Northern Nevada
By Gary Tremaine & Amanda Brierton, Dickson Commercial
Although 2021 ended with a large increase in volume (almost $200 million) investment activity in the first quarter dropped back down to $45 million in sales transactions to start the year. Which is more consistent with previous quarters going back 24 months.
Redevelopment projects were a theme in Q1. Most notably the building at 5390 Longley Boulevard. Located near the Longley and McCarran intersection, the 33,682 square foot former Gold’s Gym was purchased as a redevelopment into a multi-use and multi-disciplinary medical building.
Reno’s retail leasing market remains consistent, as anticipated, for Q1. There is limited inventory, as the retail vacancy rate of 5 percent is the lowest we’ve seen in over a decade. There are a few new developments that will deliver more retail opportunities in our market that should assist with our limited inventory.
That being said, there are two new developments in our market that are almost at 100 percent occupancy already – West End Commons in Reno & Red Rock Retail development in North Valleys. West End Commons is home to our third In-N-Out in Reno/Sparks, Reno’s first Cracker Barrel (coming soon), Chipotle, FireHouse Subs, and many other national food retailers.
Southern Nevada
By Liz Clare, Avison Young Las Vegas Office
In Q1 2022, the Las Vegas retail property sector continued to be robust. According to CoStar, the total vacancy rate posted at just 5.5 percent at the end of Q1, which is slightly lower than Q4 2021. A variety of retailer categories have been entering the market keeping the competition high for well-located available space. Drive-thru quick service restaurants (QSRs) are the hottest category for new space. The vigorous interest from retailers and tight vacancy has pushed rents higher. Overall, triple net rental rates rose from $20.02 in Q4 2021 to $20.69 in Q1 2022. These rents have increased consistently over the past nine consecutive quarters (since Q4 2019) despite the pandemic.
New development has remained healthy with 40 retail property deliveries so far in 2022 totaling just under 300,000 square feet with most of the property being pre-leased. There are currently 63 properties under construction. According to the Real Capital Analytics, there were a significant number of retail asset sales in Q1 of this year. These totaled just over $241 million with an average price of $261 per square foot.
We are heading for a correction brought on by several years of growth, which is part of the cyclical nature of real estate. With rising costs of living, growing interest rates and increasing expenses, retailers are feeling the effects and are being pushed to the limits on what they can reasonably afford for real estate expenditures. I see changes on the horizon as we adjust to a shifting economic climate.
