MARKETBEAT RETAIL SNAPSHOT

Transcription

1 Bil US$ MARKETBEAT RETAIL SNAPSHOT LAS VEGAS, NV A Cushman & Wakefield Research Publication Q NATIONAL ECONOMIC OVERVIEW Like Floyd Mayweather in the final round of a championship match, the U.S economy powered through quarter 4 (Q4) and ended the year on a positive note. The national unemployment rate declined by 0.4 percentage points (pps) to 5.7% in December as the number of unemployed declined by 383,000 to 8.7 million. As of November, the total quantity of employees who held jobs in the retail sector was up by 1.7% year over year. GDP growth slowed down from the 5% growth increase reported for Q3, to an increase of 2.6% for Q4. RETAIL SALES AND CONSUMER CONFIDENCE TRENDS $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $ RETAIL SALES CONSUMER CONFIDENCE LOCAL ECONOMY OVERVIEW The pendulum continued to swing upward for the tourism industry. The sector reported positive gains in visitor volume, convention attendance, and daily room rates. A record setting 41.1 million guests visited Las Vegas in 2014, representing an increase of 3.7% for the year. Among those millions were 5.2 million conventioneers, representing the highest total since 2008, and an increase of 1.2% over The average price per hotel room increased by 5.4%, averaging $ per night; this is just $15.36 less than the all-time high of $ posted in Total gaming revenue was down -1.2% for the year, suggesting that tourists are spending less on gaming, and more on entertainment, dinning, and shopping. State wide taxable sales for November 2014 of $3.9 billion represents a 6.9%increase over November The unemployment rate for Las Vegas decreased by 1.2 pps and finished the year at 6.9%; despite the improvement, Las Vegas unemployment rate is still 1.2 pps higher than the national average. LOCAL RETAIL FUNDAMENTALS The retail market made great strides in improvement for the year and had the best post-recession rebound in terms of Las Vegas commercial real estate. Net absorption for 2014 was 1,421,608 square feet (sf) and the vacancy rate inched up 30 basis points to end the year at 9.4%. Although the market did see the vacancy rate rise, it is important to remember that over 1.7 million square feet (msf) of new space was completed during Q4, and the vacancy rate has remained below 10% for the last seven (7) consecutive quarters. The average asking lease rate increased by 12% during Q4, and closed the year at $1.66 per square foot (psf) NNN. The large increase in asking lease rates is due to the addition of the 1.6 msf Downtown Summerlin. The project was 70%leased when completed, and the asking rates for available space are much higher than most retail spaces throughout the valley. BREAKDOWN BY PROPERTY TYPE VACANCY RENTAL RATES PSF/MO 2014 ABSORPTION Neighborhood Centers 10.4% $ ,553 Community Centers 9.4% $ ,933 Power Centers 8.4% $ ,170 TOTAL MARKET 9.4% $1.66 1,732,593 LOCAL RETAIL INVESTMENTS The market has seen an increase in the amount of out-of-state investors who are capitalizing on a rising market. The average sales price for multi-tenant and single-tenant retail buildings was $ and $ respectively. The averages sales prices have gradually increased year over year; suggesting that investors feel optimistic about the future. The cap rates for multi-tenant properties have been in the 6.5% - 7.0% range; slightly higher than the single tenant average cap rate of 6.3% - 6.5%. As the market improves, it is predicted that more retail assets will stabilize and competition amongst investors will increase. CONSTRUCTION There was 1,774,000 square feet of new retail space completed during Q4. This bumped the total market inventory up to 54.4 msf. Downtown Summerlin was completed by the Howard Hughes Corporation and attributed 1.6 msf to the inventory. Developers have begun to grade the dirt at Sunset and Buffalo where the 400,000 sf Ikea store will be built. This project is slated for completion during the summer of At the end of the year, 399,039 sf remains under construction at Tivoli Village, Las Vegas Athletic Club, and Green Valley Crossing Phase 5.

2 TRANSACTIONS During Q4, Gloamin Holdings LLC acquired two multi-tenant retail buildings for a sales price of $7,600,000 or $ per square foot. At the time of sale, the buildings were 100% occupied by nationally recognized tenants such as, Chipotle, Cold Stone, and Five Guys. This transaction set the post-recession, high water mark, for sales price on multi-tenant properties. On the leasing side, Fresh Tops signed a 60 month lease at Downtown Summerlin for 2,251 square feet. The effective rate was $5.31 psf (NNN). OUTLOOK In 2014, The Las Vegas economy demonstrated that it can roll with the punches delivered by The Great Recession. New construction, rising sales prices, and decreasing unemployment rates are all positive indicators that Las Vegas economy will continue to improving during The Governor s Office of Economic Development forecasted 25,000 new jobs in Nevada for 2015; this will help the state s unemployment rate catch up to the national average. Construction projects on Las Vegas Blvd. such as Resorts World Las Vegas, The Grandview at Las Vegas, and a 20,000 seat stadium, are expected to keep the level of construction employment elevated, and add additional fuel to job growth. The retail market still faces challenges such as speculative construction but in 2015, we predict that the vacancy rate will stay below 10% and absorption will report positive for the year. Prices will continue to increase but at a slower rate than seen in the past. Las Vegas Retail Overview SOURCE: Total Space Completed Net Absorption Vacancy Rate RESEARCH INC SOURCE: PROPERTY & PORTFOLIO RESEARCH 2,500,000 INC 2,000,000 1,500,000 1,000, , % 10.0% 8.0% 6.0% 4.0% 0-500, % 0.0%

3 MARKET HIGHLIGHTS SIGNIFICANT 2014 LEASE TRANSACTIONS SUBMARKET TENANT PROPERTY TYPE SQUARE FEET 1980 Festival Plaza Dr. West Fresh Tops Regional Mall 2, S. Nellis Blvd East DD s Discounts Neighborhood Center 22, Craig Rd North Office Depot Power Center 21,600 SIGNIFICANT 2014 SALE TRANSACTIONS SUBMARKET BUYER PRICE / $PSF SQUARE FEET W. Sunset Rd. Southeast Gloamin Holdings LLC 7,600,000 / $463 8, Centennial Center Blvd Northwest Marquerite Church 4,850,000 / $224 21, S Eastern Ave Southeast Spirit Realy Capital $9,900,000 / $494 20,032 SIGNIFICANT 2014 CONSTRUCTION SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE FEET COMPLETIONS Shops at Summerlin West Macy s and Dillard s ,500,000 SIGNIFICANT PROJECTS UNDER SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE FEET CONSTRUCTION Las Vegas Athletic Club North Las Vegas LVAC ,750 Tivoli Village West TBD ,000 Green Valley Crossing Phase V Southeast TBD ,289 * RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS 1,200,000 1,000, , , , ,000 0 Las Vegas Labor Force Seasonally Adjusted Labor Force Employed Unemployement Rate 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

4 No. of Existing Vacant Vacancy Q4 Asking Rent Construction Center Type Bldgs SF SF Rate Absorption Direct Completed Under Northwest Neighborhood 17 1,960,058 68, % (8,705) $ Community 8 1,099, , % -680 $ Power 5 2,239, , % (11,236) $ Total 30 5,299, , % (20,621) $ North Neighborhood 30 2,994, , % 2,385 $ Community 11 1,508, , % 3,000 $ ,750 Power 15 2,777, , % 18,200 $ Total 56 7,280, , % 23,585 $ ,750 Northeast Neighborhood 17 1,298,539 97, % 0 $ Community 7 1,054,911 60, % 1,200 $ Power 4 943,001 9, % 1(,600) $ Total 28 3,296, , % (400) $ West Neighborhood 23 2,740, , % (8,900) $ Community 19 2,806, , % 56,384 $ ,000 Power 12 4,679, , % 1,200,938 $3.03 1,600,000 Total 54 10,225,781 1,405, % 1,248,422 $2.19 1,600,000 1,800,000 East Neighborhood 29 3,143, , % 2,553 $ Community 12 1,953, , % 1,700 $ Power 4 1,203, , % (37,689) $ Total 45 6,300, , % 33,436 $ Southwest Neighborhood 35 3,434, , % 7,060 $ Community ,982 16, % (11,300) $1.95 4,000 0 Power 16 4,519, , % (41,581) $ Total 63 8,775, , % (34,785) $ ,000 Southeast Neighborhood 51 4,810, , % 38,475 $ ,289 Community 24 4,519, , % 194,423 $ ,000 0 Power 10 3,851, , % 5,945 $ Total 85 13,182, , % 238,843 $ ,000 11,289 Las Vegas Neighborhood ,382,131 2,138, % 163,534 $ ,000 11,289 Community 91 13,591,293 1,440, % 23,809 $ ,750 Power 65 18,613,398 1,204, % 37,330 $ ,500,000 Total ,360,822 5,121, % 1,421,608 $1.66 1,774,000 2,015,000

5 Property Classification: Neighborhood Center: Retail centers generally greater than 30,000 square feet with a supermarket anchor. Community Center: Retail centers with multiple anchors. Power Center: 100,000 square feet and up with multiple anchors with represent more than one -half of the total space within the center.