The retail real estate market continues to climb out of the recession, although lagging behind other markets, according to a report released last week by NAIAlliance.
It’s the last segment of the economy to be growing good again, Kelly Bland, senior vice president NAIAlliance, said in a phone interview.
“The retail market is seeing continual improvement in the fundamentals,” he said.
Many of the underlying statics are improving, said the report. Housing value and consumer spending continue to trend higher, while unemployment has dropped significantly. These numbers demonstrate an improving local economy.
The retail vacancy rates have come off their recession highs and are generally trending lower.
Fewer and fewer tenants are moving out, unlike the years after the recession, Bland said.
In 2012, the overall vacancy rate peaked at 18.52 percent.
In the fourth quarter of 2015, the overall vacancy level in the Reno/Sparks retail market was 14.35 percent, down from the previous quarter of 14.72 percent, and substantially down from the fourth quarter of 2014 when the vacancy rate was 16.59 percent.
During the fourth quarter 2015, In-Line shops decreased in vacancy to 16.72 percent from 18.61 percent the previous quarter and the recession high of 23.46 percent in 2013.
The significant fourth quarter drop was partially the result of the demolition of a portion of the Sierra Marketplace Shopping Center for the expansion of the Atlantis Hotel Casino parking area, the report said.
The vacancy rate for anchor space increased to 12.7 percent in the fourth quarter of 2015, still well below the 15.41 percent peak in 2012.
There are currently 17 vacant anchor shopping center spaces over 20,000 square feet in the Reno/Sparks market.
The total net absorption for this quarter was 23.386 square feet, while the gross absorption was 117,303 square feet.
In 2015 as a whole, the net absorption was 309,280 square feet and gross absorption was 621,289 square feet.
New construction for retail space does not have the momentum seen in office and industrial markets.
“We’re not quiet there yet,” Bland said. “We’ll see some selective pad buildings for specific tenants.”
In 2015, those included small buildings near Target in Sparks, the Sleep Number mattress store on Neil and South Virginia in Reno, and pads near Walmart in Lemmon Valley.
While Bland doesn’t expect construction for retail to pick up a lot, the growth in other markets will boost retail
“The thing to watch in retail market is sales. Sales revenues have increased year over year for several years,” he said.
“As more and more jobs are created here, it helps housing. Housing helps a broad spectrum of retail like furnishings.”
With jobs, population and sales all improving, “that bodes well for retail.”
For retailers looking to get into the Reno/Sparks market, now is the time, Bland said, “before the deals are gone.”
