The economy:

Reports on Las Vegas office, retail sectors offer mixed views

Brokers say the beleaguered Las Vegas-area office space market may be stabilizing after three years of declines, but retail vacancies remain at record levels amid a glut of empty shop buildings.

Commerce Real Estate Solutions, which is part of the Cushman & Wakefield alliance, and Colliers International in recent days issued reports analyzing the office and retail markets during the just-concluded third quarter.

Commerce Real Estate reported the office vacancy rate at 23.7 percent, up from 23.1 percent in the year-ago quarter. Vacancies in that market soared in recent years as tenants didn't materialize during the recession for developments launched during the economic boom.

But in a sign of optimism, year-to-date net absorption reached a positive 183,376 square feet — meaning that much space has been added to the occupied portion of the market.

"This is the first year-to-date positive result since 2008, when direct net absorption was 637,764 square feet," Commerce Real Estate said in its report.

Landlords, however, continue to be punished by low leasing rates amid the glut of space.

Rates came in at $1.91 per square foot per month in the third quarter, lower than $2.01 in the year-ago quarter, Commerce Real Estate said.

"We are optimistic that we are in market recovery,’’ Commerce said in its report, adding office demand may be driven in the near future by the federal government, health care, energy and clean technology sectors.

Colliers International, in the meantime, put the office vacancy rate at 23.8 percent and noted much of the absorption in the quarter came from the Metro Police Department moving into its 300,000-square-foot office complex.

"The main reason the office market is seeing some positive numbers, though, is employment gains in the office sector," Colliers said. "The office market was the first commercial real estate market to fall in the Great Recession, and it is now looking as though it will be the first to recover."

While construction and some other sectors of the Nevada economy continue to suffer, state statistics show some 4,500 jobs were created in the 12 months ending in August in professional and business services — sectors traditionally associated with office space, Colliers said.

Separately, Colliers said the retail sector of the local commercial real estate market struggled with a record-tying but stable vacancy rate of 11.9 percent in the third quarter.

That’s equal to the second quarter, but up 1.2 percentage points from the year-ago level and up 8.2 points from the fourth quarter of 2007 just before the recession set in, Colliers said in its report.

Colliers said the situation was boosted last month by Fry’s Electronics Inc. obtaining the vacant Great Indoors space at Boca Fashion Village in Northwest Las Vegas, but about 1.6 million square feet of similar big box anchor space remains vacant in the market.

Some of those big buildings may have to be converted to accommodate multiple users, which is what happened with the vacant Nordstrom Rack space on Eastern Avenue in the Henderson area. That square footage was divided in half to accommodate new tenantNike Outlet, Colliers said.

"In general, it seems as though the retail market is holding steady, and we don’t expect any major moves for the next 12 months other than the completion of five new (grocery, Staples and Petco) anchor spaces in Henderson and the Northwest (Las Vegas area)," Colliers said.

The reports on office and retail space follow issuance of assessments last week on the Las Vegas-area industrial market, showing its vacancy rate tops 15 percent and brokers differing on whether that market has bottomed out.

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