Retail Picks Up Speed

Transcription

1 Research & Forecast Report LAS VEGAS RETAIL Q Retail Picks Up Speed > > Net absorption was strong in the second quarter of 2017, reversing a weak first quarter > > Vacancy decreased to 8.3 percent Economic Indicators RETAIL Employment RETAIL Taxable Sales RETAIL /Job > > Asking rental rates remained at $1.36 per square foot on a triplenet basis % After a strong second half 2016, Southern Nevada s retail market suffered a weak first quarter of Fortunately, that down quarter proved to be temporary, as demand roared back to life in the second quarter. Things should improve even more by the end of 2017, with planned inventory growth and strong pre-leasing in those new projects. Vacancy decreased to 8.3 percent, and could dip below 8.0 percent by the end of the year. The asking rental rate for retail space in the second quarter of 2017 was $1.36 per square foot (psf) on a triplenet (NNN) basis, the same as it was one quarter ago. According to the Nevada Department of Employment, Training and Rehabilitation, Southern Nevada s retail job market suffered in April Historical Vacancy Rates and Asking Lease Rates 9.8% 9.6% $1.42 $1.40 Market Indicators Relative to prior period Q Q3 2017* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE *Projected -3.7% Summary Statistics Q Las Vegas Market Q2-16 Q1-17 Q % 9.2% $1.38 $1.36 Vacancy Rate 9.2% 8.4% 8.3% 9.0% 8.8% $1.34 $1.32 Asking Rent (P, NNN) $1.30 $1.36 $ % 8.4% $1.30 $1.28 Net Absorption () -26,507-17,825 75, % 8.0% $1.26 $1.24 New Completions () 23,705 53, % $ % 3 Q Q Q Q Q Q Q Q 2017 $1.20 Overall Asking Rents Vacancy Asking Rental Rate Per Square Foot Power Center $1.49 $1.54 $1.63 Despite some headwinds created by the closure of some large anchor stores in Southern Nevada, the retail market is looking up. Community Center $1.26 $1.29 $1.29 Neighborhood Center $1.43 $1.49 $1.44 Strip Retail $1.17 $1.24 $1.25

2 2017 (the latest month of data available) compared with April 2016, losing approximately 2,900 jobs in the past twelve months. According to the government, retail jobs declined on a month-to-month basis in every month of this year except April, when they increased by 1,500 jobs compared to March. Unemployment in the Las Vegas-Paradise MSA stood at 4.6 percent as of April 2017, down from 5.9 percent in April From April 2016 to April 2017, total employment in Southern Nevada increased by 40,600 jobs. The Nevada Department of Taxation reports that Clark County s taxable retail sales for the past twelve months (April 2016 to March 2017, the most recent month of data available) totaled $29.2 billion, up from $28.1 billion in the previous twelve months; with sales of $4.6 billion in the automotive sector, $10.5 billion in food service and $13.7 billion in other retail (excluding gas stations). Historical Net Absorption vs. Completions 450, , , , , , , ,000 50, ,000 3 Q Q Q Q Q Q Q Q 2017 Net Absorption Completions The highest year-over-year growth in taxable retail sales in April 2017 were in home and garden stores (21.7 percent growth), furniture stores (16.8 percent growth) and miscellaneous retailers (14.9 percent growth). Strong growth in the home and garden and furniture sectors points to increased population growth for Southern Nevada. Yearover-year taxable sales decreased in sporting goods and hobby stores (negative 5.3 percent), electronics and appliance stores (negative 4.3 percent growth), and food and beverage stores (negative 3.2 percent). Non-store retailers posted 12.0 percent year-over-year growth. There were no new retail completions in the second quarter of The market currently has 606,000 square feet of retail product under construction and scheduled to be completed by the end of the year. There were 1.7 million square feet of retail planned to begin construction within the next twelve months. Net absorption was 75,578 square feet in the second quarter of 2017, a notable improvement over the first quarter of the year, when net absorption dipped into negative territory. Among product types, net absorption was strongest in power centers, and was actually negative in community centers. This improvement of retail s fortunes occurred in the face of continued problems for anchor retailers, with K-Mart being the latest victim of downsizing. Net absorption was positive in three of the Valley s eight submarkets, including Southwest (67,184 square feet), Henderson (51,034 square feet) and North Las Vegas (12,859 square feet). Net absorption was negative in West Central (negative 22,526 square feet), Northeast (negative 13,728 square feet), University East (negative 11,148 square feet), Downtown (negative 6,193 square feet) and Northwest (negative 1,904 square feet). Strong multifamily development along the I-215 Beltway, stretching from Henderson to the Northwest, should stimulate demand for retail space over the next months in the Henderson, Southwest and Northwest submarkets. Strong taxable sales growth has already been registered in home and garden and furniture stores, sectors stimulated by population growth. Occupancy vs. Retail Employment 84,000 83,500 83,000 82,500 82,000 81,500 81,000 80,500 80,000 79,500 79,000 3 Q Q Q Q Q Q Q Q 2017 Retail Jobs Occupancy Rate 92.0% 91.8% 91.5% 91.3% 91.0% 90.8% 90.5% 90.3% 90.0% 89.8% 89.5% 2 Las Vegas Research & Forecast Report Q Retail Colliers International

3 Gross absorption of retail product totaled 790,448 square feet in the second quarter of 2017, higher than one quarter ago and roughly on the same level as the fourth quarter of Retail vacancy in Southern Nevada was 8.3 percent in the second quarter of 2017, a decrease of 0.1 points from last quarter and 0.9 points lower than one year ago. Southern Nevada s retail market has been expanding since 2012, though growth was slower in 2014 and dipped for one quarter in 2016 into negative territory. This gives us two periods of strong growth, from , and 2015 to present. Negative net absorption in the first quarter raised the possibility that the current growth cycle was in danger of ending, but this quarter s rebound makes that much less likely. Among submarkets, the Valley s highest vacancy this quarter was 12.6 percent in University East, while the lowest vacancy rate was 5.5 percent in the Southwest submarket. Vacancy decreased this quarter in Henderson, North Las Vegas and Southwest submarkets and increased in Downtown, Northeast, University East and West Central. The average asking rental rate for retail space in Southern Nevada was $1.36 psf NNN in the second quarter of 2017, the same as in the first quarter of 2017 and $0.06 higher than in the second quarter of Three submarkets saw asking rates increase on a quarter-over-quarter basis this quarter Downtown ($0.21 psf), North Las Vegas ($0.06 psf) and Southwest ($0.03 psf). Asking rates decreased in West Central ($0.05 psf), Henderson ($0.02 psf), Northeast ($0.02 psf) and University East ($0.01 psf). Asking rates were unchanged in the Northwest. Asking rents increased in power centers ($0.09 psf) and strip centers ($0.02 psf), remained unchanged in community centers, and decreased in neighborhood centers ($0.05 psf) over the same period. Single-tenant retail investment sales volume so far in 2017 was $72.2 million in 26 sales totaling 211,000 square feet. The average price per square foot was $ So far, 2017 looks like it is shaping up to be a relatively weak year for single-tenant investments, more on par with 2013 than the past three years except in terms of average price per square foot and cap rate. In those areas, 2017 is in a much healthier position than the past four years. The average cap rate so far in 2017 was 6.6 percent, a compression from last year s 7.0 percent cap rate. Shopping center investment sales volume in the first half of 2017 was $402.6 million in 23 sales totaling 2.3 million square feet. The average price per square foot was $171.89, higher than in 2016 but a bit lower than in Shopping center sales in 2017 are well on pace to surpass previous hot markets in 2014 and Single-Tenant Retail YTD No. Sales Square Footage Sold 719, , , , ,000 Sales Volume $139.8 MM $187.5 MM $306.2 MM $176.6 MM $72.2 MM Average Price/ $ $ $ $ $ Average Sale Size () 15,300 10,500 14,900 8,400 8,100 Cap Rate 7.2% 7.2% 7.0% 6.6% Shopping Center Retail YTD No. Sales Square Footage Sold 3,192,000 4,025,000 3,195,000 2,528,000 2,342,000 Sales Volume $359.2 MM $504.5 MM $588.1 MM $419.7 MM $402.6 MM Average Price/ $ $ $ $ $ Average Sale Size () 66,000 67,000 55,000 62, ,000 Cap Rate 8.9% 7.7% 6.7% 7.5% 3 Las Vegas Research & Forecast Report Q Retail Colliers International

4 Chick-Fil-A has finally entered the Southern Nevada market and plans more stores in the future. Other retailers entering or expanding in Southern Nevada include Paul Mitchell, Discount Tire, Lolo s Chicken & Waffles, Chicken Shack, Café Rio, Five Guys Burger & Fries, Black Bear Diner, Wingnutz, Pei Wei, and Cheeburger Cheeburger. Target is introducing a new Target Express concept to compete with Dollar General or Walgreens, though no locations have yet been announced in Southern Nevada. Walmart is planning locations at Rainbow & Blue Diamond and Boulder & Russell, and Smith s Marketplace, a 125,000 square foot concept is looking into putting stores in the Skye Canyon and perhaps Cadence MPC. On the down-side, three K-Mart locations are closing in Southern Nevada, along with closures by Save-A-Lot discount groceries, Sports Chalet, Toys R Us, JCPenney, Macy s and Wal-Mart earlier this year. Despite some headwinds created by the closure of some large anchor stores in Southern Nevada, the retail market is looking up. A weak first quarter was followed by a much stronger second, putting the Valley on pace to chalk 2017 up as another year of retail recovery. The second half of the year will see significant new retail inventory with strong pre-leasing completed in Southern Nevada, which should boost net absorption numbers for the year as a whole, and contribute to continued decreases in the vacancy rate. Things should improve more by the end of 2017, with planned even inventory growth and strong pre-leasing in those new projects. Households (2017) Avg. HH Income (2017) Occupied Retail Space (2016 Avg.) Occupied Retail Space (2017 Avg.) Downtown 38,000 $41,000 2,010,000 1,958,000 Henderson 112,800 $86,000 9,537,000 9,526,000 North Las Vegas 75,200 $67,000 5,625,000 5,687,000 Northeast 82,300 $55,000 3,122,000 3,119,000 Northwest 181,600 $85,000 12,741,000 12,840,000 Southwest 99,000 $81,000 7,587,000 7,683,000 University East 108,100 $61,000 7,889,000 7,948,000 West Central 56,300 $53,000 6,303,000 6,406,000 Source of Demographic Data: Claritas 4 Las Vegas Research & Forecast Report Q Retail Colliers International

5 Significant Retail Sale Activity 215 NORTH LAS VEGAS Rancho Sierra Shopping Center 318,000 - $13,180,000 $41.00/ NORTHWEST 95 April Red Rock 55,000 - $7,850,000 WEST CENTRAL DOWN TOWN NORTHEAST LAS VEGAS $143.00/ April 2017 Tropicana Nellis Shopping Village 95 84,000 - $7,100,000 $84.00/ UNIVERSITY AIRPORT May 2017 Pecos Plaza ,000 - $3,600,000 $37.00/ SOUTHWEST HENDERSON April 2017 RESORT CORRIDOR Imperial Plaza 62,000 - $5,850,000 $94.00/ May 2017 Lease Activity Property Name Tenant Lease Date Lease Term Size Lease Rate Type Decatur Retail Center Game Changer Sports Apr months 20,000 $1.10 NNN Strip Retail Desert Inn & Durango Volta Lake Enterprises May months 5,400 $1.36 NNN Community Pecos Legacy Center Arthur Murray Apr months 2,700 $1.51 NNN Community Discovery Drive Insight Nevada Apr months 2,000 $2.31 NNN Strip Retail Pebble Marketplace Stabucks Apr months 1,400 $3.35 NNN Neighborhood 5 Las Vegas Research & Forecast Report Q Retail Colliers International

6 Market Comparisons - Las Vegas Retail Market TYPE TOTAL INVENTORY DIRECT VACANT DIRECT VACANCY RATE SUBLEASE VACANT TOTAL VACANT VACANCY RATE CURRENT QUARTER VACANCY RATE PRIOR QUARTER NET ABSORPTION CURRENT QTR NET ABSORPTION YTD COMPLETIONS CURRENT QTR COMPLETIONS YTD UNDER CONSTRUCTION PLANNED CONSTRUCTION WEIGHTED AVG ASKING RENTAL RATE DOWNTOWN PC - - n/a - - n/a n/a $- CC 731,186 84, % - 84, % 11.5% - (6,135) $1.28 NC 588, , % - 105, % 17.2% (5,000) (40,161) $0.92 SC 989,530 93, % 1,960 95, % 9.3% (1,193) (17,371) - 19,800-40,500 $1.41 Total 2,308, , % - 283, % 12.0% (6,193) (63,667) - 19,800-40,500 $1.33 HENDERSON PC 2,896,215 69, % - 69, % 3.6% 35,910 29, $1.95 CC 2,714, , % 1, , % 6.2% (3,285) 14,982-33, $1.53 NC 2,930, , % 116, , % 16.2% 30,140 19, ,422 $1.41 SC 1,908, , % - 302, % 15.4% (11,731) (37,457) , ,860 $1.15 Total 10,449, , % 118, , % 10.0% 51,034 27,446-33,789 39, ,282 $1.39 NORTH LAS VEGAS PC 774,065 31, % - 31, % 4.1% $2.25 CC 2,150, , % - 132, % 6.5% 6,457 26, $1.55 NC 2,025, , % 7, , % 9.0% 9,737 (19,246) $1.57 SC 1,290, , % - 148, % 11.2% (3,335) 26, ,718 $1.25 Total 6,240, , % 7, , % 8.0% 12,859 33, ,718 $1.51 NORTHEAST PC - - n/a - - n/a n/a $- CC 1,295,615 76, % 20,114 96, % 5.9% (19,122) (8,451) $1.45 NC 1,307,891 86, % 62, , % 11.7% 4,125 (4,080) $1.46 SC 771, , % - 107, % 14.1% 1, $0.86 Total 3,375, , % 82, , % 10.0% (13,728) (11,758) $1.22 NORTHWEST PC 3,171, ,994 n/a 1, , % 7.8% 26,454 15, $1.86 CC 4,800, , % 73, , % 4.1% (13,498) (5,347) $1.11 NC 3,419, , % 36, , % 9.2% (5,745) 7, ,550 - $1.46 SC 2,450, , % - 244, % 9.6% (9,115) 2, ,220 31,000 $1.29 Total 13,841, , % 111, , % 7.2% (1,904) 18, ,770 31,000 $1.46 SOUTHWEST PC 944,314 49, % - 49, % 5.3% - (3,700) $1.46 CC 2,483, , % - 105, % 4.3% 2, , ,250 $1.74 NC 2,303, , % 7, , % 6.7% 8,444 9, , ,200 $2.03 SC 2,332, , % - 148, % 8.8% 56,240 66, ,958 $1.60 Total 8,064, , % 7, , % 6.4% 67,184 73, , ,408 $1.76 UNIVERSITY EAST PC 1,210, , % - 123, % 10.2% - (1,348) $1.19 CC 2,946, , % 28, , % 12.6% 2,884 (42,918) $1.03 NC 2,018, , % 182, , % 16.6% (16,545) (20,810) ,588 $1.38 SC 2,990, , % 6, , % 17.6% 2,513 5, ,124 $1.20 Total 9,166,263 1,153, % 211,304 1,364, % 14.8% (11,148) (59,113) ,712 $1.18 WEST CENTRAL PC 1,138,224 98, % - 98, % 8.1% (6,829) 15, $1.32 CC 1,673, , % - 215, % 13.9% 16,714 32, $1.17 NC 1,777, , % 47, , % 8.5% (15,260) (3,711) $1.10 SC 2,170, , % - 160, % 6.6% (17,151) (5,394) $1.15 Total 6,760, , % 47, , % 9.1% (22,526) 39, $1.18 MARKET TOTAL PC 10,134, , % 1, , % 6.4% 55,535 55, $1.63 CC 18,796,234 1,259, % 123,728 1,383, % 7.3% (7,350) 12,039-33, , ,250 $1.29 NC 16,370,242 1,403, % 460,019 1,863, % 11.4% 9,896 (51,431) ,550 1,016,210 $1.44 SC 14,904,820 1,727, % 8,160 1,735, % 11.7% 17,497 41,617-19,800 65, ,160 $1.25 Total 60,205,447 4,984, % 593,307 5,577, % 9.4% 75,578 57,753-53, ,007 1,770,620 $1.36 QUARTERLY COMPARISON AND TOTALS Q ,205,447 4,984, % 593,307 5,577, % 9.4% 75,578 57, , ,007 1,770,620 $1.36 Q ,205,447 5,060, % 580,286 5,640, % 8.9% (17,825) (17,825) 53,589 53, ,550 1,183,806 $1.36 Q ,151,858 4,988, % 354,423 5,343, % 9.6% 234, ,447 65, , ,506 1,385,706 $1.35 Q ,086,007 5,157, % 639,448 5,797, % 10.2% 408, ,856 71, ,774-1,564,516 $1.32 Q ,014,938 5,495, % 618,699 6,113, % 10.2% (26,507) 257,090 23, ,705 71,069 1,492,349 $1.30 Q ,991,233 5,445, % 653,842 6,098, % 10.5% 283, ,597 80,000 80, , ,083 $1.30 Q ,911,233 5,648, % 629,228 6,277, % 10.5% 87, ,512 29, , , ,023 $1.30 PC = Power Center CC = Community Center NC = Neighborhood Center SC = Strip Center 6 Las Vegas Research & Forecast Report Q Retail Colliers International

7 396 offices in 68 countries on 6 continents United States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111 $2.6 billion in annual revenue* COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, Nevada USA MARKET CONTACT: Mike Mixer Executive Managing Director Las Vegas mike.mixer@colliers.com John Stater Research & GIS Manager Las Vegas john.stater@colliers.com 2.0 billion square feet under management 15,000 professionals and staff *All statistics are for 2016 and include affiliates. About Colliers International Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry-leading global real estate services company with more than 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 12 consecutive years, more than any other real estate services firm. For the latest news from Colliers, visit Colliers.com or follow us on Twitter (@Colliers) and LinkedIn. Copyright 2017 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.