Retail is a huge subject, and it seems you readers are pretty interested in it. I would have to write a book to start covering the topic adequately. Instead, I’ll just post a few observations, and open this up for your comments and input.
For a sense of scale, Summit (Sierra) is 657,348 SF. Some recent store closings: Super Kmart NW – 166,421 SF; Mervin’s S. Virginia – 78,816 SF; Mervin’s Sparks – 52,630 SF; Target Prater – 104365 SF (replaced with a super store at the Legends). Coming up – WalMart Northtown – 129,512 SF (to be replaced by a Super WalMart just north of the Grand Sierra supposedly, but construction is delayed). Also closed: Linens-n-Things, Whitehall Jewelers, Circuit City, Wild Oats (along with their relocation to the closed Good Guy’s).
In the central core, there doesn’t seem to be any meaningful action on the Park Lane Mall replacement (any input Downtown Dude?). The center north of the Atlantis (Sierra Marketplace?) is a ghost town. Large vacancies along the Kietzke strip.
NW report – Ribeiraville at Robb and Mae Anne (Peg’s) is maybe 25% leased, and the trend is downward. Azteca which replaced Tapestries has now served it’s last combination plate. Ridgeview Plaza on McCarran (Safeway) has never leased up, and has lost the board shop, the party shop, Fiesta to Go, and apparently the Denny’s that was under construction by Mickey D’s. The Terrible’s and car wash at 4th and McCarran are both abandoned.
BestBuy is delaying the opening of it’s 100% complete Legends store (and thanks for some inside scoop, billddrummer). That represents $100,000+ in rent being written off each month, and is a pretty good indication of their take on the retail horizon – they would lose more money by opening the store.
The national retailers had the same access to the fast cash that the homeowners did. While chasing the demographic and establishing a beach-head in front of the competition is normal business practice, many of them seem to have overextended. I wouldn’t be surprise to see continued store closures at the power centers. And for the local folks? Just how many nail salons and day spas did you think the region could support?
So the topic is teed up for you folks. What do you think about our retail climate? Any gossip on closings or openings? Anyone ready to join the "buy local" bandwagon? What will succeed or fail in this market:?
Sean
I drive by the 3/4 finished terribles carwash and gas station every day and there hasnt been a person on site since july. I know terribles is in financial trouble so i think that will sit empty for a while, its so close to being a money maker for them(its a great location with easy access). One thing NW reno really needs is a movie theather, instead of putting all those small retail buildings at robb and mae anne a movie theather/chain restaurant center would have been much better. There are so many small shops there its ridicilous and even in good times they will never fill up.
As far as the legends, i really do hope it suceeds and all the promised shops/restaurants(i believe they ahve 20+ committed restaurants) will come true but wouldnt be surprised if scheels and target are the only stores there for the next 1-2 years! I wonder how many used car lots will be shutting down in the next year off kitzkie!
Zen
Check out the little strip mall on Moana by Pinocchio’s Bar & Grill. There are now several vacancy’s. At least Pinocchio’s has some parking now. Hopefully they need it.
billddrummer
On the Moana Lane corridor:
The shopping center at Moana & Kietzke that once held Target (and Lucky before that) has finally(!) completed the space that was gutted by fire over a year ago. But the large building on Kietzke that formerly held Winan’s Furniture (BK some years ago) is still vacant.
Traveling west on Moana, the hobby store and sports memoribilia store closed in the Pinocchio center, which is why there’s parking now.
At the Virginia/Moana corner, Fantasy Inn closed after the old owners sold it.
A chiropractor’s office just west of Virginia closed earlier this year.
The large office complex on the north side of Moana is still virtually vacant. That’s the space that the IRS vacated several years ago.
Across the street a restaurant space in a fairly new commercial mall was vacant for nearly a year, and now holds a Mexican operation. The Moana East mall has several line spots open. Ofishal Aquarium just closed half of its facility and now says it has “100% salt-water” fish. To me, it’s that they cut their rent in half.
And Blue Bounty is officially closed. Whether Ben’s takes over the space is open to question. It looks to me like they have some surplus room in the existing store.
The Godfather’s Pizza at Moana and Lakeside has been for sale for more than a year, as is the one in Sparks at Oddie and Rock.
And in Sparks, in the industrial district, a 4-space building at the corner of Stanford Way and Greg has an ‘opening soon’ sign for Capriotti’s, a franchise sandwich shop based in Delaware. No other tenants have done any interior work. The Starbucks at the corner is dead after 11 AM.
Thanks for this thread. I’m interested in retail because of the employment base it represents here, and because of my exposure to it through Best Buy.
I’ll share other things as I see them.
longerwalk
Pity about Aztecas. They actually had decent food.
CommercialLender
For years retail developers gleefully proclaimed the industry motto of “Retail Follow Rooftops”. And for years I said “No. Retail should follow PEOPLE” nevermind that it was not catchy or rhyming. If any of you have ever been to an ICSC convention with 40-50,000 attendees, you know what euphoria there was.
So, when you have overbuilding in homes, you create overbuilding in retail, over-abundance in service-worker jobs, and all the many things that go with it such as ample tax revenues, ample utility income, ample construction jobs, ample buyers of tile, plubming, matl’s of all sorts.
Reverse everything you’ve experienced since Reno’s hayday began, what, 6 years ago, and you’ll be shocked at what is coming down the pike.
Mark D
To be fair, while there has been a notable number of stores/restaurants closing in the past few months, there are still some businesses opening up across Reno/Sparks and appear to be doing well.
Tequila Beach opened in the Summit Sierra (under same ownership as the former Cortina). Business on Tuesday at 2 pm was brisk–not sure how much of the traffic was due to the Veteran’s Day holiday. The food was quite good if you aren’t picky about having to eat “authentic” Mexican.
Texas Roadhouse opened on Nov. 3 in Damonte Ranch next to Kohl’s (which is also thriving). On Tuesday night they had a 45-60 minute wait. Their first weekend had dinnertime wait up to 3 hours according to the hostess working there on Tuesday!
The Green Onion (across the street from TX Roadhouse) continues to hold its own–their food quality and selection has improved since their opening about a year ago. They began offering Panini sandwiches as of Oct. 31 when my family went there to eat. (they had also added a “build your own” pasta bowl station). My parents visiting from out of town were quite impressed with the food quality and selection–originally it was a couple of steps lower than Sweet Tomatoes/Souplantation from California–now it’s closer to being equal in quality. The restaurant was just over half full at 1:30 pm on Oct. 31, then business slowed down as expected after 2 pm.
Holiday Inn Express recently opened their new hotel just west of Highway 395 near the airport.
Peppermill has opened their new steakhouse and spa complex, with an Asian cuisine restaurant coming in December.
Big Pig Smokehouse left their location at Clear Acre near US 395 (now occupied by Four Seasons BBQ) but reopened in south Reno near the Winco, with further plans to open up another eatery on Oddie Blvd. sometime this month.
Sushi Lover opened up on 5th Street just west of downtown Reno, and Ijji Sushi opened up in Sparks at Prater/East McCarran. I haven’t been to either so I don’t know if they’re doing good business.
A Jewelry store has advertised its grand opening at the corner of the S. Virginia exit ramp from southbound US 395 (in the Big 5 shopping center).
Next year there will be two Staples office supply stores opening up in Reno, along with many additional businesses in the Shoppers Square expansion.
One question I have is about the Virginia Lake Crossing retail building–anyone know if any business has signed up there yet–last I saw it’s still empty.
Casinos such as the GSR, Peppermill and Atlantis still have decent crowds and mostly full parking lots on weekends, and most live concerts either downtown or at casino venues such as GSR still appear to pull in good size audiences.
Attendance at the major special events (Balloon Races, Air Races, Nugget Rib cookoff) benefitted from favorable weather and set records this year!
In my opinion, there is not a total meltdown of the Reno economy, and one-sided “doom and gloom” talk does not help make anything better. However, customers appear to be more selective in where they spend their discretionary income, and some of it is going toward the newly opened businesses such as those mentioned above along with places like Scheels. Most businesses that have superior quality in their products and customer service are likely to make it through this economic downturn, while those who either overbuilt or are not reputable, and don’t advertise well are more likely to close up shop.
Phil
Reno, a modern day ghost town…..
I don’t think we will get there, but you never know. With the layoffs at IGT, and Casino’s will only futher the problem. What a nice holiday gift, a pink slip.
If the new administration worries too much about bailing out banks, and not enough about the job problem, we maybe headed for a depression.
We need jobs! The rest will come back in time.
As for retail what I don’t understand is why there are so many drug stores here. With most large supermarkets also containing a drug store, you have to wonder — Are we sick most the time? I rarely go into a drug store, and when I do they are mostly empty. Are there deals I am missing? There is a Longs accross the street to a new Rayles, and next door to a Safeway and a Walgreens (on Vista in Sparks).
Can we say there is too much retail?
cash buyer
Reno, a modern day ghost town….. could that happen to tiny st james village??
some of the more expensive houses are beginning to adjust desert jewel in arrowcreek 2.2 to 1.277, but who has the down payment and ability to carry a high interest jumbo??
smarten
I’d be interested Mike, in learning who the owners of record are of many of the shopping centers you’ve highlighted.
In recent years many commercial properties have become the subject of TICs. Rather than developers taking it on the chin, I suspect it’s really investors. All those rich Californians who sold their investment properties at the height of the bubble and through the vehicle of 1031 exchanges, were able to become TIC owners of…
You know the drill: class A tenants, long term triple net leases, professional management, positive cash flow. Alot any of this is going to do the investor any good when the tenant [like Circuit City] files Chapter XI.
longerwalk
How does commercial property fare when left vacant for a few years, as in lease rates? Is it more like leaving land fallow? Houses tend to get a run-down appearance w/in 6 months, due of course to yard conditions and general maintenance, but it seems property management could avoid some of that.
Biggest fear for some of these large strip malls near housing developments, I would think, would be vagrants, and then the first incoming tenants after the storm would be what?
Inclinejj
How does commercial property fare when left vacant for a few years, as in lease rates? Is it more like leaving land fallow? Houses tend to get a run-down appearance w/in 6 months, due of course to yard conditions and general maintenance, but it seems property management could avoid some of that
Supply and demand..if your looking to rent 10k square feet and there are only a few left un rented you have to pay the going rate..when there are lots of spaces the more desparate building owners start lowering rents..giving free months rent..etc..
The EZ money for home builders, home owners also applied to developers of commercial office projects and retail..We are just starting to see defaults in this area also..
Sully
Having been in construction for the last several decades, I’m not much of a “no growth” fan.
Sometimes circumstances dictate differently. This area is a case in point. The county and cities planning commissions probably rank dead last in foresight amongst major areas.
There is enough retail space to service the area now, more isn’t needed at this time. Vacant stores can be refitted for new tenants. Building a brand new center just doesn’t make sense, although the county tax man will differ with me.
Most all the newer areas have rat maze traffic patterns, when compared to the older areas. Schools, for one, should be off the beaten track not on a major thru fare – that slows to 15 mph when lights are flashing. There is a lot more planning needed in this area, then what is here now.
downtownjunkie
I drive by the Terrible’s station on 4th and McCarran every day. Last week I saw roofers there so maybe they will finish the project.
MikeZ
Speaking of retail, I crack up every time I see some “expert” on CNBC or Bloomberg explaining that the US consumer is “resilient.”
The retail bulls are hilarious!!
billddrummer
I think the US consumer is exhausted.
Stagnant income, rising unemployment job uncertainty, falling home prices, wealth destruction in the markets, high utility bills (anyone have a $39 cable bill or $29 cell phone bill?) rising property taxes, insurance premiums, and the like have sucked the discretionary cash out of many people’s wallets.
Add to that the fact that loans taken out a few years ago are clamboring to be repaid now, and there’s precious little left over for dinner out, a movie (a first run movie costs $75 for a family of 4 if you don’t go to the matinee).
Retail is sick. I believe it will get well, but not before confidence returns to the consumer. If only things would just stop going down, perhaps confidence would return. But until the numbers stop getting worse, I think the sector will suffer.
Food, fuel and basics are on the shopping list. Fancy new stuff isn’t.
Inclinejj
Was in Sears last night..They where doing a VIP sales event..Big deal..you would have thought they where giving things away for free. 50% off Sears appliances..
Friends & Family sale..BFD it was in every paper..for the extra 10% off
DowntownMakeoverDude
Unfortunately, we’re about to see one of the worst retail seasons on record…this country will be in the double digits for unemployment by February or March…watch.
billddrummer
To Inclinejj,
So that’s where my prospects went for their refrigerator and range!
I work in appliances at Best Buy, and Sears is our most effective competitor. (Of course, if you work for Sears in appliances, you don’t consider Best Buy a competitor, but that’s another story.)
Sears appliances are sourced through Whirlpool and GE. At one time Kenmore represented 50% of Whirlpool’s appliance output.
Having a proprietary brand like Kenmore gives Sears incredible pricing and market power. Which explains the deep discounts and big advertising push for house branded product.
In my opinion, the landscape in the appliance realm is in the process of further consolidation, along the lines of Whirlpool buying the Maytag company.
Stay tuned.
billddrummer
Moana & Virginia:
When did the Century 21 office at 3500 South Virginia close? Sign is down, no cars in the parking lot.
greenNV
Here’s my understanding of 4th and McCarran – Dennis Banks (Construction) owns the Terrible’s site. It was a build-to-suit with a lease back. When Herbst went into BK they stopped the project, so Banks stopped construction. He is probably searching for a new lessee before resuming construction. At least it is weather tight.
The car wash is a separate, though related, project on a separate parcel with separate ownership. Construction there stopped when they figured out that Terrible’s was stopped, and a stand alone car wash wasn’t going to pencil there. I’m not sure if the resumed construction is to just get weather tight, or if they plan to open.
Grand Wazoo
The Starbucks in the Palladio, the only retail in that building so far, has closed recently as Starbucks announced it would some months ago. I believe the Palladio has also recorded its first “real” NOD for $357K.
Lynne B
I have not waited more than 10 minutes for a table at any restaurant in Reno in the past 4 months, as far as ‘casino parking lots being full’ they must be full of employee’s cars because we went to the Atlantis to eat last weekend and it was pretty dismal compared to the weekend crowds you would have seen in previous years. I went through this when I lived in Northern Ca. several years ago, tons of businesses and banks closed down, abandoned for years until they were ultimately converted to ‘satellite welfare offices’ or ‘strip mall churches’ With the rate of businesses going belly up in Reno I am not very optimistic about this turning around in the near term
Tom
Some of the nicer restaurants within hotels at Lake Tahoe — at the south shore especially –have either ‘temporarily’ closed or gone to limited open days and reduced service hours. Their current menus seem newly abbreviated, also.
The result is that to us, South Tahoe isn’t as attractive for a weekend trip as it once was, so we have scratched it until things change. If others might be doing the same, doesn’t that cause a snowball-going-downhill effect? A few less visitors, then more amenities have to be curtailed, causing more people to nix a return visit. A downward economic spiral is in place that may take a significant time period to correct.
Sully
Bankruptcies, the next bubble Greenspan helped create.
billddrummer
Bully’s Update:
The Spanish Springs Bully’s at the corner of Eagle Canyon and Pyramid Highway opened today for lunch, and will go live with gaming tomorrow. C of O was issued Thursday.
Phil
WOW! I keep looking at the development there, and Bully’s and all seemed to me months away from opening. Perhaps they finished one of the buildings.
One more place to eat in the desert of Spanish Springs!
billddrummer
To Phil,
The Bully’s building (I’m sure you’ve seen the sign by now) is the one on the far northeast corner of the parcel. Access is off the first roundabout along Eagle Canyon.
Also, the Best Buy at Legends will open this spring (2009).