By Jeffrey Mitchell, Principal Broker, Mountain West Commercial Real Estate
Las Vegas experienced the second largest unemployment rate at the start of the COVID-19 pandemic in April 2020. Since then, the Las Vegas Metro has come a long way in recovering economically. It continues to see growth, particularly in the retail sector.
Some key factors as to why Las Vegas has been on a continued trajectory of growth include the migration of residents, capital from across the country (with California being the primary source) and substantial tourism to the Vegas Strip. This has all fueled the flames for a hot Las Vegas that’s attracting investors, big box tenants and franchises looking to expand with a fury.
The migration of California residents has helped increase residential growth by 2.2 percent in Clark County. California residents typically have a higher disposable income, which has flooded the housing market with prices increasing by 20.9 percent. New residents translate to new sales, which have also bolstered the food and beverage and retail markets by creating demand for more retail tenants around them.
Jeffrey Mitchell,Principal Broker, Mountain West Commercial Real Estate
Ironically, high-end retailers have set records throughout the pandemic with their sales on the Strip. Other business owners have strategically managed PPE from the government or capital they held onto, pumping it back into the economy through retail franchise expansion, investments and new builds.
Notable brands that expanded during the pandemic or are actively pursuing expansion include Daiso, Five Below, Skechers, Target (first Las Vegas Boulevard location), Buy Buy Baby, Burlington Stores (first Las Vegas Boulevard location), Snooze AM Eatery, Randy’s Donuts (coming from LA), Pinkbox Donuts, Shake Shack, Texas Roadhouse, Salad & Go, Panda Express, Café Zupas and Café Rio. Las Vegas is ground zero for the “chicken wars,” with Dave’s Hot Chicken, Houston’s Hot Chicken, Chicken Shack, Chick-fil-A, Angry Chickz, Golden Chick all competing in this coveted category.
Mountain West Commercial Real Estate has supported many of these retail businesses, such as Burlington, Snooze AM Eatery, Randy’s Donuts, and Houston’s Hot Chicken, in the past year. These big box tenants are looking to capitalize on the hot market by rolling out multiple sites to keep up with the population growth and demand.
While the market is exuberant, there have been a few challenges. Supply and demand have played a big role for retail tenants expanding their business. There aren’t many properties available, especially as many tenants seek drive-thru spaces. The challenge has become more about the high demand for space and the net operating income, which is becoming hard to justify in terms of profitability versus the cost of doing business.
Many people are eager to travel again. Some are even calling it “revenge travel,” as they’re making up for lost time when they couldn’t travel last year. Bigger top name concerts are back, and the Las Vegas Convention Center has recently expanded by 1.4 million square feet, with conventions loading up to pre-COVID capacities. This is creating a buzz for more businesses to expand, particularly the retail sector of business.