Empty retail space continues to be absorbed
May 18, 2017
The retail real estate market showed significant signs of strength during the first quarter of 2017, as a couple big boxes found leases and the first large new retail in years nears completion.
"We're starting to see some empty junior anchor spaces get gobbled up," said Shawn Smith, vice president with CBRE and a retail specialist.
The vacancy rate fell by 40 basis points in the first quarter to 11 percent, according to the quarterly report from CBRE, Inc. Year-over-year, that represented a change of 100 basis points.
"Given market activity, vacancy rates can be expected to fall below 11.0 percent for the first (time) since CBRE began tracking market activity in 2009," the report said.
Net absorption fell by 70,780 square feet, the ninth consecutive quarter of positive net absorption.
Leases in Spanish Springs signed by Grocery Outlet and Sprouts accounted for 59.7 percent of the first quarter's absorption.
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Grocery Outlet will move into a 22,000-square-foot space, a portion of the former Disc Drive Scolari's.
Sprouts leased a building in Sparks Galleria that formerly housed a Circuit City. The store plans to expand the building by 10,000 square feet, which will create a 30,000-square-foot space, Smith said.
While no new projects opened in the first quarter, one big one is taking shape in south Reno.
South Meadows Promenade will be anchored by a second Sprouts and is expected to be completed in the third quarter of 2017.
Promenade is almost 100 percent leased, Smith said.
"Reno has a great story to tell," he said, referring to the economic stimulation of Tesla, Switch, Apple and now Google.
The influx of companies big and small is increasing the number of jobs available, which attracts more people to the area. All those people with more money in their bank accounts are going out to dinner more and shopping more, which attracts more retailers.
Another planned retail project is an expansion of the Legends at Sparks with a 58,700-square-foot build-to-suit building and a 7,060-square-foot speculative building.
Retail businesses set to move into the Legends include Burlington Coat Factory, Chick-fil-A, The Habit Burger Grill, Jersey Mike's, Buckle and Charlotte Russe.
Even bigger projects are coming down the pipeline.
Two projects by Reno Land Inc. have substantial retail components as well as housing and office space.
Work has begun on Rancharrah in south Reno, off Kietzke Lane, and plans for the Park Lane project on Plumb and South Virginia are going through the approval and refinement process.
Rancharrah, originally the 141-acre estate of William Harrah, the founder of Harrah's casinos, will be a master planned, mixed use community, with 12.8 acres designated for office and retail space.
The Park Lane project is on the 46-acre site of the now demolished Park Lane Mall. Plans include 110,000 square feet of retail and restaurant space.
The Promenade, Rancharrah and Park Lane projects are all infill projects giving life to unused land within the city limits. These and other, smaller projects taking shape, are expected to keep Reno's retail market growing.