By Dees Stribling
As ICSC members finalize their travel plans to Las Vegas for RECon 2011 this May, their destination city is on a path of its own. One of the U.S. markets hit hardest by the recession, Las Vegas is on a slow but steady road to recovery, observers say.
“The best we can say is that 2011 will be a better year than 2010, which was a better year than 2009,” said John Restrepo, principal of the Las Vegas-based RCG Economics, a real estate and economics consultancy. “Are we seeing a V-shaped recovery? No, more like an elongated Nike swoosh recovery.”
According to data compiled by RCG Economics, the vacancy rate among anchored shopping centers in Las Vegas spiked from between 2 percent and 3 percent during glory days of mid-2000s to nearly 12 percent in 2010. Rental rates, which peaked at around $24 per square foot in 2007, declined to about $18 per square foot last year. New retail projects, except for a scattering of built-to-suits, have ground to a halt.
George W. Connor, senior vice president of the retail division of Colliers International in its Las Vegas office, generally agrees that the market will experience a long recovery. “With all the excess capacity in the market today, it’s hard to say when it will be absorbed,” he says. “Maybe three to five years.”
The city has clocked an uptick in visitor volume recently. According to the Las Vegas Visitors & Convention Authority, the city saw 37.3 million visitors in 2010, a 2.3 percent increase over 2009, and the January 2011 visitor volume of 3.12 million was 8.6 percent more than during the same month in 2010.
And some new projects are appearing. The open-air, 370,000-square-foot Tivoli Village in western Las Vegas, for instance, which had been but on ice for a few years because of the recession, finally had a soft opening in April with 15 specialty retailers and a handful of restaurants in place. A development of the locally based EHB Cos. and IBD Group USA, an Israeli company, the property has the distinctive advantage of no financing and therefore no debt service.
The partners aren’t the only believers in the future of local retail. “We have our eye on potential acquisitions as well,” says David Simon, president of Marnell Properties, whose most recent retail property, the 600,000-square-foot McCarran Marketplace near the new airport terminal — another retail project begun before the recession — has been leasing up at long last, with a Wal-Mart, Lowe’s and other retailers now in place.