Northern Nevada
By Gary Tremaine, Dickson Commercial Group
The retail market in northern Nevada has encountered ongoing obstacles in terms of development, such as elevated construction expenses and the imperative to address escalating inflation. Nevertheless, there are several new projects advancing. Both regional and national tenants have shown sustained interest in our region, helping to maintain stable vacancy rates.
In the third quarter, two lease transactions stood out: the leasing of O’Reilly Auto Parts in Smithridge Plaza and Burn Boot Camp in The Summit Sierra. These deals collectively secured 41,670 square feet of retail space. Specifically, 35,086 SF was leased in the Smithridge Plaza within the Meadowood submarket, while an additional 6,584 SF found successful leasing in The Summit of the South Reno submarket.
The Plumb Lane Retail Development was the most noteworthy project in Q3 within the Reno/Sparks retail landscape and offers 4,800 SF with a multi-tenant establishment and end-cap drive-thru. The addition of Cracker Barrel marks the continued expansion of the recently constructed retail development, West End Commons. Located in West Downtown, the built-to-suit, 10,486-square-foot space will house the first Cracker Barrel establishment in northern Nevada.
Southern Nevada
By Liz Clare, Principal-Capital Markets, Avison Young – Las Vegas Office
The Las Vegas retail property market continues to be strong with a total vacancy rate of just 5.6 percent ending the third quarter of 2023. It is key to note that in 2023, the vacancy rate was consistent with near decade-lows for the region. Quick service restaurants (QSRs) and discount stores have been at the top of the retailer categories when it comes to those seeking new space. In Q3, Las Vegas retail recorded 150,633 SF of positive net absorption which marks the fourth consecutive quarter of positive absorption for the market. Though remaining positive during the third quarter, net absorption has slowed when compared to historical norms, as supply-side pressure has hindered leasing activity.
On the retail property sales side, the volume increased by $59.3 million which equates to a 79.1 percent change quarter-over-quarter – jumping from $74.9 million in Q2 to $134.1 million in Q3. Despite breaking the $100 million mark for total transaction volume in a quarter, sales activity still lags historical norms which is attributed to a near-doubling of comprehensive borrowing costs – leading buyers to push for higher cap rates from sellers to offset the increased borrowing costs. However, sellers have been reluctant to make concessions, as most have opted to retain their assets, as record-low vacancy rates have led to increased cash flow for landlords across Las Vegas.
