Brokerage Outlook: Nevada

• Las Vegas Retail

• Las Vegas Industrial

• Las Vegas Office

• Las Vegas Gaming

Las Vegas Retail Lord Submitted by Tami Lord, vice president with the Las Vegas office of Voit Commercial Brokerage. Posted 09/21/07. What area is your expertise? • I specialize in retail (shopping centers, free-standing retail, and national tenant representation) in Nevada, but the bulk of my business is in the Las Vegas area. What trends do you see presently in retail development in your area? • In order to make projects economically feasible at today’s land and construction prices, developers have to maximize their site coverage. Both developers and tenants are starting to be more creative. Examples include traditional projects now incorporating office on top of retail, parking structures, traditional restaurants taking end-cap positions instead of free-standing positions and fast-food users going into multi-tenant buildings. What type of retail product is doing well in your area? • Well-anchored retail still not only leases the best, but also continues to have more longevity in the marketplace throughout the years. What retailers are new to your area? • Tesco’s Fresh & Easy is literally setting the town on fire as they implement their market strategy to enter the Las Vegas market. Crate & Barrel also has announced that their first store at General Growth Properties Summerlin Centre will open in 2009. JC Penney has opened its first free-standing store in the market. Numerous Hispanic grocers are starting to take Las Vegas seriously as well. Who are the active retail developers in your area? • General Growth Properties, Regency Centers, Laurich Properties, Territory Incorporated, Juliet Properties and Great American Capital continue to lead the retail big box development. Green Street, Business Properties Group, Diversified Interests, Vertical Holdings, Kennedy Commercial and Sansone Development are all active with various types of anchored, shadow-anchored and mixed-use projects. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Traditionally anchored big box projects like The Arroyo (Laurich/EJM), Blue Diamond Crossing (Juliet), and McCarran Marketplace (Marnell Properties) that seemed to be in the planning stages for such a long period of time are all finally in various stages of construction and opening. All are absorbing the current demand in their respective trade areas for the short term and include category killer tenants like Wal-Mart, Target, Kohl’s, Lowe’s Home Improvement Warehouse, The Home Depot, Best Buy, OfficeMax, Office Depot, PetsMart and Petco. Where is the majority of development taking place? Why is this area doing well? • As is customary in Las Vegas, most of the retail development is following the residential growth, but it also is following the Interstate 215 beltway. What area do you expect to be the next big retail development market? Why? • There is no doubt that the next big wave of anchored retail will be along the northern I-215 beltway along Revere and North 5th Street. Please describe the retail leasing activity in your area. • Retail continues to be strong within the Las Vegas market with less than 3 percent vacancy and most major new developments being pre-leased before they ever break ground. The fact is the residential growth is still outpacing the speed at which developers can bring new retail to the market. What major leases have been closed recently? • Recent market commitments include Kohl’s closing escrow and commencing construction at North 5th Street and Deer Springs, Tesco’s Fresh & Easy and Office Depot finalizing their leases at redevelopment project at Tropicana & Jones, Stein Mart finalizing its first lease in over 5 years at Shadow Mountain Marketplace and Lowe’s Home Improvement Warehouse is in the final stages of finalizing their newest planned location in northwest Las Vegas. Please give a measure of retail vacancy rates and a measure of available sublease space. • Las Vegas now has over 46 million square feet of retail and still benefits from a very low overall vacancy rate that hovers around 3 percent, depending on the submarket. Even the older areas of the market are benefiting from second and third generation tenant absorption and/or redevelopment of stale product. What types of retailers should look into your market in the coming year? What type of retail is needed? • Las Vegas has most of the major national players but is really lacking in boutique and/or niche retailers and restaurants. More diversity is needed in all quadrants in order to make neighborhood shopping more inviting and unique to that particular area of town. Every neighborhood deserves a sense of place for the residents that choose to live there. Would you like to make any additional observations about the retail market in your area? • The rapid escalation of the lease rates in Las Vegas is causing serious concern among many of the national retailers, particularly in the outlying, new growth areas where the current residential density does not justify the asking rates.

Las Vegas Industrial Toft Submitted by Garrett Toft, senior associate with the Las Vegas office of Voit Commercial Brokerage. Posted 08/24/07. What area is your expertise? • I specialize in the Greater Las Vegas Valley. What trends do you see presently in industrial development in your area? • We are seeing a number of larger speculative industrial buildings being developed and marketed for sale. The for-sale product achieves a premium return over leasing product and therefore enables developers to make financial sense of new development on our ever-increasing industrial land prices. What type of industrial product is doing well in your area? • All industrial product in the Las Vegas market is very strong due to the lack of available product, steady and strong demand and high land prices, which create a barrier to new speculative development. Who are the active industrial developers in your area? • Panatonni Development Co., DP Partners, ProLogis, Thomas & Mack Development Group and Harsch Investment Properties are all active in our area. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • The Northern Beltway Industrial Center, developed by Thomas & Mack Development Group, is a 200-acre master planned industrial park that will be 1.9 million square feet upon completion. This development is the first speculative distribution product being developed in the Speedway submarket in North Las Vegas. The Speedway submarket is one of the last areas (with infrastructure) in the greater Las Vegas Valley where large-scale industrial development can occur. Currently, there is a 189,000-square-foot rear loader and a 235,000-square-foot cross-dock facility under construction. These buildings will be complete by third quarter 2007, and subsequent phases will follow shortly thereafter. This park is also one of the very few developments that can accommodate a large-scale build-to-suit in Las Vegas. Where is the majority of development taking place? Why is this area doing well? • The majority of new development is taking place in North Las Vegas, due to the comparatively low land prices compared with other areas of Las Vegas. Industrial land prices in the southwest submarket (west of the Strip) are more than $1 million-per-acre and there is virtually no developable land in the airport submarket. Henderson is also supply constrained and cost prohibitive. North Las Vegas is the only place to go for the foreseeable future. Please describe the industrial leasing activity in your area. • Leasing activity is strong, rental rates continue to increase, absorption is strong and we have limited new supply coming online. It is very much a landlord’s market, with a 3 to 4 percent vacancy rate valley-wide. Please describe the industrial sales activity in your area. • Sales activity is also strong. While sales are not as strong as they were 1 to 2 years ago, we have seen 100 percent appreciation on industrial buildings within that timeframe in several submarkets. Naturally, activity will slow slightly. Please give a measure of industrial vacancy rates and a measure of available sublease space. Industrial vacancy rates vary from 3 to 4 percent across all submarkets and product types. We currently have an industrial base of 92 million square feet. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Interest rates are still historically low. Unless the Federal Reserve implements a drastic rate-hike or a number of rate-hikes in the next year I do not see the user-sale market slowing from its current pace. Investment sales, with already low market cap rates 6 to 7 percent, will become increasingly difficult to pencil. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • Las Vegas is in the midst of the largest Strip construction boom that it has ever witnessed. There are a number of support businesses that must grow in order to meet the demand that all of the new development along the Strip will bring.

Las Vegas Office Submitted by Brad Peterson, SIOR, senior vice president; Randy Broadhead, SIOR, senior vice president; Darren Lemmon, vice president; and Jayne Cayton, senior associate, with the Las Vegas office of CB Richard Ellis. Posted 12-21-05. What area is your expertise? • Las Vegas, Nevada - Office Market What trends do you see presently in office development in your area? • With the dramatic increase in land prices and construction costs, rents are expected to rise over the next year by 10 percent to 20 percent. Who are the active office developers in your area? • Currently, the most active office developers in the Las Vegas market are American Nevada Company, Centra, EJM Development, and Thomas & Mack Companies. Please name one or two significant office developments in your area. What impact will these projects have on the market? • EJM Development and Thomas & Mack Companies are developing along the Beltway. Both will build more than 1 million square feet over the next 5 years and this will have a positive impact on absorption over that period of time. Where is the majority of development taking place? Why is this area doing well? • The majority of the new office development in Las Vegas is occurring along the new I-215 freeway, stretching from the southeast part of the valley to the northwest. As construction nears completion on this new freeway, this will be the first time that Las Vegas has an easy and convenient way to travel from the west side of town to the east side. This corridor is attractive to users because more employees and clients on either side of the valley can access these locations much quicker than before. The I-215 also provides easy access to the airport, which is highly desired by many tenants. • The Green Valley office market, located off the I-215 on the southeast side of town, has had outstanding lease up success in the last 3 years because of its proximity to the airport and being part of a large master-planned community with new services and amenities. • Driving from Green Valley going along the I-215 through the I-15 and up towards Summerlin has also been very attractive because of its centrality to the entire valley. • Summerlin has been very attractive as a location for tenants because of the master-planned environment and the services and amenities that the area has and will have in the future with restaurants and the high-end shopping, including a planned regional mall. What area do you expect to be the next big development market? Why? • The I-215 corridor will continue to be the major corridor for most new office development of significant size in the future because of land availability and access. Another new attractive area where we will see significant development in the future is in the northwest surrounding the I-215/I-95 area. The number of rooftops that are going up in this area are substantial and office buildings in this sector will provide services along the I-215. This area also provides quick access to downtown Las Vegas. • We will also see significant development and future office growth in the downtown area, to take advantage of this area's central location and proximity to the Clark County Courthouse and Regional Justice Center as well as City Hall and County Buildings. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • Most submarkets in the valley are substantially leased, including some of the older established corridors such as West Charleston/West Sahara. The East Flamingo/East Tropicana areas will struggle with occupancy levels, as many buildings are showing their age and with locations that are not close to freeways. Please give a measure of office vacancy rates. Please give a measure of available sublease space. • The third quarter 2005 office vacancy in Las Vegas was 10.88 percent. What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in 2006? • Current interest rates have removed tenants that would typically lease and put them in an owner/user bracket, and some have even become landlords. With that being said, our vacancy rates are low and we have a healthy leasing market. Interest rates will tick up during the next year, having some impact on the owner/user market. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • The current unemployment rate is 4.2 percent. As new employers enter our market, creating employment opportunities, this will reduce our unemployment rates. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in 2006 to absorb a great deal of office space? What areas will be affected? • Although there is not one type of tenant absorbing a majority of office space, over the last few years our market has seen an increase in training and post-secondary schools that have located or expanded in Las Vegas. Also on the rise are service-oriented users such as mortgage, title, and real estate companies, as well as law firms and medical users. These types of users will continue to expand and absorb space in our market as the city continues it's phenomenal growth. Particular areas of our market that have experienced high levels of absorption include the I-215 Beltway corridor as well as the Northwest and Southeast submarkets. Would you like to make any additional observations about the office market in your area? Lease absorption continues to be impacted by the large number of tenants who are pre-leasing buildings. However, our vacancy rates remain quite low at 10.66 percent.

Las Vegas Gaming Submitted by John J. Knott II, senior vice president with The Global Gaming Group in CB Richard Ellis' Las Vegas office. The Las Vegas hotel and gaming industry continues to be vibrant, as record gaming revenues are achieved, occupancy rates remain high, and average daily rates (ADRs) are at peak levels. 2005 was the year of the mega merger for the gaming industry overall. In the spring, MGM MIRAGE acquired Mandalay Bay Resort Group, positioning the company as the leader in Las Vegas market, while Harrah's Entertainment purchased Caesars Entertainment to become the world's largest gaming company. Both companies are headquartered in Las Vegas. Land prices in the Las Vegas resort corridor have continued to rise to record levels, putting further pressure on development density. During the first 10 months of 2005, Las Vegas Strip gaming revenue was $5.01 billion. This compares with $4.47 billion for the first 10 months of 2004, which translates into a 12 percent annual increase in gaming revenue. Every month in 2005 had higher revenue than the same month in 2004. In October, the Strip gaming revenue was up 14.45 percent over October 2004, as the all-time monthly record was achieved at $564 million. Average Las Vegas occupancy rates for 2005 exceeded 92 percent. Through the end of October, ADRs for the overall Las Vegas market were $102.67, up 13 percent for 2004. The ADRs on the Strip are higher. Wynn Las Vegas reported $264 for the third quarter and The Venetian, $203. Good news is likely to continue for the Las Vegas gaming industry at large. Wynn Las Vegas opened on the Strip at the end of April, which allowed the market to grow, and this growth is expected to easily continue through April 2006. Numerous other major gaming developments are in the planning stages, including Phil Ruffin's redevelopment of the New Frontier, Boyd Gaming's redevelopment of the Stardust, Turnberry's redevelopment of the El Rancho, Centex Destination Homes' redevelopment of the Westward Ho and MGM MIRAGE's Project City Center on the Strip. These developments total more than $10 billion of planned investment over an estimated 6 years. Land prices on the Strip are now estimated to range from $15 million to $25 million per acre. In the area surrounding the Strip, land prices range from a low of $4 million to nearly $15 million per acre. These values require property owners and developers to carefully create projects that use the land as intensely as possible while balancing the economic viability of the development. In part, the opportunity to construct high-density residential has pushed land prices to record levels. However, the capital markets are expressing some hesitancy to fund more similar developments until the current slew of product is built and actually absorbed. Future developments, particularly on the Strip, appear to be focused on mixed uses. Hotel and gaming remain the focus; however, retail has become a more important opportunity. Condominium and hotel condominium uses have significant roles as owners try to maximize the development value. Timeshare also offers a significant opportunity. Strip land already is scarce and likely to become more cherished in the future. You read it here first: Strip land will be $80 million per acre by 2020. Freestanding parking structures will no longer be built, as parking will be integrated into the vertical structures. Development intensity will continue to increase with uses that incorporate advertising. In part, the future success for Las Vegas will require the city to remain the entertainment capital of the world while attracting more and more visitors that have the financial wherewithal and desire to spend the money that will be necessary to support the new developments.