Retail strip edges out credit freeze

By Mike Trask

Thursday, Oct. 30, 2008 | 2 a.m.

The sprawling concrete buildings along Lake Mead Parkway would not be standing had this 73-acre project begun any later.

There would be no Target store anchoring what will become a 100-store complex near Water Street in Henderson.

The good news, though, was that this complex got its construction funding just in the nick of time, before the finance industry froze in a credit crunch. The stores got built.

But what a lousy time to open a retail mall.

“It’s a real issue,” said John Stewart, principal with developer Juliet Cos. “It causes concern.”

Las Vegas’ retail market is getting punched by the national credit crisis, slammed by the housing slump and kicked by the closing of retail businesses big and small.

Several major retail projects in the valley have been delayed by at least a year.

In Henderson, at least five mixed-used and condominium projects near Water Street have been either delayed or canceled.

But the 700,000-square-foot Lake Mead Crossing has managed to open. Target opened in July and last month a Sportsman’s Warehouse store opened, joined by a T-Mobile shop and a Hallmark store.

More than half of the retail space has been leased, and a flurry of stores will open in the next month, Stewart said.

Early next year the second phase of the project will open, including a Petsmart.

But Southern Nevada is awash with vacant storefronts. The retail space vacancy rate has reached 6.3 percent, the highest since 1999, according to a market report by CB Richard Ellis. More than 3.7 million square feet of retail space stands empty valleywide.

Retail vacancies have increased nearly 65 percent from a year ago, the CB Ellis study shows.

“It certainly makes it tougher for places just opening to lease space,” said Christina Strickland, an associate with CB Ellis. “The number of tenants looking (for space) is much less than even six months ago.”

Stewart sees this when negotiating with potential tenants for Lake Mead Crossing. A few years ago storefronts would fill as soon as they were completed. Now the leasing is more tedious, negotiations over the cost and terms are drawn out.

He said he’s confident the shopping center, surrounded by neighborhoods and other retail space, will fill up.

Many of the commercial developments struggling for tenants, Stewart said, are on the less-developed outskirts of town.

Competition for tenants is growing even in long-established, in-town shopping centers, not only because small businesses are succumbing to the economy, but because of the demise of Mervyns and concerns that Circuit City may be closing stores after the holidays.

An Applied Analysis study shows 3.1 million square feet of valley retail space under construction, including the next phases of Lake Mead Crossing, and another 11.5 million square feet in the planning stages. Much of that being planned is facing delays.

“These large-scale retail developers are entering the market at a difficult time,” said Brian Gordon, an Applied Analysis principal. “We will see less of these in the near term. Consumers aren’t spending to the level they were a year or two ago.”

Stewart said there will always be a need for more shopping as the region continues to grow.

But he didn’t try to sugarcoat the bad times.

At least this project is happening, he said, knocking on a wood table.

“A few years ago a shopping center would pop up and it was just another project,” he said. “I think we appreciate it more today.”