LAS VEGAS (KLAS) — The retail market suffered a rough second quarter due to job losses. Nearly 75,000 square feet of retail space was vacated and another half-million square feet is in jeopardy of being vacated following the announced closures and potential closures of some major retail chain stores.
“The state moratorium on evictions also ends in July, raising the possibility of a wave of retail vacancies in the third quarter,” according to a report from Colliers International Las Vegas.
The commercial real estate company released a report on the second quarter which occurred when near the start of the COVID-19 pandemic.
At least one sector has bucked the trend of expected weaker commercial real estate numbers during the pandemic. More industrial space, specifically warehouse/distribution was leased.
According to the report, the second quarter of 2020 produced over 2 million square feet of industrial net absorption. Warehouse/distribution product posted all of the valley’s positive net absorption in the second quarter of 2020.
However, other industrial product types, which rely more heavily on small businesses, suffered less leasing and how they will fare going forward will likely depend on how quickly small businesses will recover.
“The loss of jobs, and the loss of occupied industrial space caused by those job losses, was not felt evenly in the market,” said John Stater, research manager of Colliers International, Las Vegas.
When it came to the office market, 10,000 square feet of office space was leased in the second quarter. Although, it’s not a large amount any positive net absorption in the face of massive job losses was remarkable, according to Colliers International Las Vegas.
The news release adds that the eviction moratorium imposed until July makes it difficult to know how vulnerable the market is to future vacancies.
“We think the office market will continue to be challenged by the job losses already experienced and the uncertainty regarding evictions, utilization of office space post-pandemic and whatever other upheavals 2020 has in store for us.”
The report also addresses the closure of hospitality properties in Southern Nevada for more than two months which was unprecedented and had an obvious negative impact on the hospitality industry in particular, and the valley’s economy in general. The report said just how permanent this damage will be is unknown, as properties only began re-opening in June 2020 and there is no visitation and revenue data yet for those re-openings.
Commercial land sales also dropped lower, likely due to an uncertain business climate, in the second quarter following a strong first quarter.