Las Vegas retail market report

The total vacancy rate for Las Vegas retail stayed consistent quarter-over-quarter – remaining at 5.6%. Direct vacancy increased by 10bps quarter-over-quarter, ending Q3 at 5.4%, while sublet vacancy saw a decrease of 10bps over the same period, ending the quarter at 0.2%.

Vacancy fell significantly in 2022 as tenants re-entered the market following the Covid pandemic and its associated lockdowns, since then, vacancy rates have remained stable at near decade-lows ranging from 5.6%-5.8% throughout 2023.

Las Vegas retail recorded 150,633 sf of positive net absorption during the 3rd quarter – marking the 4th consecutive quarter of positive absorption. 

Though remaining positive during the 3rd quarter, net absorption has slowed when compared to historical norms, as supply-side pressure has impeded leasing activity. The record-low vacancy rate and decade-low in available space recorded in Q3 indicate that demand is fully intact. However, the lack of available space has created significant competition for retail space in Las Vegas.

Investment sales volume increased by $59.3m (79.1%) quarter-over-quarter – jumping from $74.9m in Q2 to $134.1m in Q3. Despite breaking the $100m mark for total transaction volume in a quarter for the first time this year, sales activity still lags historical norms, as the 5-year moving average of quarterly transaction volume is $176.5m.

The slowdown in investment activity can primarily be attributed to a near-doubling of comprehensive borrowing costs during 2023 – leading buyers to push for higher cap rates from sellers to offset the increased borrowing costs. However, sellers have been reluctant to make concessions, as most have opted to retain their assets, as record-low vacancy rates have led to increased cash flow for landlords across Las Vegas.