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Retail sales rise over holidays, offering hint of hope
Seven million square feet worth of new
construction projects on hold
February 01, 2010 - The
retail market had a small but noteworthy holiday sales improvement over the
previous year, the Retail Association of Nevada reports.
There was $353 billion in retail spending nationwide in December, up 5.4 percent
from last year, while fourth-quarter total sales increased 1.9 percent over the
same period in 2008.
"The year 2009 ended pretty much better than it started, considering the
year-over-year growth rate in three of the past four months," association
President Mary Lau said. "Should these trends continue, they may very well point
to much-needed employment growth."
The retail sector employed 132,200 people statewide in December, which is 8.8
percent less than last year, reports the Nevada Department of Employment,
Training and Rehabilitation. There were 8,800 retail related positions shed
during the last 12 months, with most of the losses occurring in the food and
beverage industry. Fewer people are seemingly dining out during the recession.
"Consumer spending in Southern Nevada continues to be hampered by a depressed
housing market and a fragile employment market," said Brian Gordon, principal of
Applied Analysis, Las Vegas-based business advisory firm. "We don't expect
immediate improvement in consumer spending -- a condition that will extend the
pain for selected retailers. Landlords and lenders may find themselves working
closely with tenants to evaluate portfolio performances going forward."
Retail vacancies rose to 10 percent in the fourth quarter, with 71,300 square
feet of negative net absorption for the year, Applied Analysis reported. The
historical 10-year vacancy rate average for local shopping centers is 4.5
percent, which is less than half the current level. Average valley asking rents
dropped to $1.84 per square foot in the fourth quarter, as a result. It marks a
16.4 percent decrease from two years ago.
A glut of empty shop space has ratcheted up landlord competition. Rival shopping
centers are aggressively luring tenants and re-signing existing ones, with
incentives that include free rent, tenant upgrades and reduced pricing. Southern
Nevada now has 77 retail units available that are 10,000 square feet in size or
larger, reports Colliers International Las Vegas. It's a five-space increase
from the third quarter and 28 units more than a year ago.
"Retailers with a presence in Southern Nevada who have announced closures in
2010, include Waldenbooks, B. Dalton, Jo-Ann (Fabric and Crafts), Pier I
(Imports), Kirkland's, Target and Kmart," Colliers Research Manager John Stater
said. "Distressed retail space totaled 2.7 million square feet in the fourth
quarter, an increase of 844,000 square feet from the last quarter."
New retail construction has virtually halted as a result. Only two projects
totaling 809,800 square feet were under construction during the fourth quarter,
including a Lowe's anchored center in the northwest and Tivoli Village at
Queensridge at Rampart Boulevard and Alta Drive. Nearly 7 million square feet of
future projects remain on hold.
"Forward momentum in the Las Vegas retail market has slowed quite a bit in
recent years; however, it has not stopped entirely," Grubb & Ellis research
analyst Dave Dworkin said. "Tenants have plenty of options for new space to
consider and opportunities to renew in their existing space, resulting in their
spending more time in the evaluation and decision making process than in the
past."
PROJECTS
Rafael Construction completed an $11.1 million, 29,667-square-foot senior center
and a $14.5 million, 41,523-square-foot aquatic facility inside the 160-acre
Heritage Park at Racetrack Road and Burkholder Boulevard in Henderson.
The senior center, designed by Carpenter Sellers Architects, contains dining
areas, a library and activity rooms. The aquatic facility, by SH Architecture,
consists of two indoor pools, classrooms and 600-person capacity spectator
seating as well as other amenities. |
