What’s Happening in Las Vegas’ Retail Market?
There are no guarantees in commercial real estate. For commercial real estate owners, developers and investors, however, betting on the continued strength of the Las Vegas marketplace has been as close to a sure thing as it gets in recent years.
The Vegas commercial market is as strong as it’s ever been as we head into 2020. Delivery on new projects is up 800,000 square feet over 2018. About 1.2 million square feet of retail space will have been added to the market by year’s end, while retail rental rates are up 4.6 percent in 2019.
What’s really exciting isn’t just the top-line numbers, but the evolving nature of a market that is becoming more diverse. Las Vegas is preserving its gaming and entertainment dynamism while introducing more robust retail and mixed-use elements that expand well beyond the iconic Strip. Consequently, Vegas market performance isn’t just strong, it’s sustainable.
A market overview reveals some of those reasons for optimism, as well as a deeper understanding of what’s driving that commercial real estate evolution. It never hurts to be the entertainment capital of the world, and there’s no doubt that gaming, hospitality and entertainment remain the foundation of the city’s appeal. Hotels are expanding, casinos are renovating, convention traffic remains strong and the tourist industry in Vegas continues to post new records virtually on a monthly basis.
But there’s also a palpable sense that Vegas is diversifying well beyond gaming. Casinos are opening up and embracing more dining, diverse entertainment, experiential retail and family friendly features. The emerging sense that Vegas is a community and not just a tourist destination is seen in places and projects well outside the Strip. Downtown Summerlin on the city’s west side stands up favorably against any mixed-use project in the nation. The renowned Vegas restaurant scene is thriving, with lots of new tenants and concepts entering the market.
Sports is a strength as well. The Las Vegas Aviators led Minor League baseball in attendance in 2019. Meanwhile, construction of the new 65,000-seat, $1.9 billion NFL Raiders stadium, scheduled to open in July 2020, has generated civic excitement and fueled significant development surrounding the project. The stadium is being built on the west side of Interstate 15, within walking distance of the Strip.
Las Vegas is the 11th fastest-growing metro market in the nation, according to Forbes. The Vegas economy is strong, unemployment is around 4.5 percent and Vegas remains affordable compared to other regional metro markets. These strong fundamentals support the notion that Vegas is poised for continued commercial success in the years ahead.
— By Liz Clare, principal, Avison Young, and Jacqueline Young, senior vice president, Avison Young. This article first appeared in the December 2019 issue of Western Real Estate Business magazine.