 Northwest Community Centers 17 3,451,348 - - 324,305 9.40% (41,925) 8,849 - $0.81 $3.25 $1.97 Freestanding - - - - - - - - Neighborhood Centers 11 721,010 - - 133,846 18.56% 90,682 93,592 - $0.99 $4.00 $2.08 Anchorless Strip 13 366,302 - - 112,531 30.72% (2,173) 3,930 - $0.75 $3.25 $1.76 Total 41 4,538,660 - - 570,682 12.57% 46,584 106,371 - $0.75 $4.00 $1.94 Southwest Community Centers 15 4,176,004 - - 548,099 13.12% (59,358) 45,544 - $1.00 $4.00 $2.04 Freestanding - - - - - - - - Neighborhood Centers 10 962,756 - - 50,222 5.22% 81,709 98,855 - $1.25 $2.80 $1.90 Anchorless Strip 44 1,630,125 - - 311,822 19.13% 84,681 133,613 - $0.75 $5.00 $1.83 Total 69 6,768,885 - - 910,143 13.45% 107,032 278,012 - $0.75 $5.00 $1.92 Summerlin Community Centers 18 3,602,518 - - 201,332 5.59% (63,772) 22,048 - $0.75 $3.50 $2.36 Freestanding - - - - - 0.00% - - - Neighborhood Centers 8 515,641 - - 28,498 5.53% 251 2,400 - $0.85 $3.00 $1.83 Anchorless Strip 13 428,398 - - 99,179 23.15% (8,387) - - $1.00 $3.75 $1.90 Total 39 4,546,557 - - 329,009 7.24% (71,908) 24,448 - $0.75 $3.75 $2.03 Las Vegas Total Community Centers 189 36,998,724 - - 4,524,495 12.23% (565,226) 625,878 - $0.49 $4.50 $1.82 Freestanding 19 1,186,633 - - 28,174 2.37% 35,581 62,555 - $0.83 $1.60 $1.15 Neighborhood Centers 106 8,878,070 - - 1,276,204 14.37% 231,788 406,678 - $0.60 $7.50 $1.88 Anchorless Strip 221 7,843,139 - - 1,658,848 21.15% (148,711) 241,774 - $0.31 $5.00 $1.61 Total 535 54,906,566 - - 7,487,721 13.64% (446,568) 1,336,885 - $0.31 $7.50 $1.74 Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.
  • 2010 1st QTR Retail Market Report Commerce | Las Vegas, NV www.comre.com Cushman & Wakefield and you get the most innovative and progressive real estate brokerage in the Intermountain West: Commerce Real Estate Solutions. Doing business in a brisk and nuanced marketplace is complex and difficult. We can help. Our experience, COMMERCE | FULL SERVICE COMMERCIAL REAL knowledge, innovative thinking, networking infrastructure ESTATE SOLUTIONS and unmatched service make Commerce the clear choice for your commercial real estate needs. Commerce Real Estate Solutions has been among the top commercial real estate brokerage firms in the Intermountain West for over 30 years. From our headquarters in Salt Lake City and offices in Provo/Orem, Clearfield and St. George, Utah, Las Vegas, Nevada and Seattle and Bellevue Washington 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 CUSHMAN & WAkEFIELD worldwide. Cushman & Wakefield is the world’s largest privately- Meeting your real estate objectives is our number one held commercial real estate services firm. Cushman goal at Commerce Real Estate Solutions. Whether & Wakefield is the world’s largest privately-held you’re looking to lease, own, develop or sell commercial commercial real estate services firm. Founded in 1917, properties, we have the team of professionals to get it it has 231 offices in 58 countries and 15,000 employees. done for you. Our seasoned agents are recognized both The firm represents a diverse customer base ranging from regionally and nationally for their first-rate performance; small businesses to Fortune 500 companies. It offers a and because of their success, they tend to stay with our complete range of services within four primary disciplines: company longer. The average tenure of Commerce agents Transaction Services, including tenant and landlord is one of the longest in the industry. representation in office, industrial and retail real estate; Capital Markets, including property sales, investment That means you’re getting an experienced agent when management, valuation services, investment banking, you do business with us. You’re also gaining access debt and equity financing; Client Solutions, including to our Information Services Group, which includes our integrated real estate strategies for large corporations Geographic Information System (GIS), the industry and property owners, and Consulting Services, including standard-bearer in mapping, Graphic Design and business and real estate consulting. A recognized leader Marketing, and Research. in global real estate research, the firm publishes a broad array of proprietary reports available on its online At Commerce we have a complete understanding of the Knowledge Center at www.cushmanwakefield.com. real estate market. Our comprehensive database allows our agents to feel, track and analyze every movement in the industry and to see opportunities as soon as they arise. Combine this with the global resources of Our Vision We are the firm of choice - a real estate advisor and principal - the global standard for knowlege, service, and execution.