Las Vegas Quarterly, Q1-10

30
COLLIERS LAS VEGAS | FIRST QUARTER | 2010 www.lvcolliers.com L V Q The most successful and innovative brokerage working for you QUARTERLY LAS VEGAS Q1/10 PHOTO BY CHRIS POESE ©2009 COLLIERS LAS VEGAS

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A complete review of the commercial real estate market in Las Vegas, NV.

Transcript of Las Vegas Quarterly, Q1-10

Page 1: Las Vegas Quarterly, Q1-10

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0w w w . l v c o l l i e r s . c o m

LVQ

The most successful and innovative brokerage working for you

QUA R T E R LY

LASVEGAS

Q1/10

Photo by Chris Poese ©2009 Colliers las Vegas

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Industrial Definitionsincubator: Multi-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and bay sizes lower than 3,500 square feet.light Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of less than 15,000 square feet.light industrial: Multi- or single-tenant buildings without dock-high loading doors that have a parking ratio lower than 3.5/1,000 square feet and, in the case of multi-tenant buildings, bay sizes of at least 3,500 square feet.r&D/Flex: Multi- or single-tenant buildings without dock-high loading doors with parking ratios in excess of 3.5/1,000 square feet.Warehouse/Distribution: Multi- or single-tenant buildings that include dock-high loading doors and have bay sizes of at least 15,000 square feet.

Office DefinitionsClass a office: buildings with steel frame construction, high end exterior finish, distinctive lobbies featuring upgraded finishes, amenities including on-site security, state-of-the-art communications and data infrastructure and covered parking. Class a buildings are usually multi-story.Class b office: buildings osteel frame, reinforced concrete or concrete tilt-up construction. Class b buildings contain common bathrooms and hallways, and their lobbies may have granite and hardwood detailing. Class b buildings are often multi-story.Class C office: buildings of wood frame construction. Class C buildings are often garden-style and are built around courtyards.Medical office: buildings that are more than 50% occupied by medical tenants.

Retail DefinitionsCommunity Center: retail centers anchored by supermarkets, drug stores and discount department stores. tenants include off-price retailers selling apparel, home improvements/furnishings, toys, electronics or sporting goods.Neighborhood Center: retail centers anchored by supermarkets and drug stores. Neighborhood centers are intended for convenience shopping for day-to-day needs of consumers.Power Center: retail centers dominated by several large anchors including discount department stores, off-price stores, warehouse clubs or “category killers”. Power centers generally inline space.

General DefinitionsVacant sF: space in a building that is unoccupied and offered for lease by the owner of the company.sublease sF: space in a building that offered for sub-lease by the primary tenant. this space may or may not be unoccupied.Net absorption: the difference in occupied square footage from one period to another. v

glossary

this report and other research materials may be found on our website at www.lvcolliers.com. this quarterly report is a research document of Colliers international – las Vegas, NV. Questions related to information herein should be directed to the research Department at 702-836-3781. information contained herein has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Colliers Nevada, llC dba Colliers international is an independently owned and operated business and a member firm of Colliers international Property Consultants, an affiliation of independent companies with over 294 industrials throughout more than 61 countries worldwide.

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3294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

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John M. staterresearch Manager

[email protected] 702-836-3781

Mike MixerManaging Partner

[email protected] 702-836-3777

Chris Poese

graphic artist [email protected] 702-836-3721

Colliers international3960 howard hughes Parkway

suite 150las Vegas, NV 89169

United states P: 702-735-5700 F: 702-731-5709

www.lvcolliers.com

Contentseconomic review ........................................ 4John M. staterWhile the national economy continues to show signs of economic recovery, Southern Nevada economy remains essentially flat.

industrial review ......................................... 8John M. staterThe condition of Southern Nevada’s industrial market is improving slowly.

office review ............................................. 16John M. staterSouthern Nevada’s office market continues to show signs of recovery, and has seen an end to the free fall it experienced in 2008 and 2009.

retail review ............................................. 22John M. staterSouthern Nevada’s retail market showed minor improvement in the first quarter of 2010, but continued to suffer from rising vacancy and falling net absorption.

land review ............................................... 28John M. staterThere remain thousands of acres of residential-zoned land that are owned free and clear, but owners of that land paid more than $250,000 per acre.

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economic review

las Vegas Msa Visitor VoluMe

las Vegas Msa gaMing reV

las Vegas Msa eMPloyMent

While the national economy continues to show signs of economic recovery, southern Nevada’s economy remains unchanged. leading indicators in southern Nevada have been essentially flat for several months, suggesting that local recovery is not in our immediate future. Unemployment in the las Vegas Msa reached 13.8% after posting a decline at the end of 2009. Job losses continue and both gaming revenue and taxable sales are down year-over-year. the number of residential permits that were pulled in January of 2010 was almost four times that in January of 2009. New homes sales were down, while sales of existing homes were up.

southern Nevada continued to shed jobs at a quick pace in the first quarter of 2010. between February 2009 and February 2010, the only sectors of employment that showed growth were health & social services and Professional & business services. UNlV’s Center for business and economic research is forecasting continued job losses of 5.2 percent in 2010, easing by the end of that year, and modest 0.5-percent growth in 2011.

apartment vacancy was up by 12.5% between the fourth quarter of 2009 and the fourth quarter of 2008 and the residential electric meter count was down by 0.1% between February 2010 and February 2009. the driver’s license count showed the number of new residents down by 12.2% between February 2010 and February 2009. National economic recovery, coupled with the continued recession locally, should keep southern Nevada’s population on the decline through 2010. stagnant population growth will probably slow down the absorption of vacant retail space.

the hospitality & leisure sector continues to be plagued by problems of its own, keeping southern Nevada’s engine of growth idle. spurred on by deep discounts on hotel rooms, year-over-year visitor volume grew by 2.4%. Most other

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Las Vegas MSA Visitor Volume 

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Las Vegas MSA Gaming Revenue 

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important measures, however, continued to slide. between January 2010 and January 2009, convention attendance was down 16.4%, airplane passengers at McCarran international airport were down 0.2% and gaming revenue was down 2.2%. las Vegas’ room inventory grew by 5.8% between January 2010 and January 2009, largely due to the completion of portions of MgM Mirage’s CityCenter. on the bright side, CityCenter’s performance has been better than local gaming analysts expected, and increased visitor volume should help lessen the impact CityCenter has on other high-end “strip” resorts. overall, local gaming analysts expect some recovery on the “strip” in 2010, a portent of recovery in southern Nevada’s economy as a whole in 2011.

investment sales in southern Nevada picked up slightly in the first quarter of 2010, but continue to be far below the levels seen in 2006 and 2007. sales of foreclosed commercial real estate are sparse. the gap in expectations between buyers and sellers remains vast, but some sellers are starting to price their properties on actual, rather than pro forma, income. Cap rates are likely to increase another 100 basis points in 2010, making potential investors reluctant to jump into the market now.

the amount of distressed commercial real estate in southern Nevada continued to increase in the first quarter of 2010. We are tracking almost 8-million square feet of distressed industrial, office and retail property in southern Nevada, up from 6.6 million square feet last quarter. approximately 40 percent of this space is office product, 40 percent retail and 20 percent industrial. the largest quarter-over-quarter increase was in industrial space, which grew by 55% to 1.6-million square feet. the amount of distressed office space grew by 29% to 3.2-million square feet, while distressed retail grew by a scant 2% to 3.2 million square feet. the number of foreclosure sales of commercial real estate remains low.

according to the FDiC website, 30 banks failed so far in 2010. this is an increase over the same period

in 2009, when 21 banks with combined assets of $9.5 billion were taken over by the FDiC. No banks headquartered in southern Nevada have failed so far this year. Nationally, banks that failed so far this year had combined assets of $18.5 billion.

recovery indexUltimately, the key to recovery for commercial real estate is employment growth. as total employment has plummeted, occupancy of commercial real estate has followed. several factors feed into the prospect for renewed employment growth in southern Nevada, which we have combined into a composite index. the index showed a slight decline between December 2009 and January 2010. six indexes contributed negatively to the composite index: New home sales, Commercial occupancy, Visitor Volume, New residents, employment, and in-loaded Containers at the Port of los angeles. three indexes, gaming revenue, taxable sales and Personal Consumption, contributed positively to the index. the decline in the composite index that began in 2007 is slowing, but it is not yet trending upwards. this suggests to us that meaningful recovery is not likely until 2011 at the earliest.

Clark County eConoMiC Data

Oct-09 Oct-08

Unemployment rate 13.8% 10.3%

Visitor Volume 3,141,556 3,066,738

gaming revenue $764.36 M $781.67 M

taxable sales ytD* $7.166 b $8.208 b

residential Permits** 466 134

Commercial Permits** 21 31

New home sales 240 284

existing home sales 3,111 2,536

* December 2009 / December 2008** February 2010 / February 2009

Source: The Center for Business & Economic Research, UNLV

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LASVEGAS looking ahead

as the impact of the construction industry on the local economy recedes, the need for economic diversification will become ever more apparent. southern Nevada remains a popular place to live and do business, due its pleasant climate and friendly tax environment. as tourism recovers along with the national economy, our primary engine of growth will come to life. this, in turn, will spur recovery in our construction sector as the standing inventory of residential and commercial real estate is exhausted. in short, southern Nevada’s economy will recover to a point with or without diversification. Diversification of the local economy is important, however, for establishing greater economic stability. Nobody wants to see another severe recession in the near future, but it will surely come without a continued push to diversify the

local economy. Medical research centers like the Cleveland Clinic for brain health and the Nevada Cancer institute are one form of diversification that is happening now. other avenues include solar energy and trade centers on the model of the World Furniture Center. We all know that times are bad now, but we should also be aware that exciting things are in southern Nevada’s future if only we have the foresight to plan ahead.

DistresseD sQuare Footage By ProDuCt tyPe

501,000 

656,000 

1,496,000 

614,000 

1,027,000 

1,229,000 

907,000 

340,000 

139,000 

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144,000 

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1,217,000 

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1,194,000 

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104,000 

62,000 

0  200,000  400,000  600,000  800,000 1,000,000 1,200,000 1,400,000 1,600,000 

Class A Professional 

Class B Professional 

Class C Professional 

Medical Office 

Power Center 

Community Center 

Neighborhood Center 

Harehouse/DistribuKon 

Light DistribuKon 

Light Industrial 

Incubator 

R&D/Flex 

Distressed Square Footage By Product Type 

Q4‐09  Q1‐10 

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eMPloyMent growth (year oVer year)

CoMMerCial real estate reCoVery inDex

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‐2,200 

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‐5,200 

‐25,000  ‐20,000  ‐15,000  ‐10,000  ‐5,000  0  5,000 

Construc0on 

Manufacturing 

6ransporta0on & Warehousing 

Wholesale 

=inancial Ac0vi0es 

Professional & Business Services 

Health Care & Social Assistance 

Retail 

Employment Growth (Year Over Year) 

80 

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Commercial Real Estate Recovery Index 

2006 = 100 

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the condition of southern Nevada’s industrial market is improving slowly. there is yet some pain to endure, as the amount of distressed industrial property is increasing rapidly and industrial employment continues to fall. sales and leasing activity, however, has improved dramatically from 12 to 18 months ago, foreshadowing a “bottoming-out” of the market. Net absorption improved over last quarter, although it remained negative. Vacancy continued to increase, reaching 15% this quarter, a 3.4% increase from one quarter ago and a 33.9% increase from one year ago. there were no new industrial projects completed this quarter, and only five projects remained in the pipeline. year-over-year vacancy increases, which increased last quarter after several quarters of trending downward, got back on track this quarter.

between February 2009 and February 2010, las Vegas-Paradise Msa employment in sectors that traditionally occupy industrial space declined by almost 30,000 jobs. the

construction sector lost over 20,000 jobs during this period while the other three industrial sectors (transportation & warehousing, wholesale and manufacturing) lost between 1,200 and 2,100 jobs. Unemployment in the las Vegas-Paradise Msa stood at 13.9% as of February 2010, up from 10.3% in February 2009. in general, the pace of industrial job losses does not appear to be decreasing, promising continued weak demand for industrial real estate through at least the first half of 2010.

For the first time since we began tracking southern Nevada’s industrial market, there were no new completions of industrial space. almost 1.7 million square feet of industrial product was completed during 2009. While this is bad news for construction workers and developers, it is necessary for the eventual recovery of the industrial market, as an over-supply of industrial space has plagued the market for the past two years.

Forward supply of industrial space in the Valley stood at only 400,608 square

Market inDiCators

Q1-10Q2-2010 Projected

VaCaNCy

Net absorPtioN

CoNstrUCtioN

reNtal rate

industrial review

NORTHWESTEAST

LAS VEGAS

NORTHLAS VEGAS

SOUTHWEST

WESTCENTRAL

AIRPORT

HENDERSON

15

215

215

95

95

1Forward supply is a combination of space presently under construction in a quarter and space planned to begin construction within the next 4 quarters.

Photo by Chris Poese ©2009 Colliers las Vegas

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feet in the first quarter of 2010. this was a slight increase from the 370,608 square feet recorded at the end of last year. Most of the space in the pipeline is in the Marnell air Cargo Center located in the airport submarket. of the remainder, more than half is in the form of build-to-suit projects.

Net absorption was much improved this quarter over last, with only 497,401 square feet of industrial space returned to the market. Net absorption improved this quarter for light industrial and Warehouse/Distribution space, with the latter posting almost 100,000 square feet of net absorption. both the airport and henderson submarkets posted positive net absorption this quarter, with the West Central submarket joining those two in increasing net absorption on a quarterly basis. gross absorption of industrial space stood at 3.6 million square feet in southern Nevada this quarter, double what it was one year ago.

industrial vacancy increased to 15% this quarter, a 0.5 point increase from one quarter ago and a 3.8 point increase from one year ago. industrial vacancy has been rising for 15 straight quarters, since the second quarter of 2006, when it was at a low of 3.1%. the Northwest submarket continued to have the Valley’s highest vacancy rate at 32.8%. although east las Vegas experienced a sharp increase in vacancy, it continued to have the lowest vacancy rate in the Valley at 9.4%. Vacancy increased in the east las Vegas, North las Vegas, Northwest and southwest submarkets, and decreased in the airport and henderson submarkets. this was the second straight quarter in which henderson industrial vacancy decreased. Warehouse/Distribution space also experienced a small decrease in vacancy since last quarter.

the change in industrial vacancy on a year-over-year basis was 3.8 points this quarter, lower than the 4.3 point increase in the fourth quarter of 2009. this number had been on the decline for four quarters before spiking last quarter. given the rapid increase in vacancy experienced in 2009, it is likely that this number will fall through most of 2010. year-over-year vacancy increased for three quarters during the mini-recession of 2001-2002, with the first

decline in year-over-year vacancy experienced eight quarters later. During this recession, year-over-year vacancy increased for seven quarters between the first quarter of 2007 and third quarter of 2008.

the most active businesses taking industrial space in 2009 were involved in food services, transportation, retail services, manufacturing and construction. even though the number of deals signed were fairly even between companies headquartered in Nevada versus companies from other states, the companies headquartered outside of Nevada took 83% of the all the square feet occupied during the first quarter of 2010. this trend will probably continue for the rest of the year.

54% of all leases signed in 2009 were signed by companies headquartered in Nevada, while 13% were with California companies. 47% of leases signed in 2009 were with regional or national companies (companies operating in multiple states and/or internationally). given the state of the local economy, leasing activity by national and regional companies should loom large in the coming months, and will probably benefit some product types, such as Warehouse/Distribution, more than others.

the weighted average asking lease rate for industrial space decreased this quarter to $0.59 psf NNN from last quarter’s $0.61. if adjusted for inflation , the weighted average asking lease rate actually increased this quarter by $0.01 psf. adjusted for inflation, the weighted average asking lease rate for industrial product has dropped by $0.22 psf from its peak in the first quarter of 2007. Current inflation-adjusted asking rental rates are almost equal to what they were in the third quarter of 2004.

achievable rental rates, i.e. the rental rates actually being paid by new industrial tenants, are as much as $0.33 psf lower than asking rental rates. the gap between achievable and asking rates averaged $0.11 during 2009, and now stands at an average of $0.16 in the first quarter of 2010. the largest gap is in r&D/Flex projects, while there is virtually no gap now in

MaRket SnapShOt

Q1-10 Q4-09 Q1-09 Q-O-Q Change Y-O-Y Change

Vacancy rate 15.0% 14.5% 11.2% + 3.4% + 33.9%

asking rent (PsF, NNN) $0.59 $0.61 $0.76 - 3.3% - 22.4%

Net absorption (sF) -497,401 -815,284 -288,378 + 38.9% - 72.5%

New Completions (sF) 0 495,529 739,803 - 100.0% - 100.0%

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LASVEGAS light industrial projects. the

lowest gap between achievable and asking rents among submarkets is in east las Vegas, with achievable rents $0.06 higher than the average asking rent, and North las Vegas, with achievable rents only $0.06 lower than the average asking rent.

adjustments in asking rents were more balanced this quarter than last. Four submarkets experienced an increase in asking rents and only three a decrease. of the five product types, only incubator space saw an increase in asking rents. the 289 new availabilities that entered the industrial market this quarter had an average asking rental rate of $0.54 psf NNN, $0.06 lower than the 278 new availabilities that entered the industrial market during the fourth quarter of 2009. of existing availabilities, 21% had their asking lease rate decrease this quarter by an average of $0.14 psf, while 22% showed an increase by an average of $0.15 psf. this is a marked change from the 2009, when only three to five percent of existing leases posted an increase in asking rent. these movements in asking rent suggest that landlords are becoming more confident in the future of southern Nevada’s industrial market.

the inventory of industrial properties available for owner/user sale decreased this quarter to 3,886,000 square feet from 4,044,000 square feet in the fourth quarter of 2009. one year ago, there was 4,065,000 square feet of owner/user space on the market. the average asking price for owner/user industrial sales decreased to $132 psf, well below the average asking price of $152 psf recorded one year ago. More than 65% of the available owner/user sale square footage in southern Nevada was in the North las Vegas and southwest submarkets, with average asking prices

of $118 and $149 respectively. Prominent owner/user sale availabilities include the berlin industries building in the Northwest submarket (101,000 square feet), the Decatur business Center in the southwest submarket (87,000 square feet) and the Progressive gaming Facility in the airport submarket (87,000 square feet).

the inventory of industrial buildings for sale as investments increased from 1,185,000 square feet in the fourth quarter of 2009 to 1,213,000 square feet this quarter. the average asking price decreased by $2 psf this quarter to $133 psf. sellers of industrial investment properties are still quoting an average cap rate of 8%, though it is important to note that more and more sales listings fail to quote a cap rate at all, just as fewer and fewer investment sales comps quote a cap rate. Prominent investment sale availabilities include hughes airport Center bldg 14 in the airport submarket (133,000 square feet), Patrick lane industrial Park in the airport submarket (100,000 square feet) and aabacus industrial Park in the southwest submarket (72,000 square feet).

in the first quarter of 2010, 204,000 square feet of industrial properties sold as investments at an average sales price of $121 psf. this represented a very small decrease in terms of square feet

“While local and regional economic weakness will continue to hamper a

complete recovery of our industrial market, national recovery will help at least

some segments of the industrial market prosper.”

InDuStRIal eMplOYMent

Feb 2010 Feb 2009 Change

Construction 51,300 74,200 -22,900

Manufacturing 20,200 22,300 -2,100

transportation & Warehousing 30,400 32,500 -2,100

Wholesale 21,000 22,200 -1,200

total 122,900 151,200 -28,300

Source: Nevada Department of Employment, Training and Rehabilitation.

ReGIOnal WaRehOuSe / DIStRIbutIOn

Market asking Rent (Q4-09)

las Vegas, NV $0.47 psf NNN

Phoenix, aZ $0.53 psf NNN

inland empire, Ca $0.32 psf NNN

reno, NV $0.31 psf NNN

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11294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

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sold from one year ago, but a substantial increase in the average price. owner/user sales this quarter amounted to only 36,000 square feet with an average price of $141 per square foot, again showing a decrease in the amount of space sold from one year ago, but an increase in the average price. Despite the “expectations gap” between buyer and sellers, and continued difficulties in securing loans for commercial real estate, the sales market does appear to be stabilizing.

Net absorption in Warehouse/Distribution product turned positive in the first quarter of 2010, coming in at 92,779 square feet. the Warehouse/Distribution market enjoys greater leasing activity from national and regional companies than do other product types in southern Nevada, and therefore might lead the market into recovery, or at least buck the overall industrial trend. the local transportation sector is still shedding jobs on a year-over-year basis, however, so hopes of a quick turn-around based on a single quarter of positive net absorption might be premature. the asking rent of Warehouse/Distribution space in southern Nevada was still higher than in California’s inland empire and reno in the fourth quarter of 2009, but was lower than in Phoenix, arizona, a key competitor. the amount of Warehouse/Distribution space available for sub-lease increased by 278,000 square feet this quarter, again suggesting the product type is not out of the woods yet. Just the same, we think Warehouse/Distribution will lead the industrial pack in 2010.

light Distribution space continued to struggle this quarter, posting -299,912 square feet of net absorption, a significant decrease from the 11,464 square feet of net absorption in the fourth quarter of 2009. Vacancy stood at 22%, a 1.7 point increase from last quarter, and a 4.8 point increase from one year ago. the average asking lease rate for light Distribution space decreased this quarter over last by $0.04 to $0.53 psf NNN. of all the industrial product types

in southern Nevada, light Distribution is probably the most closely tied to the health of the “strip” resorts. you can expect the prospects for recovery of the light Distribution market to improve if visitor volume and gaming revenue continue to improve.

light industrial space could be the poster child for industrial over-supply in southern Nevada. From 2007 to 2009 a total of 2.85 million square feet of light industrial space was completed, much of it because higher prices for industrial land made freestanding buildings that could be leased and quickly sold an attractive option for developers. Unfortunately, net absorption of light industrial space over the same period was -621,652 square feet. recently, though, there have been some signs of improvement. Net absorption in the first quarter of 2010 was almost 300,000 square feet higher than in the fourth quarter of 2009, and lease comparables suggest that landlords have been pricing light industrial space just about right for the past four quarters. on the down side, the light industrial market is dominated by local companies, with almost 70% of the companies taking light industrial space last year being headquartered in Nevada. since the local economy is still showing signs of distress, the chances for a speedy recovery of the light industrial market remain slim.

if the market for incubator space is any indication, small businesses are not yet recovering in southern Nevada. although net absorption for incubator space was positive in fourth quarter 2009, it turned negative again this quarter, returning 70,828 square feet to the market. small business people are still facing an unsure environment of taxes, health insurance and regulations, and this as much as anything will keep them, and the incubator market, on the sidelines in 2010.

the very flexibility that seemed to serve r&D/Flex space well in 2009 failed to save it in first quarter 2010, possibly because retail and office tenants are

InDuStRIal DevelOpMent pIpelIne

project type Submarket Size pre-leasing Completion

1192 Center Point light industrial henderson 25,000 sF bts Q2-10

7000 W Post rd light industrial southwest 50,000 sF bts Q3-10

7040 redwood light industrial southwest 50,000 sF 0% Q3-10

Marnell air Cargo Center Warehouse/Distribution airport 79,000 sF 100% Q3-10

Marnell air Cargo Center light Distribution airport 122,000 sF 59% Q3-10

Page 12: Las Vegas Quarterly, Q1-10

lVQ | Q1/10

i n D u s t r i a l

QUA R T E R LY

LASVEGAS finding competitively priced retail and

office space more satisfactory to their needs. although r&D/Flex space posted positive net absorption in 2009, net absorption fell to -101,171 square feet this quarter and vacancy jogged upward to 28.8%.

southern Nevada’s industrial market had a hard time in 2009, and it is not yet clear that 2010 will be significantly better. gross absorption has rebounded substantially since this time last year, but high negative net absorption suggests that southern Nevada isn’t capturing new tenants, but rather seeing existing tenants on the hunt for lower rents. in itself, this is not a bad thing for the economy as a whole. in a long recession, companies must reduce their expenses to stay in business, and the local industrial market certainly does not need more businesses vacating space. a market that is good for the buyer/

renter is not good for the seller/landlord, and plunging rental rates will push more industrial product into foreclosure. Distressed industrial space totaled 1,572,000 square feet in first quarter 2010, a 55% increase from last quarter. southern Nevada’s industrial market is going through a monumental period of re-pricing and restructuring. 2010 will be a tumultuous year, but we believe a better year than 2009 by most measures. While local and regional economic weakness will continue to hamper a complete recovery of the industrial market, national recovery will help at least some segments prosper.

year oVer year VaCanCy Change

‐1.6%  ‐1.1% 

0.2% 

2.1% 

3.1% 

2.7% 

1.8% 

1.6% 

1.4% 

1.4%  1.8% 

0.7% 

‐0.1% 

‐0.9% 

‐1.5% 

‐2.2% 

‐2.2% 

‐3.5% 

‐3.2% 

‐3.5% 

‐3.9% 

‐2.5% 

‐1.8% 

‐0.1% 

0.6% 

1.6% 

1.6%  2.1%  2.6% 

3.8% 

4.8% 

4.2% 

4.2% 

4.0% 

3.5% 

4.3% 

3.8% 

‐5.0% 

‐4.0% 

‐3.0% 

‐2.0% 

‐1.0% 

0.0% 

1.0% 

2.0% 

3.0% 

4.0% 

5.0% 

6.0% 

Q101 

Q201 

Q301 

Q401 

Q102 

Q202 

Q302 

Q402 

Q103 

Q203 

Q303 

Q403 

Q104 

Q204 

Q304 

Q404 

Q105 

Q205 

Q305 

Q405 

Q106 

Q206 

Q306 

Q406 

Q107 

Q207 

Q307 

Q407 

Q108 

Q208 

Q308 

Q408 

Q109 

Q209 

Q309 

Q409 

Q110 

Y‐O‐Y Vacancy Change 

Page 13: Las Vegas Quarterly, Q1-10

13294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

historiCal net aBsorPtion Vs CoMPletions

oCCuPanCy Vs inDustrial eMPloyMent

161,400 

148,000 

137,400 

132,500 

128,100 

122,900 

89.7% 

88.8% 

87.6% 

86.6% 

85.5% 85.0% 

82.0% 

83.0% 

84.0% 

85.0% 

86.0% 

87.0% 

88.0% 

89.0% 

90.0% 

91.0% 

100,000 

110,000 

120,000 

130,000 

140,000 

150,000 

160,000 

170,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Industrial Jobs  Occupancy Rate 

41,723 

‐288,378 

‐1,016,256 

‐831,975 

‐815,284 

‐497,401 

495,411 

739,803 

342,574 

212,270 

495,529 

‐1,200,000 

‐1,000,000 

‐800,000 

‐600,000 

‐400,000 

‐200,000 

200,000 

400,000 

600,000 

800,000 

1,000,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

/01 234567859  :5;7<08594 

Page 14: Las Vegas Quarterly, Q1-10

lVQ | Q1/10

i n D u s t r i a l

VaCanCy Vs rental rate

InDuStRIal SaleS

Q1-10 Q4-09 Q1-09

owner/User

space for sale (sf) 3,886,000 4,044,000 4,065,000

average asking Price/sF $132 $138 $152

space sold (sf) 36,000 151,000 142,000

average Price/sF $141 $160 $100

investment

space for sale (sf) 1,213,000 1,185,000 1,050,000

average asking Price/sF $133 $135 $137

average Cap rate 8.0% 8.0% 7.3%

space sold (sf) 214,000 258,000 195,000

average Price/sF $115 $66 $91

average Cap rate n/a n/a 5.6%

lease aCtiVity

pROpeRtY aDDReSS leaSe Date leaSe teRM SIze leaSe Rate tYpe

hughes Cheyenne Center Feb 2010 126 months 84,397 sf $0.52 NNN Warehouse/Distribution

Wigwam Jones industrial Park Jan 2010 38 months 9,401 sf $0.56 Mg light Distribution

Procyon avenue business Center Feb 2010 36 months 7,967 sf $0.53 NNN light industrial

West harmon business Park Feb 2010 13 months 2,788 sf $0.52 NNN r&D/Flex

ali baba Commerce Center Jan 2010 38 months 2,211 sf $0.55 NNN incubator

sales aCtiVity

pROpeRtY aDDReSS SaleS Date Sale pRICe SIze pRICe/SF tYpe

Decatur Crossing Feb 2010 $17,750,000 140,594 sf $126.25 light Distribution

Park West business Center Mar 2010 $2,000,000 23,517 sf $85.04 Warehouse/Distribution

Coleman airpark Jan 2010 $900,000 12,439 sf $72.35 light industrial

traverse Point Commerce Center Jan 2010 $887,000 8,020 sf $110.60 light industrial

h bizctr Whitney Mesa Jan 2010 $645,930 7,177 sf $90.00 r&D/Flex

10.3%  11.2%  12.4%  13.4%  14.5%  15.0% 

 $0.76    $0.76  

 $0.71  

 $0.66  

 $0.61    $0.59  

 $‐    

 $0.10  

 $0.20  

 $0.30  

 $0.40  

 $0.50  

 $0.60  

 $0.70  

 $0.80  

0.0% 

2.0% 

4.0% 

6.0% 

8.0% 

10.0% 

12.0% 

14.0% 

16.0% 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Vacancy  Asking Rental Rate 

Page 15: Las Vegas Quarterly, Q1-10

15294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

InDuStRIal MaRket StatIStICSFIRSt QuaRteR 2010

M a R k e t t O t a l

Q u a R t e R l Y C O M p a R I S O n a n D t O t a l S

S u b M a R k e t S

Wh 556 45,404,605 4,544,579 10.0% 1,028,295 2.3% 5,572,874 12.3% 11.7% 92,779 92,779 - - 78,936 $0.45 lD 512 17,414,601 3,835,900 22.0% 209,802 1.2% 4,045,702 23.2% 21.3% (299,912) (299,912) - - 121,992 $0.53 lI 2,482 30,171,049 4,530,799 15.0% 92,739 0.3% 4,623,538 15.3% 14.8% (118,269) (118,269) - - 199,680 $0.60 InC 354 8,126,232 1,416,941 17.4% 21,134 0.3% 1,438,075 17.7% 16.8% (70,828) (70,828) - - - $0.71 FlX 366 5,962,523 1,716,124 28.8% 53,271 0.9% 1,769,395 29.7% 27.9% (101,171) (101,171) - - - $0.96 tOtal 4,270 107,079,010 16,044,343 15.0% 1,405,241 1.3% 17,449,584 16.3% 15.4% (497,401) (497,401) - - 400,608 $0.59

Q1-10 4,270 107,079,010 16,044,343 15.0% 1,405,241 1.3% 17,449,584 16.3% 15.4% (497,401) (497,401) 0 0 400,608 $0.59 Q4-09 4,256 107,079,010 15,546,942 14.5% 996,001 0.9% 16,542,943 15.4% 14.2% (815,284) (2,951,893) 495,529 1,790,176 370,608 $0.61 Q3-09 4,244 106,583,481 14,236,129 13.4% 945,745 0.9% 15,181,874 14.2% 13.4% (831,975) (2,136,609) 212,270 1,294,647 590,229 $0.66 Q2-09 4,210 106,371,211 13,191,884 12.4% 1,028,315 1.0% 14,220,199 13.4% 11.9% (1,016,256) (1,304,634) 342,574 1,082,377 712,104 $0.71 Q1-09 4,188 106,028,637 11,833,054 11.2% 744,605 0.7% 12,577,659 11.9% 11.0% (288,378) (288,378) 739,803 739,803 643,955 $0.76 Q4-08 4,168 105,288,834 10,804,873 10.3% 775,544 0.7% 11,580,417 11.0% 10.4% 41,723 (227,364) 495,411 4,443,334 1,109,988 $0.76

the InFORMatIOn COntaIneD In thIS RepORt WaS pROvIDeD bY SOuRCeS DeeMeD tO be RelIable, hOWeveR, nO GuaRantee IS MaDe aS tO the aCCuRaCY OR RelIabIlItY. aS neW, CORReCteD OR upDateD InFORMatIOn IS ObtaIneD, It IS InCORpORateD IntO bOth CuRRent anD hIStORICal Data, WhICh MaY InvalIDate COMpaRISOn tO pRevIOuSlY ISSueD RepORtS.

eXIStInG pROpeRtIeS DIReCt vaCanCY SubleaSe vaCanCY tOtal vaCanCY net abSORptIOn SF u/C and pROpOSeD SF avG RentS

total Current

Completed Completed

under

type bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate vacancy

period

YtD this Qtr YtD

Constr

Rate Sq Ft

Rate Sq Ft

previous Q

aIRpORt SubMaRket Wh 76 4,667,484 388,531 8.3% 45,700 1.0% 434,231 9.3% 16.9% 355,757 355,757 - - 78,936 $0.57 lD 67 2,969,897 664,543 22.4% 31,453 1.1% 695,996 23.4% 21.8% (49,570) (49,570) - - 121,992 $0.57 lI 199 2,864,013 311,337 10.9% 8,995 0.3% 320,332 11.2% 10.8% (22,184) (22,184) - - - $0.76 InC 91 1,750,621 274,027 15.7% 6,508 0.4% 280,535 16.0% 16.9% 13,970 13,970 - - - $0.79 FlX 66 1,308,181 394,897 30.2% 17,076 1.3% 411,973 31.5% 32.2% 8,753 8,753 - - - $0.90 tOtal 499 13,560,196 2,033,335 15.0% 109,732 0.8% 2,143,067 15.8% 18.2% 306,726 306,726 - - 200,928 $0.69 eaSt laS veGaS SubMaRketWh 24 1,022,855 100,080 9.8% 0 0.0% 100,080 9.8% 0.0% (100,080) (100,080) - - - $0.70 lD 20 352,819 35,089 9.9% 0 0.0% 35,089 9.9% 11.0% 3,827 3,827 - - - $0.47 lI 93 1,152,384 52,818 4.6% 6,400 0.6% 59,218 5.1% 4.0% (13,540) (13,540) - - - $0.44 InC 13 298,623 75,720 25.4% 0 0.0% 75,720 25.4% 19.4% (17,751) (17,751) - - - $0.47 FlX 8 142,294 14,509 10.2% 0 0.0% 14,509 10.2% 5.6% (6,567) (6,567) - - - $0.57 tOtal 158 2,968,975 278,216 9.4% 6,400 0.2% 284,616 9.6% 5.1% (134,111) (134,111) - - - $0.55 henDeRSOn SubMaRketWh 75 6,283,356 581,721 9.3% 10,000 0.2% 591,721 9.4% 10.8% 57,095 57,095 - - - $0.43 lD 36 1,696,226 459,418 27.1% 13,432 0.8% 472,850 27.9% 26.3% (26,589) (26,589) - - - $0.54 lI 324 3,088,118 597,350 19.3% 0 0.0% 597,350 19.3% 20.2% 25,521 25,521 - - 25,000 $0.72 InC 29 456,976 64,495 14.1% 4,830 1.1% 69,325 15.2% 13.3% (8,618) (8,618) - - - $0.60 FlX 78 1,275,017 274,493 21.5% 0 0.0% 274,493 21.5% 22.8% 15,990 15,990 - - - $1.01 tOtal 542 12,799,693 1,977,477 15.4% 28,262 0.2% 2,005,739 15.7% 16.4% 63,399 63,399 - - 25,000 $0.63 6 nORth laS veGaS SubMaRketWh 178 18,748,956 1,940,004 10.3% 528,095 2.8% 2,468,099 13.2% 11.0% (85,957) (85,957) - - - $0.36 lD 168 4,672,500 1,109,974 23.8% 45,964 1.0% 1,155,938 24.7% 21.6% (134,575) (134,575) - - - $0.37 lI 609 6,977,954 1,296,688 18.6% 35,972 0.5% 1,332,660 19.1% 19.0% 5,140 5,140 - - 94,680 $0.46 InC 31 562,095 217,895 38.8% 0 0.0% 217,895 38.8% 36.5% (12,630) (12,630) - - - $0.57 FlX 46 780,909 229,803 29.4% 7,779 0.0% 237,582 30.4% 28.7% (18,612) (18,612) - - - $0.88 tOtal 1,032 31,742,414 4,794,364 15.1% 617,810 1.9% 5,412,174 17.1% 15.2% (246,634) (246,634) - - 94,680 $0.42 nORthWeSt SubMaRket Wh 5 224,906 132,990 59.1% 0 0.0% 132,990 59.1% 59.1% - - - - - $0.49 lD 1 50,000 0 0.0% 0 0.0% 0 0.0% 0.0% - - - - - $- lI 17 298,896 52,615 17.6% 4,500 1.5% 57,115 19.1% 20.0% 7,108 7,108 - - - $1.06 InC 4 99,427 40,869 41.1% 0 0.0% 40,869 41.1% 16.7% (24,291) (24,291) - - - $1.09 FlX 55 672,202 214,814 32.0% 0 0.0% 214,814 32.0% 22.2% (65,453) (65,453) - - - $0.98 tOtal 82 1,345,431 441,288 32.8% 4,500 0.3% 445,788 33.1% 26.7% (82,636) (82,636) - - - $0.85 SOuthWeSt SubMaRket Wh 135 12,559,601 1,344,661 10.7% 444,500 3.5% 1,789,161 14.2% 12.7% (134,036) (134,036) - - - $0.54 lD 184 6,990,703 1,453,124 20.8% 118,153 1.7% 1,571,277 22.5% 21.1% (60,816) (60,816) - - - $0.64 lI 749 9,133,520 1,630,504 17.9% 20,268 0.2% 1,650,772 18.1% 16.0% (184,820) (184,820) - - 80,000 $0.65 InC 120 2,496,381 364,302 14.6% 9,796 0.4% 374,098 15.0% 15.7% 19,691 19,691 - - - $0.71 FlX 101 1,564,088 553,437 35.4% 28,416 1.8% 581,853 37.2% 34.2% (35,282) (35,282) - - - $1.02 tOtal 1,289 32,744,293 5,346,028 16.3% 621,133 1.9% 5,967,161 18.2% 16.7% (395,263) (395,263) - - 80,000 $0.66 WeSt CentRal SubMaRket Wh 63 1,897,447 56,592 3.0% 0 0.0% 56,592 3.0% 3.0% - - - - - $0.51 lD 36 682,456 113,752 16.7% 800 0.1% 114,552 16.8% 14.3% (32,189) (32,189) - - - $0.55 lI 491 6,656,164 589,487 8.9% 16,604 0.2% 606,091 9.1% 9.9% 64,506 64,506 - - - $0.53 InC 66 2,462,109 379,633 15.4% 0 0.0% 379,633 15.4% 13.7% (41,199) (41,199) - - - $0.76 FlX 12 219,832 34,171 15.5% 0 0.0% 34,171 15.5% 15.5% - - - - - $0.73 tOtal 668 11,918,008 1,173,635 9.8% 17,404 0.1% 1,191,039 10.0% 9.9% (8,882) (8,882) - - - $0.61

Page 16: Las Vegas Quarterly, Q1-10

o F F i C e

lVQ | Q1/10

QUA R T E R LY

LASVEGAS

southern Nevada’s office market continues to show signs of recovery, and has seen an end to the free fall it experienced in 2008 and 2009. Net absorption improved in the first quarter of 2010, reaching -65,120 square feet. While net absorption remained negative, it was a distinct improvement from one quarter ago and one year ago. Vacancy increased for the fourteenth quarter in a row, reaching 22.6%. on a year-over-year basis, this is the smallest increase in vacancy since the first quarter of 2007. asking lease rates reached a four year low of $2.23 per square foot (psf) on a full service gross (Fsg) basis.

the Nevada Department of employment, training & rehabilitation revised last year’s employment numbers to show a significant expansion of employment in the fourth quarter of 2009. this expansion continued this quarter, with office employment increasing from 206,900 to 207,400 jobs. between February 2009 and February 2010, a total of

1,000 office jobs were added. the bright spot of office employment continued to be the health care and social assistance sector, which added 2,100 jobs between February 2009 and February 2010. Unemployment in the las Vegas Msa stood at 13.9 percent in February 2010, up from 10.3 percent in February 2009.

a total of 87,683 square feet of new office space was completed in the first quarter of 2010, an increase over the past two quarters, during which a total of 40,000 square feet were completed. Most of the projects that will be completed in 2010 are build-to-suit projects located in the Downtown submarket. the Downtown submarket has had very few new completions over the past decade, but is now experiencing a renaissance with such projects as the smith Center for the Performing arts, the Cleveland Clinic for brain health and the new headquarters of the Metropolitan Police Department.

Market inDiCators

Q1-10Q2-2010 Projected

VaCaNCy

Net absorPtioN

CoNstrUCtioN

reNtal rate

office review

NORTHWESTEAST

LAS VEGAS

NORTHLAS VEGAS

SOUTHWEST

WESTCENTRAL

AIRPORT

HENDERSON

DOWNTOWN

15

215

215

95

95

Photo by Chris Poese ©2009 Colliers las Vegas

Page 17: Las Vegas Quarterly, Q1-10

17294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

Forward supply of office space remained steady at 284,265 square feet this quarter. the lowest forward supply recorded prior to our current economic difficulties was 1.6 million square feet in the first quarter of 2003. Most of the current forward supply, 200,000 square feet, is in the Class a category, while the remainder is Class C. all of southern Nevada’s forward supply of speculative office space is located in the Northwest submarket. southern Nevada had approximately 470,000 square feet of office product that stopped construction and another 2.8 million square feet whose development was either temporarily or indefinitely put on hold.

office vacancy in the las Vegas office market stood at 22.6% in the first quarter of 2010. While this was the fourteenth straight quarter of rising vacancy, it was also the fifth straight quarter in which the year-over-year increase in vacancy declined. this is a round-about way of saying that things still are not good, but are getting better.

gross absorption of office space decreased slightly this quarter over last, but remains well above average for the last eighteen months. a total of 359 new office availabilities were brought to the market during the first quarter of 2010, slightly less than the 365 introduced in the fourth quarter of 2009.

the highest vacancy rates in southern Nevada were in the southwest (31.2%), airport (25.9%) and Northwest (23.9%) submarkets. the lowest vacancy rates were in the Downtown (12.1%) and West Central (14.2%) submarkets. Class a professional office space still had the highest vacancy rate at 31.8%, while the lowest vacancy rate was in Medical office space at 18.5%. all product types saw an increase in vacancy year-over-year, with the exception of Medical office, in which vacancy has decreased from 19.3% in first quarter 2009 to 18.5% in first quarter 2010.

over the past year, health services, insurance services, legal services and financial services

companies accounted for approximately 48% of the new office tenants in southern Nevada. the large shadow cast by health and insurance companies highlights the importance of the health reform legislation recently signed into law in Washington D.C. to southern Nevada’s office market. slightly more than half of the office market’s new leases were signed by companies headquartered outside Nevada, with California companies contributing more activity than any other state. so far in 2010, legal services and real estate services companies are dominating leasing activity, and firms based in Nevada have accounted for more than half of all new leases signed.

the amount of office space that is distressed, i.e. properties that have received a notice of default or are at some stage in the foreclosure process, increased in the first quarter of 2010 to 3.2 million square feet, up from 2.5 million last quarter. Class C professional office buildings continue to suffer the highest delinquency rate, with Class b professional office buildings a distant second.

the weighted average asking rental rate decreased this quarter to $2.23 per square foot (psf) on a full service gross (Fsg) basis. this was a decrease of $0.04 from last quarter and a decrease of $0.18 from twelve months ago. asking rents have been on the decline since the fourth quarter of 2007, which corresponds to the beginning of the current recession. of those availabilities that were active last quarter, 17% had a reduction in asking rent by an average of $0.30 psf, while 6% had an increase in asking rent by an average of $0.32 psf. availabilities that were new to the market this quarter had an average asking rent of $1.92 psf Fsg.

the amount of office space available for sub-lease decreased again this quarter, to 545,419 square feet. this marked the second quarter of declining sub-lease availability after a small increase in the third

MaRket SnapShOt

Q1-10 Q4-09 Q1-09 Q-O-Q Change Y-O-Y Change

Vacancy rate 22.6% 22.3% 20.4% +1.3% +10.8%

asking rent (PsF, Fsg) $2.23 $2.27 $2.41 -1.8% -7.5%

Net absorption (sF) -65,120 -312,186 -319,423 79.1% 79.6%

New Completions (sF) 87,683 0 620,985 +100% -85.9%

Page 18: Las Vegas Quarterly, Q1-10

o F F i C e

lVQ | Q1/10

QUA R T E R LY

LASVEGAS

1Forward supply is a combination of space presently under construction in a quarter and space planned to begin construction within the next 4 quarters.

“The performance of the

office market in this first

quarter of 2010 offers some

hope that economic recovery

in Southern Nevada is

around the corner.”

quarter of 2009. the amount of sub-lease space on the market peaked in the fourth quarter of 2008 at 932,681 square feet. although sub-lease space has been on the decline since then, it is still significantly higher than at any other time in the past decade. if one included vacant sub-lease space with directly vacant space, the office vacancy rate was 24.3%.

the amount of office space available for sale on an owner/user basis decreased slightly this quarter to 1,038,000 square feet. since the first quarter of 2009, the amount of owner/user space on the market has decreased by approximately 200,000 square feet. the average asking price for owner/user space this quarter was $193 psf, a slight decrease from last quarter’s $194 psf and a decrease of $33 psf from one year ago. significant owner/user sale offerings include sunset Pilot Plaza (99,000 square feet), las Vegas Corporate Center (47,000 square feet), the Park at horizon ridge (46,000 square feet), san Martin Medical Center (44,000 square feet) and highland Plaza (36,000 square feet). owner/user sales continued to lag this quarter, with only 10,000 square feet of office space changing hands this quarter at an average price of $189 psf.

Properties available for sale on an investment basis decreased to 855,000 square feet from last quarter’s 866,000 square feet. the average asking price for investment sales was $179 psf, a $12

decrease from one quarter ago and a $67 decrease from one year ago. significant investment properties for sale include Nema business Center (59,000 square feet), Mammoth Professional building henderson (58,000 square feet), southern hills

Medical office building (57,000 square feet), Medical Pavilion at southern Palms (47,000 square feet) and Winchester Plaza (45,000 square feet). there were four investment sales this quarter totaling 45,000 square feet. the average sales price was $100 psf.

the performance of the office market in this first quarter of 2010 offers some hope that economic recovery in southern Nevada is around the corner. While there is little doubt that recovery, when it comes, will be slow and uneven, it is at least encouraging to see positive net absorption in the office market, the first segment of commercial real estate to enter recession in 2007. While sales activity continues to be light, leasing activity in office properties has recovered substantially since hitting bottom in the first quarter of 2009. Most important, office employment numbers are showing signs of recovery, with new revised numbers showing a substantial increase in office employment in the fourth quarter of 2009. We think that a lack of new completions in 2010, a continued slide in asking prices and asking rental rates, and an increase in office-based employment will help southern Nevada’s office market begin a slow recovery in 2010.

OFFICe eMplOYMent

Feb 2010 Feb 2009 Change

Financial activities 41,000 43,900 -2,900

Professional & business services 102,600 103,600 -1,000

health Care & social assistance 63,800 60,900 +2,900

total 207,400 208,400 -1,000

Source: Nevada Department of Employment, Training and Rehabilitation.

Page 19: Las Vegas Quarterly, Q1-10

19294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

OFFICe DevelOpMent pIpelIne

project type Submarket Size pre-leasing Completion

Metropolitan Police Dept hQ

Class b Downtown 300,000 bts 2011

tivoli gardens Class a Northwest 200,000 0% Unknown

Cleveland Clinic Medical Downtown 65,000 bts Q2-10

Centennial business Park Class C Northwest 43,000 0% Unknown

the Park at Palisades Class C Northwest 42,000 0% Unknown

501 south eighth st Class b Downtown 25,000 bts Q3-10

Page 20: Las Vegas Quarterly, Q1-10

o F F i C e

lVQ | Q1/10

historiCal net aBsorPtion Vs CoMPletions

VaCanCy Vs rental rate

oCCuPanCy Vs oFFiCe eMPloyMent

OFFICe SaleS

Q1-10 Q4-09 Q1-09

owner/User sales

space for sale (sf) 1,038,000 1,175,000 1,246,000

average asking Price/sF $193 $194 $226

space sold (sf) 10,000 37,000 8,000

average Price/sF $189 $91 $199

investment sales

space for sale (sf) 855,000 866,000 1,337,000

average asking Price/sF $179 $191 $246

average Cap rate 9.7% 9.0% 7.6%

space sold (sf) 45,000 262,000 0

average Price/sF $100 $173 n/a

average Cap rate n/a 14% n/a

lease aCtiVity

pROpeRtY aDDReSS leaSe Date leaSe teRM SIze leaSe Rate tYpe

Cheyenne Corporate Center Jan 2010 120 months 39,478 sf $2.10 MG Class b professional Office

the park business Center Jan 2010 90 months 36,600 sf $1.32 nnn Class b professional Office

Green valley Corp Center III Jan 2010 36 months 13,949 sf $2.06 FSG Class a professional Office

630 trade Center Mar 2010 12 months 12,077 sf $1.35 FSG Class b professional Office

150 valley view Mar 2010 180 months 11,995 sf $1.57 nnn Medical Office

sales aCtiVity

pROpeRtY aDDReSS SaleS Date Sale pRICe SIze pRICe/SF tYpe

Wellington Commercial Center Feb 2010 $2,000,000 19,732 sf $101.36 Medical Office

Desert Inn professional bldg Jan 2010 $1,150,000 14,174 sf $81.13 Medical Office

Fort apache point Jan 2010 $785,000 6,600 sf $118.94 Medical Office

Quail view Jan 2010 $769,000 5,025 sf $153.03 Class C professional Office

tarkanian professional Center Feb 2010 $1,125,000 5,000 sf $225.00 Class b professional Office

‐22,413 

‐319,423 

‐247,618 

‐34,833 

‐312,186 

‐65,120 

483,080 

620,985 

160,581 

40,000 

87,683 

‐400,000 

‐200,000 

200,000 

400,000 

600,000 

800,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

/01234526  72849:5261 

210,6

00 

205,8

00 

203,2

00 

200,5

00 

206,9

00 

207,4

00 

81.5% 

79.6% 

78.7% 78.5% 

77.7% 77.4% 

75.0% 

76.0% 

77.0% 

78.0% 

79.0% 

80.0% 

81.0% 

82.0% 

194,000 

196,000 

198,000 

200,000 

202,000 

204,000 

206,000 

208,000 

210,000 

212,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Office Jobs  Occupancy Rate 

18.5%  20.4%  21.3%  21.5%  22.3%  22.6% 

 $2.40   $2.41  

 $2.36  

 $2.33  

 $2.27  

 $2.23  

 $2.10  

 $2.15  

 $2.20  

 $2.25  

 $2.30  

 $2.35  

 $2.40  

 $2.45  

7.5% 

9.5% 

11.5% 

13.5% 

15.5% 

17.5% 

19.5% 

21.5% 

23.5% 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Vacancy  Asking Rental Rate 

Page 21: Las Vegas Quarterly, Q1-10

21294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

OFFICe MaRket StatIStICSFIRSt QuaRteR 2010

M a R k e t t O t a l

Q u a R t e R l Y C O M p a R I S O n a n D t O t a l S

S u b M a R k e t S

a 54 5,617,610 1,784,029 31.8% 128,658 2.3% 1,912,687 34.0% 33.8% (78,686) (78,686) - - - $2.80 b 323 13,265,973 2,798,555 21.1% 260,141 2.0% 3,058,696 23.1% 22.5% (61,627) (61,627) - - - $2.28 C 1,248 14,938,194 3,381,082 22.6% 140,229 0.9% 3,521,311 23.6% 24.0% 31,294 31,294 27,683 27,683 - $1.86 MeD 453 7,947,136 1,466,344 18.5% 16,391 0.2% 1,482,735 18.7% 18.7% 43,899 43,899 60,000 60,000 - $2.27 tOtal 2,078 41,768,913 9,430,010 22.6% 545,419 1.3% 9,975,429 23.9% 23.8% (65,120) (65,120) 87,683 87,683 - $2.23

Q1-10 2,078 41,768,913 9,430,010 22.6% 545,419 1.3% 9,975,429 23.9% 23.8% (65,120) (65,120) 87,683 87,683 - $2.23 Q4-09 2,075 41,681,230 9,277,207 22.3% 657,308 1.6% 9,934,515 23.8% 23.2% (312,186) (914,060) 0 821,566 - $2.27 Q3-09 2,066 41,681,230 8,965,021 21.5% 698,474 1.7% 9,663,495 23.2% 22.9% (34,833) (601,874) 40,000 821,566 - $2.33 Q2-09 2,054 41,641,230 8,890,188 21.3% 650,913 1.6% 9,541,101 22.9% 22.0% (247,618) (567,041) 160,581 781,566 324,364 $2.36 Q1-09 2,031 41,480,649 8,481,989 20.4% 631,329 1.5% 9,113,318 22.0% 20.6% (319,423) (319,423) 620,985 620,985 610,750 $2.41 Q4-08 1,995 40,859,664 7,541,581 18.5% 869,719 2.1% 8,411,300 20.6% 19.5% (22,413) (860,620) 483,080 1,993,546 1,449,840 $2.40

the InFORMatIOn COntaIneD In thIS RepORt WaS pROvIDeD bY SOuRCeS DeeMeD tO be RelIable, hOWeveR, nO GuaRantee IS MaDe aS tO the aCCuRaCY OR RelIabIlItY. aS neW, CORReCteD OR upDateD InFORMatIOn IS ObtaIneD, It IS InCORpORateD IntO bOth CuRRent anD hIStORICal Data, WhICh MaY InvalIDate COMpaRISOn tO pRevIOuSlY ISSueD RepORtS.

eXIStInG pROpeRtIeS DIReCt vaCanCY SubleaSe vaCanCY tOtal vaCanCY net abSORptIOn SF u/C and pROpOSeD SF avG RentS

total Current

Completed Completed

under

type bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate vacancy

period

YtD this Qtr YtD

Constr

Rate

Sq Ft Rate

Sq Ft

previous Q

aIRpORt SubMaRket a 6 644,478 428,953 66.6% 11,395 1.8% 440,348 68.3% 72.8% (42,427) (42,427) - - - $2.99 b 37 1,841,850 288,405 15.7% 83,830 4.6% 372,235 20.2% 15.7% (78,688) (78,688) - - - $2.16 C 252 2,677,765 637,090 23.8% 28,399 1.1% 665,489 24.9% 25.2% 2,286 2,286 - - - $1.89 MeD 9 117,194 12,383 10.6% 0 0.0% 12,383 10.6% 2.0% (9,983) (9,983) - - - $1.76 tOtal 304 5,281,287 1,366,831 25.9% 123,624 2.3% 1,490,455 28.2% 27.1% (128,812) (128,812) - - - $2.29 DOWntOWn SubMaRketa 4 700,065 34,855 5.0% 0 0.0% 34,855 5.0% 7.4% 5,471 5,471 - - - $2.83 b 22 1,531,899 278,371 18.2% 19,241 1.3% 297,612 19.4% 16.8% (35,249) (35,249) - - - $2.35 C 55 765,511 63,310 8.3% 0 0.0% 63,310 8.3% 5.6% (20,348) (20,348) - - - $1.49 MeD 29 534,762 51,320 9.6% 0 0.0% 51,320 9.6% 8.9% (3,860) (3,860) - - - $2.03 tOtal 110 3,532,237 427,856 12.1% 19,241 0.5% 447,097 12.7% 11.3% (53,986) (53,986) - - - $2.23 eaSt laS veGaS SubMaRketa 9 1,351,642 212,461 15.7% 90,741 6.7% 303,202 22.4% 20.2% (17,594) (17,594) - - - $3.05 b 17 1,038,569 307,219 29.6% 1,075 0.1% 308,294 29.7% 27.6% (21,257) (21,257) - - - $1.53 C 96 1,879,985 473,001 25.2% 0 0.0% 473,001 25.2% 21.7% (64,699) (64,699) - - - $1.49 MeD 58 1,573,374 292,767 18.6% 1,290 0.1% 294,057 18.7% 19.6% 13,946 13,946 - - - $1.85 tOtal 180 5,843,570 1,285,448 22.0% 93,106 1.6% 1,378,554 23.6% 21.8% (89,604) (89,604) - - - $1.84 henDeRSOn SubMaRketa 11 787,274 273,371 34.7% 0 0.0% 273,371 34.7% 35.3% 0 - - - - $3.00 b 65 2,183,681 392,451 18.0% 32,700 1.5% 425,151 19.5% 22.3% 47,198 47,198 - - - $2.33 C 150 1,572,999 399,148 25.4% 0 0.0% 399,148 25.4% 27.4% 29,157 29,157 27,683 27,683 - $1.94 MeD 98 1,261,594 281,184 22.3% 1,486 0.0% 282,670 22.4% 22.1% (9,413) (9,413) - - - $2.42 tOtal 324 5,805,548 1,346,154 23.2% 34,186 0.6% 1,380,340 23.8% 25.4% 66,942 66,942 27,683 27,683 - $2.37 nORth laS veGaS SubMaRket a - 0 0 n/a 0 n/a 0 n/a n/a - - - - - $- b 8 200,796 61,698 30.7% 0 0.0% 61,698 30.7% 34.1% - - - - - $2.46 C 74 459,624 70,811 15.4% 1,000 0.2% 71,811 15.6% 23.3% 35,152 35,152 - - - $1.76 MeD 13 125,385 5,179 4.1% 0 0.0% 5,179 4.1% 7.5% 4,239 4,239 - - - $1.61 tOtal 95 785,805 137,688 17.5% 1,000 0.1% 138,688 17.6% 23.5% 39,391 39,391 - - - $2.07 nORthWeSt SubMaRket a 19 1,509,415 492,875 32.7% 16,813 1.1% 509,688 33.8% 33.7% (456) (456) - - - $2.46 b 73 2,508,675 683,336 27.2% 55,705 2.2% 739,041 29.5% 30.9% 35,643 35,643 - - - $2.40 C 214 2,240,146 519,531 23.2% 36,612 1.6% 556,143 24.8% 24.6% 6,831 6,831 - - - $2.03 MeD 95 2,352,687 362,297 15.4% 720 0.0% 363,017 15.4% 16.4% 69,961 69,961 60,000 60,000 - $2.56 tOtal 401 8,610,923 2,058,039 23.9% 109,850 1.3% 2,167,889 25.2% 25.8% 111,979 111,979 60,000 60,000 - $2.35 SOuthWeSt SubMaRket a 3 397,112 296,392 74.6% 0 0.0% 296,392 74.6% 67.4% (28,774) (28,774) - - - $2.82 b 56 2,338,223 642,481 27.5% 67,590 2.9% 710,071 30.4% 29.9% 9,191 9,191 - - - $2.54 C 240 2,617,148 754,547 28.8% 56,703 2.2% 811,250 31.0% 32.1% 1,950 1,950 - - - $2.03 MeD 91 1,206,395 355,806 29.5% 10,662 0.9% 366,468 30.4% 30.0% (4,934) (4,934) - - - $2.35 tOtal 390 6,558,878 2,049,226 31.2% 134,955 2.1% 2,184,181 33.3% 33.1% (22,567) (22,567) - - - $2.36 WeSt CentRal SubMaRket a 2 227,624 45,122 19.8% 9,709 4.3% 54,831 24.1% 22.1% 5,094 5,094 - - - $2.33 b 45 1,622,280 144,594 8.9% 0 0.0% 144,594 8.9% 7.8% (18,465) (18,465) - - - $1.94 C 167 2,725,016 463,644 17.0% 17,515 0.6% 481,159 17.7% 19.3% 40,965 40,965 - - - $1.73 MeD 60 775,745 105,408 13.6% 2,233 0.3% 107,641 13.9% 11.8% (16,057) (16,057) - - - $1.97 tOtal 274 5,350,665 758,768 14.2% 29,457 0.6% 788,225 14.7% 14.8% 11,537 11,537 - - - $1.84

Page 22: Las Vegas Quarterly, Q1-10

r e ta i l

lVQ | Q1/10

QUA R T E R LY

LASVEGAS

southern Nevada’s retail market showed minor improvement in the first quarter of 2010, but continued to suffer from rising vacancy and falling net absorption. With no new anchored retail centers completed in the first quarter, net absorption fell to -199,221 square feet. Vacancy increased to 9.3%, a 0.9 point increase from the fourth quarter of 2009. Vacancy has increased by 2.2 points since the first quarter of 2009, when it was 7.1%. the average asking lease rate fell to $1.72 per square foot (psf ) on a triple-net basis (NNN) from last quarter’s $1.83.retail employment dropped by 5,700 jobs between February 2010 and February 2009. retail employment has declined for two straight quarters, after a small increase in the third quarter of 2009. on a year-over-year basis, the pace of retail job losses has been lower than -5.0% since the fourth quarter of 2008. Fourth quarter retail employment usually shows a sizable increase due to temporary workers brought on to deal with the holiday rush. in the fourth quarter of 2009, however, total retail employment declined by 1,500 jobs, an indicator

of the severity of southern Nevada’s current recession. Clark County’s taxable sales were $7.2 billion in the fourth quarter of 2009, a 19% decline from the fourth quarter of 2008. the pace of year-over-year taxable sales declines declined in the fourth quarter of 2009, reversing five straight quarters of increasing losses. During the current recession, Clark County has posted a quarterly average of $83,154 of taxable sales per retail employee. this is down from the pre-recession average of $90,329 of taxable sales per employee. in the fourth quarter of 2009, this number dropped to $79,622 of taxable sales per retail employee, suggesting that taxable sales will need to rebound substantially before it makes sense for retailers to begin expanding their work forces.No new anchored retail centers were completed in the first quarter 2010. the only anchored retail project actively under construction is Caroline’s Court, a 274,000 square foot center in the Northwest submarket. Major centers that are either planned to begin construction within the next year, or that have had their construction stalled,

Market inDiCators

Q1-10Q2-2010 Projected

VaCaNCy

Net absorPtioN

CoNstrUCtioN

reNtal rate

retail review

NORTHWEST

UNIVERSITYEAST

NORTHEAST

NORTHLAS VEGAS

SOUTHWEST

WESTCENTRAL

HENDERSON

DOWNTOWN

15

215

215

95

95

RESORTCORRIDOR

Photo by Chris Poese ©2009 Colliers las Vegas

Page 23: Las Vegas Quarterly, Q1-10

23294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

included Decatur 215 (260,000 square feet), Decatur Marketplace (156,000 square feet) and green Valley Crossing (146,000 square feet). Forward supply of retail space in the Valley stood at 836,000 square feet, an increase from the 681,000 square feet of space that was under construction or planned in the fourth quarter of 2009. all of the projects that are currently planned or under construction are in the Community Center category, and all of the space is located in the henderson, Northwest and North las Vegas submarkets.retail vacancy was 9.3% in the first quarter of 2010. Vacancy has increased for the past eight quarters, and was 2.2 points higher this quarter than it was one year ago. since the onset of the recession in the fourth quarter of 2007, retail vacancy has increased by 6.2 points. the Valley’s highest vacancy was in the Downtown submarket at 14.7%. the lowest vacancy was in the southwest submarket at 6.4%. Downtown, southwest and West Central experienced a decrease in vacancy this quarter over last. all product types had an increase in vacancy in this quarter over last, suggesting that most of the leasing activity in the market involves the movement of existing tenants rather than the introduction of new tenants into southern Nevada.the weighted average asking rental rate for retail space fell to $1.72 per square foot (psf ) on a triple-net basis (NNN) between the first quarter of 2010 and the fourth quarter of 2009. the largest decreases were in the southwest submarket (the submarket with the lowest vacancy rate in the Valley), at $0.10, followed by henderson ($0.05 decrease) and University east and West Central, which both experienced a decrease of $0.03. the Northeast and Northwest submarkets experienced an increase in their weighted average asking lease rate, of $0.02 and $0.04 respectively. southern Nevada’s lowest average asking rent remained in the Downtown submarket at $1.07 psf NNN, while the highest average asking rent, $2.12 psf NNN, was in the southwest submarket. the gap between the two decreased from $1.13 last quarter to $1.05 this quarter. the gap between asking rents and achievable rents averaged $0.35 in 2009. Power Centers had a $0.51 gap, followed by Community Centers at $0.49 and Neighborhood Centers at $0.23. the average lease term for retail space in 2009 was 68 months. approximately 62% of the retail leases signed in 2009 were with local retailers, followed by 22% with

national retailers and 17% with regional retailers. the most active retail categories were grocery stores, Furniture stores, education & social services, Food services and salons & spas.only 7% of existing availabilities decreased their asking rent between the first quarter of 2010 and the fourth quarter of 2009. this represents a significant decrease from one year ago, when 25% of existing availabilities posted a decrease in asking rent. existing availabilities that decreased their rent this quarter did so by an average of $0.34. only 2% of existing availabilities increased their asking rent this quarter, by an average of $0.27. the 177 new retail availabilties added to our database in the first quarter of 2010 had an average asking rate of $1.76 psf NNN.sales of retail space, both on an owner/user and investment basis, remain too infrequent to suggest pricing trends. No major shopping centers were sold this quarter. owner/user single-tenant retail sales declined slightly this quarter, with 30,000 square feet sold at an average sales price of $24 per square foot. investment sales of single-tenant retail has rebounded since last year, with 52,000 square feet sold at an average price of $39 per square foot. average sales prices have declined by $187 per square foot for owner/user sales, and $276 per square foot for investment sales.there are still 77 retail units available for lease that are 10,000 square feet in size or larger. this was 23 more spaces of this size range than were available one year ago. the largest of these anchor spaces was the great indoors at boca Park (139,000 square feet), the vacant indoor swap-meet at Charleston Plaza Mall (106,000 square feet) and the former albertsons at renaissance Center east (62,000 square feet). Waldenbooks, b. Dalton, Jo-ann, Pier 1, Kirklands, target and K-Mart have all announced national closures in 2010, though there has been no announcement that any of these closures will take place in southern Nevada. the largest announced national expansions in 2010 are by McDonalds, go green and Dollar general. 7-eleven, based in Dallas, recently announced that they will be opening from 15

MaRket SnapShOt

Q1-10 Q4-09 Q1-09 Q-o-Qy-o-yChange

Vacancy rate 9.3% 8.4% 7.1% + 10.7% + 31.0%

asking rent (PsF, NNN) $1.72 $1.83 $1.95 - 0.6% - 11.8%

Net absorption (sF) -199,221 -72,841 -268,166 + 173.5% + 25.7%

New Completions (sF) 0 130,000 477,250 - 100.0% - 100.0%

Page 24: Las Vegas Quarterly, Q1-10

r e ta i l

lVQ | Q1/10

QUA R T E R LY

LASVEGAS

“While we will still see the closure of retail stores, at least some retailers are

poised to take advantage of the buyer’s market in Southern Nevada and

expand their local presence in 2010.”

to 20 new stores in southern Nevada over the next three years, with at least half of those stores occupying existing available space. raising Caine’s, Carl’s Jr., bJ’s, Clear Wireless and Cox are also expanding their presence in southern Nevada.Distressed retail space totaled 3.2 million square feet this quarter, an increase of 60,000 square feet from last quarter. 39% of this space is in the Community Center category, while 32% is Power Center space and 29% is Neighborhood Center space. general growth Properties, which owns over 3.5 million square feet of retail in southern Nevada , is expected to emerge from bankruptcy in 2010 largely intact. Construction on shoppes at summerlin, their new 1 million square foot regional mall project in the Northwest submarket, was halted earlier this year.southern Nevada’s retail market appears to have entered recession behind its office and industrial markets. Current performance suggests that the last one in might also be the last one out. the number of retail jobs has plummeted since the beginning of the recession. For each square foot of occupied retail space, southern Nevada has $180 of taxable sales. this is down from a peak of $276 per occupied square foot in the second

quarter of 2006. More importantly, population growth appears to be either stagnating or reversing. Fortunately, taxables sales in fourth quarter 2009 were higher than in third quarter of 2009. While they are not yet showing a clear trend of improvement, they do seem to be holding steady. Moreover, year-over-year vacancy changes are trending downward. year-over-year vacancy grew by 2.2 points in the first quarter of 2010; year-over-year vacancy growth peaked at 4.1 points in the second quarter of 2009. For all the challenges facing the retail market, there is the possibility that it will hit bottom in 2010. While we will still see the closure of retail stores, at least some retailers are poised to take advantage of the buyer’s market in southern Nevada and expand their local presence in 2010. rents will continue to fall in 2010, but probably at a slower rate than in 2009. since new completions will remain restrained, net absorption will probably continue to trend negative, but may begin to improve in the latter part of the year.

Page 25: Las Vegas Quarterly, Q1-10

25294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

historiCal net aBsorPtion Vs CoMPletions

VaCanCy Vs rental rate

oCCuPanCy Vs retail eMPloyMent

RetaIl SaleS

Q1-10 Q4-09 Q1-10

Single tenant - Owner/user Sales space for sale (sf) 30,000 38,000 54,000 average asking Price/sF $24 $127 $211Single tenant - Investment

Sales space sold (sf) 52,000 39,000 18,000 average asking Price/sF $39 $252 $315 average Cap rate n/a n/a 14.9%Shopping Center - Owner/user Sales space for sale (sf) 0 0 0 average asking Price/sF n/a n/a n/aShopping Center -

Investment Sales space for sale (sf) 0 163,000 105,000 average asking Price/sF n/a $42 $119 average Cap rate n/a 15.0% 9.0%

lease aCtiVity

pROpeRtY aDDReSS leaSe Date leaSe teRM SIze leaSe Rate tYpe

3535 W Sahara ave Oct 2009 120 months 40,351 sf $0.90 nnn Freestanding Retail

Siena promenade Oct 2009 120 months 6,155 sf $2.57 nnn Strip Center

Canyon lakes nov 2009 60 months 3,693 sf $2.80 nnn neighborhood Center

Sunrise Mountain plaza nov 2009 60 months 3,130 sf $0.87 nnn Community Center

Rhodes Ranch town Center Oct 2009 60 months 2,400 sf $1.84 nnn neighborhood Center

sales aCtiVity

pROpeRtY aDDReSS SaleS Date Sale pRICe SIze pRICe/SF tYpe

5545 Camino al norte Oct 2009 $4,300,000 14,659 sf $293.34 Freestanding Retail

5593 losee Rd Oct 2009 $1,850,000 5,874 sf $63.39 Freestanding Retail

* Source: CoStar COMPS

5.4% 

7.1% 

7.9% 8.4% 

8.8% 9.3% 

 $2.05  

 $1.95  

 $1.89  

 $1.83  

 $1.73    $1.72  

 $1.50  

 $1.60  

 $1.70  

 $1.80  

 $1.90  

 $2.00  

 $2.10  

2.0% 

3.0% 

4.0% 

5.0% 

6.0% 

7.0% 

8.0% 

9.0% 

10.0% 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Vacancy  Asking Rental Rate 

387,385 

‐268,166 

125,108 

‐72,841 

39,028 

‐199,221 

554,665 

477,250 

532,000 

130,000 

267,342 

‐400,000 

‐300,000 

‐200,000 

‐100,000 

100,000 

200,000 

300,000 

400,000 

500,000 

600,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Square Feet 

/01234526  72849:5261 

100,000 

91,600 

90,900 

91,500 

90,000 

86,500 

94.6% 

92.9% 

92.1% 

91.6% 

91.2% 

90.7% 

88.0% 

89.0% 

90.0% 

91.0% 

92.0% 

93.0% 

94.0% 

95.0% 

75,000 

80,000 

85,000 

90,000 

95,000 

100,000 

105,000 

4 Q 2008  1 Q 2009  2 Q 2009  3 Q 2009  4 Q 2009  1 Q 2010 

Retail Jobs  Occupancy Rate 

Page 26: Las Vegas Quarterly, Q1-10

r e ta i l

lVQ | Q1/10

RetaIl MaRket StatIStICSFOuRth QuaRteR 2009

M a R k e t t O t a l

Q u a R t e R l Y C O M p a R I S O n a n D t O t a l S

S u b M a R k e t S

pC 24 9,861,822 831,175 8.4% 2,666 0.0% 833,841 8.5% 8.3% (38,037) (38,037) - - - $1.79 CC 105 18,504,513 1,864,613 10.1% 35,676 0.2% 1,900,289 10.3% 9.9% (63,049) (63,049) - - 274,360 $1.70 nC 137 15,380,387 1,362,921 8.9% 291,191 1.9% 1,654,112 10.8% 10.1% (98,135) (98,135) - - - $1.70 tOtal 266 43,746,722 4,058,709 9.3% 329,533 0.8% 4,388,242 10.0% 9.6% (199,221) (199,221) - - 274,360 $1.72

Q1-10 266 43,746,722 4,058,709 9.3% 329,533 0.8% 4,388,242 10.0% 9.6% (199,221) (199,221) 0 0 274,360 $1.72 Q4-09 266 43,746,722 3,859,488 8.8% 357,630 0.8% 4,217,118 9.6% 9.2% 39,028 (176,871) 267,342 1,406,592 274,360 $1.73 Q3-09 262 43,479,380 3,631,174 8.4% 383,283 0.9% 4,014,457 9.2% 8.7% (72,841) (215,899) 130,000 1,139,250 673,744 $1.83 Q2-09 261 43,349,380 3,428,333 7.9% 344,288 0.8% 3,772,621 8.7% 7.9% 125,108 (143,058) 532,000 1,009,250 666,080 $1.89 Q1-09 259 42,817,380 3,021,441 7.1% 358,131 0.8% 3,379,572 7.9% 6.1% (268,166) (268,166) 477,250 477,250 1,961,892 $1.95 Q4-08 257 42,340,130 2,276,025 5.4% 321,952 0.8% 2,597,977 6.1% 5.6% 387,385 1,197,068 554,665 2,210,879 2,389,142 $2.05

the InFORMatIOn COntaIneD In thIS RepORt WaS pROvIDeD bY SOuRCeS DeeMeD tO be RelIable, hOWeveR, nO GuaRantee IS MaDe aS tO the aCCuRaCY OR RelIabIlItY. aS neW, CORReCteD OR upDateD InFORMatIOn IS ObtaIneD, It IS InCORpORateD IntO bOth CuRRent anD hIStORICal Data, WhICh MaY InvalIDate COMpaRISOn tO pRevIOuSlY ISSueD RepORtS.

eXIStInG pROpeRtIeS DIReCt vaCanCY SubleaSe vaCanCY tOtal vaCanCY net abSORptIOn SF u/C and pROpOSeD SF avG RentS

total Current

Completed Completed

under

type bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate vacancy

period

YtD this Qtr YtD

Constr

Rate

Sq Ft Rate

Sq Ft

previous Q

DOWntOWn SubMaRket pC - 0 0 n/a 0 n/a 0 n/a n/a - - - - - $- CC 5 684,340 173,159 25.3% 13,312 1.9% 186,471 27.2% 27.5% 1,980 1,980 - - - $1.07 nC 5 518,070 3,974 0.8% 0 0.0% 3,974 0.8% 1.3% 2,746 2,746 - - - $0.95 tOtal 10 1,202,410 177,133 14.7% 13,312 1.1% 190,445 15.8% 16.2% 4,726 4,726 - - - $1.07 henDeRSOn SubMaRketpC 8 2,896,215 328,915 11.4% 1,400 0.0% 330,315 11.4% 11.3% (3,564) (3,564) - - - $1.57 CC 20 2,825,692 349,950 12.4% 0 0.0% 349,950 12.4% 9.5% (83,426) (83,426) - - - $1.50 nC 25 2,797,088 247,480 8.8% 85,156 3.0% 332,636 11.9% 10.8% (30,743) (30,743) - - - $1.88 tOtal 53 8,518,995 926,345 10.9% 86,556 1.0% 1,012,901 11.9% 10.5% (117,733) (117,733) - - - $1.63 nORth laS veGaS SubMaRketpC 2 832,000 123,476 14.8% 0 0.0% 123,476 14.8% 13.7% (9,244) (9,244) - - - $2.09 CC 12 2,254,358 149,966 6.7% 0 0.0% 149,966 6.7% 6.5% (3,661) (3,661) - - - $1.90 nC 15 1,895,468 149,562 7.9% 1,763 0.1% 151,325 8.0% 6.2% (33,401) (33,401) - - - $2.07 tOtal 29 4,981,826 423,004 8.5% 1,763 0.0% 424,767 8.5% 7.6% (46,306) (46,306) - - - $2.02 nORtheaSt SubMaRketpC - 0 0 n/a 0 n/a 0 n/a n/a 0 - - - - $- CC 8 1,398,026 71,224 5.1% 18,614 1.3% 89,838 6.4% 5.9% (7,873) (7,873) - - - $1.53 nC 15 1,306,795 129,964 9.9% 0 0.0% 129,964 9.9% 9.2% (9,943) (9,943) - - - $1.40 tOtal 23 2,704,821 201,188 7.4% 18,614 0.7% 219,802 8.1% 7.5% (17,816) (17,816) - - - $1.45 nORthWeSt SubMaRket pC 7 2,840,846 189,207 n/a 1,266 n/a 190,473 6.7% 6.6% (1,604) (1,604) - - - $1.96 CC 17 3,715,512 448,115 12.1% 0 0.0% 448,115 12.1% 10.7% (51,824) (51,824) - - 274,360 $2.40 nC 31 3,705,508 364,051 9.8% 113,834 3.1% 477,885 12.9% 11.2% (64,578) (64,578) - - - $1.54 tOtal 55 10,261,866 1,001,373 9.8% 115,100 1.1% 1,116,473 10.9% 9.7% (118,006) (118,006) - - 274,360 $2.00 SOuthWeSt SubMaRket pC 1 944,314 45,665 4.8% 0 0.0% 45,665 4.8% 4.8% - - - - - $3.17 CC 9 3,216,421 169,852 5.3% 0 0.0% 169,852 5.3% 5.5% 6,168 6,168 - - - $2.05 nC 13 1,623,100 154,238 9.5% 71,249 4.4% 225,487 13.9% 16.4% 41,414 41,414 - - - $1.90 tOtal 23 5,783,835 369,755 6.4% 71,249 1.2% 441,004 7.6% 8.4% 47,582 47,582 - - - $2.12 unIveRSItY eaSt SubMaRket pC 3 1,210,223 69,591 5.8% 0 0.0% 69,591 5.8% 5.5% (28,155) (28,155) - - - $1.59 CC 19 2,761,018 240,059 8.7% 1,451 0.1% 241,510 8.7% 9.0% 6,060 6,060 - - - $1.35 nC 17 1,950,703 196,391 10.1% 19,189 1.0% 215,580 11.1% 11.0% (1,700) (1,700) - - - $1.64 tOtal 39 5,921,944 506,041 8.5% 20,640 0.3% 526,681 8.9% 8.9% (23,795) (23,795) - - - $1.50 WeSt CentRal SubMaRket pC 3 1,138,224 74,321 6.5% 0 0.0% 74,321 6.5% 6.9% 4,530 4,530 - - - $1.16 CC 15 1,649,146 262,288 15.9% 2,299 0.1% 264,587 16.0% 20.3% 69,527 69,527 - - - $1.21 nC 16 1,583,655 117,261 7.4% 0 0.0% 117,261 7.4% 7.3% (1,930) (1,930) - - - $1.47 tOtal 34 4,371,025 453,870 10.4% 2,299 0.1% 456,169 10.4% 12.1% 72,127 72,127 - - - $1.27

Page 27: Las Vegas Quarterly, Q1-10

27294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

inDustrial y-o-y VaCanCy Change

oFFiCe y-o-y VaCanCy Change

retail y-o-y VaCanCy Change

0.3% 

0.9% 

1.1% 

1.1% 

0.9% 

0.7%  1.3% 

0.9% 

0.1% 

0.2% 

‐1.6% 

‐2.1% 

‐2.0% 

‐2.2% 

‐0.7% 

‐0.2% 

‐0.2% 

0.3% 

0.1% 

0.4% 

0.6% 

0.7% 

2.0% 

2.2% 

3.7% 

4.1% 

3.3% 

3.4% 

‐3.0% 

‐2.0% 

‐1.0% 

0.0% 

1.0% 

2.0% 

3.0% 

4.0% 

5.0% 

Q103 

Q203 

Q303 

Q403 

Q104 

Q204 

Q304 

Q404 

Q105 

Q205 

Q305 

Q405 

Q106 

Q206 

Q306 

Q406 

Q107 

Q207 

Q307 

Q407 

Q108 

Q208 

Q308 

Q408 

Q109 

Q209 

Q309 

Q409 

Y‐O‐Y Vacancy Change 

‐1.5%  ‐0.1% 

1.7% 

3.1% 

3.9% 

2.8% 

0.5% 

1.0% 

‐0.3% 

‐0.2% 

0.5% 

0.1% 

‐0.2% 

‐0.9% 

‐0.1% 

0.1% 

0.3% 

‐0.1% 

‐1.6% 

‐3.7% 

‐4.1%  ‐2

.6%  ‐1

.0% 

0.5% 

2.3% 

2.5% 

2.8% 

3.0% 

3.6%  4.6% 

6.4% 

6.6% 

6.5% 

6.0% 

4.1% 

3.7% 

‐6.0% 

‐4.0% 

‐2.0% 

0.0% 

2.0% 

4.0% 

6.0% 

8.0% 

Q101 

Q201 

Q301 

Q401 

Q102 

Q202 

Q302 

Q402 

Q103 

Q203 

Q303 

Q403 

Q104 

Q204 

Q304 

Q404 

Q105 

Q205 

Q305 

Q405 

Q106 

Q206 

Q306 

Q406 

Q107 

Q207 

Q307 

Q407 

Q108 

Q208 

Q308 

Q408 

Q109 

Q209 

Q309 

Q409 

Y‐O‐Y Vacancy Change 

‐1.6% 

‐1.1% 

0.2% 

2.1% 

3.1% 

2.7% 

1.8% 

1.6% 

1.4% 

1.4% 

1.8% 

0.7% 

‐0.1% 

‐0.9% 

‐1.5% 

‐2.2% 

‐2.2% 

‐3.5% 

‐3.2% 

‐3.5% 

‐3.9% 

‐2.5%  ‐1.8% 

‐0.1% 

0.6% 

1.6% 

1.6% 

2.1% 

2.6% 

3.8% 

4.8% 

4.2% 

4.2% 

4.0% 

3.5%  4.3% 

‐5.0% 

‐4.0% 

‐3.0% 

‐2.0% 

‐1.0% 

0.0% 

1.0% 

2.0% 

3.0% 

4.0% 

5.0% 

6.0% 

Q101 

Q201 

Q301 

Q401 

Q102 

Q202 

Q302 

Q402 

Q103 

Q203 

Q303 

Q403 

Q104 

Q204 

Q304 

Q404 

Q105 

Q205 

Q305 

Q405 

Q106 

Q206 

Q306 

Q406 

Q107 

Q207 

Q307 

Q407 

Q108 

Q208 

Q308 

Q408 

Q109 

Q209 

Q309 

Q409 

Y‐O‐Y Vacancy Change 

Page 28: Las Vegas Quarterly, Q1-10

l a n D

lVQ | Q1/10

QUA R T E R LY

LASVEGAS

NORTHWESTEAST

LAS VEGAS

NORTHLAS VEGAS

SOUTHWEST

WESTCENTRAL

AIRPORT

HENDERSON

15

215

215

95

95

Residential landthere remain thousands of acres of residential-zoned land that are owned free and clear, but owners of that land paid more than $250,000 per acre. this means that equity in such investments purchased between 2003 and 2007 has completely dissipated. additionally, thousands of acres of land secured by first trust deeds will have difficulty in resetting values due to complicated work-outs. “Mom and Pop” investors who invested $25,000 - $100,000 per asset in short term bridge financing with developers and speculators now face the reality that their investments are less valuable than the remaining debt on their properties.Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010, with one in every 27 housing units receiving a foreclosure filing, more than five times the national average. Foreclosure filings were reported on 41,296 Nevada properties during the quarter, an increase of 19% from the previous quarter and an increase of nearly 111% from the first quarter of 2008. bank repossessions in Nevada were down 3% from the previous quarter, but defaults increased 27% and auction sale notices

increased 35%.in order for any home builder to consider buying land, finished lot values must be near 25% of the new home sale cost to be competitive with the foreclosure market. since most finished lots are selling at $40,000 to $50,000, residual land value can be viewed as $0 - $10,000 per raw lot.on the bright side, the las Vegas Valley is running out of finished lots. builders who have cash are bidding existing finished lots up to above replacement costs. Dr horton recently paid $85,000 per finished lot for 51 lots in henderson. this is causing builders and speculators to turn to partially improved lots and land. the Valley has an 18 month supply of finished lots. When the finished lots are gone, builders will either have to start land development again or pay premium prices to those who still have lots in supply.Resort Corridor landgaming revenue and hotel revPar’s are still bleak, and demand for additional resort/hotel/gaming/timeshare products is likely five or more years away. this is in part driven by national consumer recovery, which is also years away. it is difficult to guess when the american

Market inDiCators

Q1-10Q2-2010 Projected

resiDeNtia

VolUMe

resort CorriDor

VolUMe

soUthWest

VolUMe

land reviewPhoto by Chris Poese ©2009 Colliers las Vegas

Page 29: Las Vegas Quarterly, Q1-10

29294 oFFiCes in 61 Countries on 6 Continents$48.1 Bil l ion in annual transaction Volume | 1.1 Bil l ion sF Managed | 12,749 Professionals

C o l l i e r s l a s V e g a s | F i r s t Q u a r t e r | 2 0 1 0

consumer will have the disposable income necessary to support our large supply of luxury hotel rooms and high-end retail sufficiently enough for the casinos to become profitable enough for more supply to become necessary. resort land values will be driven by the timeline of the recovery.Many owners in the resort corridor can hold on to their land and need not consider selling anywhere near the price at which a deal could be struck today. banks would also rather hold onto foreclosed resort corridor land than sell it at today’s prices. Furthermore, many investors are indicating that they would rather hold onto las Vegas blvd (“the strip”) land than the majority of their other assets, and that they will hold these lots for years if necessary. this means that we will continue to see few transactions and few distressed sales in the resort corridor for the next few years.the bid/ask delta has decreased substantially in the last 3 to 6 months. owner/sellers are starting to grasp the 80% to 90% drop off in resort land values from the 2007 peak, and buyers are now able to justify the carrying and opportunity costs associated with buying now or in order to pick up a marquee resort/gaming/retail site. these sales are happening at a steep discount of course, but at or near some distressed buyers’ expectations.a soft market consensus of value has been established at $1-2 million per acre for Paradise road, Koval lane, and the peripherals of las Vegas blvd. at these numbers, the land’s realistic use may open up to uses other than casino/resort, retail for example. Prime las Vegas blvd land is harder to value because of the lack of distressed (or able) sellers, and because the latest sale at las Vegas blvd & harmon is hard to comprehend. two acres in front of Planet hollywood was purchased from the county for $12 million per acre by brett torino. this transaction surprised many who anticipated the value of the site to be at around $4-6 million per acre. Many speculations about it not being a true arms-length transaction have been made, and this is likely the case. however, it is possible that an intensive retail use can pencil at the price paid. regardless, it is a positive sale comparable in a market that can use them.Southwest Commercial landMany of the landowners in the southwest part of the las Vegas Valley own their property free and clear, and these owners are not going to compete with the distressed seller on price. these sellers are instead going to compete by giving time to users to do the necessary due diligence and get the property zoning and financing needed to build their project. Most users cannot purchase the discounted distressed properties

because of the short timeframes that the lenders are requiring to get the properties quickly off their books. in short, if you need to sell you had better be prepared to severely discount the property to attract the “all cash investor” that is looking for a great price to enable them to hold the property for 5-10 years.if you are a land owner and you have a bank loan, it is most likely that your property will be going back to the bank. appraisals are going to decrease significantly once the sales comparables reflect the distressed sales. this will mean that the loans will no longer be in compliance with bank and FDiC regulations unless the property is to be recapitalized. recapitalization, however, is unlikely, and therefore the lender will have no choice but to foreclose on the property, creating the snowball effect on values we have already seen in the residential markets.on a positive note, the southwest has more willing sellers than in past years and with plenty of available inventory and the re-pricing of property, this will bode well for companies that are looking to purchase or do a build-to-suit. a company can get a premium location at a much lower price for land and much lower construction costs to build their facility than they could have a few years ago.

$0 

$200,000,000 

$400,000,000 

$600,000,000 

$800,000,000 

$1,000,000,000 

$1,200,000,000 

$1,400,000,000 

Q1‐06 Q2‐06 Q3‐06 Q4‐06 Q1‐07 Q2‐07 Q3‐07 Q4‐07 Q1‐08 Q2‐08 Q3‐08 Q4‐08 Q1‐09 Q2‐09 Q3‐09 Q4‐09 Q1‐10 

!e#$%e&'al +a&% 

Total Volume ($) 

$0 

$200,000,000 

$400,000,000 

$600,000,000 

$800,000,000 

$1,000,000,000 

$1,200,000,000 

$1,400,000,000 

Q1‐06 Q2‐06 Q3‐06 Q4‐06 Q1‐07 Q2‐07 Q3‐07 Q4‐07 Q1‐08 Q2‐08 Q3‐08 Q4‐08 Q1‐09 Q2‐09 Q3‐09 Q4‐09 Q1‐10 

Resort Corridor Land 

Total Volume ($) 

$0 

$50,000,000 

$100,000,000 

$150,000,000 

$200,000,000 

$250,000,000 

Q1‐06 Q2‐06 Q3‐06 Q4‐06 Q1‐07 Q2‐07 Q3‐07 Q4‐07 Q1‐08 Q2‐08 Q3‐08 Q4‐08 Q1‐09 Q2‐09 Q3‐09 Q4‐09 Q1‐10 

Commerial Land ‐ Southwest 

Total Volume ($) 

ReSORt CORRIDOR lanD - tOtal vOluMe ($)

resiDential lanD - totaly VoluMe ($)

COMMeRCIal lanD / SOuthWeSt - tOtal vOluMe ($)

Page 30: Las Vegas Quarterly, Q1-10

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