V Q VEGAS QUARTERLY LAS. The most successful and innovative brokerage working for you Q1/10.

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1 L LAS VEGAS QUARTERLY Q1/10 V Q Photo by Chris Poese 2009 Colliers Las Vegas The most successful and innovative brokerage working for you Colliers Las Vegas First Quarter

2 LAS Glossary Industrial Definitions Incubator: 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. VEGAS QUARTERLY Office Definitions Class 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 Definitions Community 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 Definitions Vacant 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 This report and other research materials may be found on our website at 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 I nfo r m a t i o n co n t a i n e d h e r e i n ha s b e e n o b t a i n e d f r o m s o u r ce s d e e m e d r e lia b l e a n d n o r e p r e s e n t a t i o n is m a d e a s to t h e a ccu r a c y t h e r e of. C o lli e r s N ev a d a, L LC d b a C o lli e r s I n t e r na t i o na l is a n i n d e p e n d e n t l y ow n e d a n d o p e r a t e d b u s i n e s s a n d a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 294 Industrials throughout more than 61 countries worldwide. LVQ Q1/10

3 Colliers Las Vegas First Quarter 2010 John M. Stater Research Manager Mike Mixer Managing Partner Chris Poese Graphic Artist Colliers International 3960 Howard Hughes Parkway Suite 150 Las Vegas, NV United States P: F: Contents Economic Review... 4 John M. Stater While the national economy continues to show signs of economic recovery, Southern Nevada economy remains essentially flat. Industrial Review... 8 John M. Stater The condition of Southern Nevada s industrial market is improving slowly. Office Review John M. Stater 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 Retail Review John M. Stater 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. Land Review John M. Stater There 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. 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 3

4 LAS VEGAS QUARTERLY Economic Review 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 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 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 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 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 The driver s license count showed the number of new residents down by 12.2% between February 2010 and February National economic recovery, coupled with the continued recession locally, should keep Southern Nevada s population on the decline through 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-overyear visitor volume grew by 2.4%. Most other Las Vegas MSA Gaming Rev $12,000,000,000 $10,000,000,000 $8,000,000,000 $6,000,000,000 $4,000,000,000 $2,000,000,000 $0 Las Vegas MSA Employment Las Vegas MSA Employment 1,000, , , , , , , , , ,000 0 Las Vegas MSA Visitor Volume Las Vegas MSA Visitor Volume 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 Las Vegas MSA Gaming Revenue YTD YTD YTD LVQ Q1/10

5 Colliers Las Vegas First Quarter 2010 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 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 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 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 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 Index Ultimately, 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 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 $ M $ M Taxable Sales YTD* $7.166 B $8.208 B Residential Permits** Commercial Permits** New Home Sales Existing Home Sales 3,111 2,536 * December 2009 / December 2008 ** February 2010 / February 2009 Source: The Center for Business & Economic Research, UNLV 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 5

6 LAS VEGAS QUARTERLY 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 R&D/Flex Incubator Light Industrial Light DistribuKon Harehouse/DistribuKon Neighborhood Center Community Center Power Center Medical Office Class C Professional Class B Professional Class A Professional Distressed Square Footage By Product Type 62, ,000 Q4 09 Q , , , ,000 49, , , , , ,000 1,194,000 1,229,000 1,017,000 1,027, , ,000 1,217,000 1,496, , , , , , , , ,000 1,000,000 1,200,000 1,400,000 1,600,000 LVQ Q1/10

7 Colliers Las Vegas First Quarter 2010 Employment growth (Year over Year) Employment Growth (Year Over Year) Retail 5,200 Health Care & Social Assistance 1,700 Professional & Business Services =inancial Ac0vi0es Wholesale 6ransporta0on & Warehousing Manufacturing Construc0on 20, , ,400 1,600 25,000 20,000 15,000 10,000 5, ,000 Commercial Real Estate Recovery Index 110 Commercial Real Estate Recovery Index 2006 = Jan 2005 Feb 2005 Mar 2005 Apr 2005 May 2005 Jun 2005 Jul 2005 Aug 2005 Sep 2005 Oct 2005 Nov 2005 Dec 2005 Jan 2006 Feb 2006 Mar 2006 Apr 2006 May 2006 Jun 2006 Jul 2006 Aug 2006 Sep 2006 Oct 2006 Nov 2006 Dec 2006 Jan 2007 Feb 2007 Mar 2007 Apr 2007 May 2007 Jun 2007 Jul 2007 Aug 2007 Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Dec 2009 Jan offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 7

8 Industrial LAS VEGAS QUARTERLY NORT H LAS VEGAS NORTHWEST EAST LAS VEGAS WEST CENTRAL AIRPORT SOUTHWEST HENDERSON Market Indicators Vacancy Net Absorption Construction Rental Rate Q1-10 Q Projected 1 Forward supply is a combination of space presently under construction in a quarter and space planned to begin construction within the next 4 quarters. Industrial Review 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-overyear 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 Photo by Chris Poese 2009 Colliers Las Vegas 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 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 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 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 LVQ Q1/10

9 feet in the first quarter of 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 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 Year-over-year vacancy increased for three quarters during the mini-recession of , with the first Colliers Las Vegas First Quarter 2010 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 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 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 Current inflation-adjusted asking rental rates are almost equal to what they were in the third quarter of 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 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% % Asking Rent (PSF, NNN) $0.59 $0.61 $ % % Net Absorption (SF) -497, , , % % New Completions (SF) 0 495, , % % 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 9

10 Industrial LAS VEGAS QUARTERLY 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. 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 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 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 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, ,200-28,300 Source: Nevada Department of Employment, Training and Rehabilitation. 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 Regional Warehouse / Distribution Market Las Vegas, NV Phoenix, AZ Inland Empire, CA Reno, NV Asking Rent (Q4-09) $0.47 psf NNN $0.53 psf NNN $0.32 psf NNN $0.31 psf NNN LVQ Q1/10

11 Colliers Las Vegas First Quarter 2010 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 sublease 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 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 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 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 Q W Post Rd Light Industrial Southwest 50,000 SF BTS Q 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% Q offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 11

12 Industrial LAS VEGAS QUARTERLY 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 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 Y O Y Vacancy Change 6.0% 5.0% 4.0% 3.0% 3.1% 2.7% 2.6% 3.8% 4.8% 4.2% 4.2% 4.0% 3.5% 4.3% 3.8% 2.0% 2.1% 1.8% 1.6% 1.4% 1.4% 1.8% 1.6% 1.6% 2.1% 1.0% 0.2% 0.7% 0.6% 0.0% 1.0% 2.0% 3.0% 1.6% 1.1% 0.1% 0.9% 1.5% 2.2% 2.2% 2.5% 1.8% 0.1% 4.0% 3.5% 3.2% 3.5% 3.9% 5.0% 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 LVQ Q1/10

13 Colliers Las Vegas First Quarter 2010 OCCUPANCY vs Industrial EMPLOYMENT 170, , , % 88.8% 87.6% 91.0% 90.0% 89.0% 88.0% 140, % 87.0% 130, , , , % 85.0% 161, , , , , ,900 4 Q Q Q Q Q Q % 85.0% 84.0% 83.0% 82.0% Industrial Jobs Occupancy Rate HISTORICAL NET ABSORPTION VS COMPLETIONS 1,000, , , , , , , , ,000 1,000,000 1,200,000 41, , , , , , ,529 1,016, , , , Q Q Q Q Q Q 2010 / :5;7< offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 13

14 Industrial VACANCY VS RENTAL RATE 16.0% 14.0% 12.0% $0.76 $0.76 $0.71 $0.66 $0.61 $0.59 $0.80 $0.70 $ % $ % $ % $ % $ % 0.0% 10.3% 11.2% 12.4% 13.4% 14.5% 15.0% 4 Q Q Q Q Q Q 2010 $0.10 $ Vacancy Asking 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 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 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 months 84,397 sf $0.52 NNN Warehouse/Distribution Wigwam Jones Industrial Park Jan months 9,401 sf $0.56 MG Light Distribution Procyon Avenue Business Center Feb months 7,967 sf $0.53 NNN Light Industrial West Harmon Business Park Feb months 2,788 sf $0.52 NNN R&D/Flex Ali Baba Commerce Center Jan 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, ,594 sf $ 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 $ Light Industrial H bizctr Whitney Mesa Jan 2010 $645,930 7,177 sf $90.00 R&D/Flex LVQ Q1/10

15 Colliers Las Vegas First Quarter 2010 Industrial MARKET STATISTICS First Quarter 2010 EXISTING PROPERTIES DIRECT VACANCY SUBLEASE VACANCY total VACANCY NET ABSORPTION SF u/c and PROPOSED SF avg RENTS total Vacancy Type Bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate Rate Sq Ft Previous Q SUB MARKETS Completed Current YTD This Qtr Period Sq Ft Completed Under Rate YTD Constr Airport Submarket WH 76 4,667, , % 45, % 434, % 16.9% 355, , ,936 $0.57 LD 67 2,969, , % 31, % 695, % 21.8% (49,570) (49,570) ,992 $0.57 LI 199 2,864, , % 8, % 320, % 10.8% (22,184) (22,184) $0.76 INC 91 1,750, , % 6, % 280, % 16.9% 13,970 13, $0.79 FLX 66 1,308, , % 17, % 411, % 32.2% 8,753 8, $0.90 Total ,560,196 2,033, % 109, % 2,143, % 18.2% 306, , ,928 $0.69 East Las Vegas Submarket WH 24 1,022, , % 0 0.0% 100, % 0.0% (100,080) (100,080) $0.70 LD ,819 35, % 0 0.0% 35, % 11.0% 3,827 3, $0.47 LI 93 1,152,384 52, % 6, % 59, % 4.0% (13,540) (13,540) $0.44 INC ,623 75, % 0 0.0% 75, % 19.4% (17,751) (17,751) $0.47 FLX 8 142,294 14, % 0 0.0% 14, % 5.6% (6,567) (6,567) $0.57 Total 158 2,968, , % 6, % 284, % 5.1% (134,111) (134,111) $0.55 Henderson Submarket WH 75 6,283, , % 10, % 591, % 10.8% 57,095 57, $0.43 LD 36 1,696, , % 13, % 472, % 26.3% (26,589) (26,589) $0.54 LI 324 3,088, , % 0 0.0% 597, % 20.2% 25,521 25, ,000 $0.72 INC ,976 64, % 4, % 69, % 13.3% (8,618) (8,618) $0.60 FLX 78 1,275, , % 0 0.0% 274, % 22.8% 15,990 15, $1.01 Total ,799,693 1,977, % 28, % 2,005, % 16.4% 63,399 63, ,000 $ North Las Vegas Submarket WH ,748,956 1,940, % 528, % 2,468, % 11.0% (85,957) (85,957) $0.36 LD 168 4,672,500 1,109, % 45, % 1,155, % 21.6% (134,575) (134,575) $0.37 LI 609 6,977,954 1,296, % 35, % 1,332, % 19.0% 5,140 5, ,680 $0.46 INC , , % 0 0.0% 217, % 36.5% (12,630) (12,630) $0.57 FLX , , % 7, % 237, % 28.7% (18,612) (18,612) $0.88 Total 1,032 31,742,414 4,794, % 617, % 5,412, % 15.2% (246,634) (246,634) ,680 $0.42 Northwest Submarket WH 5 224, , % 0 0.0% 132, % 59.1% $0.49 LD 1 50, % 0 0.0% 0 0.0% 0.0% $- LI ,896 52, % 4, % 57, % 20.0% 7,108 7, $1.06 INC 4 99,427 40, % 0 0.0% 40, % 16.7% (24,291) (24,291) $1.09 FLX , , % 0 0.0% 214, % 22.2% (65,453) (65,453) $0.98 Total 82 1,345, , % 4, % 445, % 26.7% (82,636) (82,636) $0.85 Southwest Submarket WH ,559,601 1,344, % 444, % 1,789, % 12.7% (134,036) (134,036) $0.54 LD 184 6,990,703 1,453, % 118, % 1,571, % 21.1% (60,816) (60,816) $0.64 LI 749 9,133,520 1,630, % 20, % 1,650, % 16.0% (184,820) (184,820) ,000 $0.65 INC 120 2,496, , % 9, % 374, % 15.7% 19,691 19, $0.71 FLX 101 1,564, , % 28, % 581, % 34.2% (35,282) (35,282) $1.02 Total 1,289 32,744,293 5,346, % 621, % 5,967, % 16.7% (395,263) (395,263) ,000 $0.66 West Central Submarket WH 63 1,897,447 56, % 0 0.0% 56, % 3.0% $0.51 LD , , % % 114, % 14.3% (32,189) (32,189) $0.55 LI 491 6,656, , % 16, % 606, % 9.9% 64,506 64, $0.53 INC 66 2,462, , % 0 0.0% 379, % 13.7% (41,199) (41,199) $0.76 FLX ,832 34, % 0 0.0% 34, % 15.5% $0.73 Total ,918,008 1,173, % 17, % 1,191, % 9.9% (8,882) (8,882) $0.61 MARKET TOTAL WH ,404,605 4,544, % 1,028, % 5,572, % 11.7% 92,779 92, ,936 $0.45 LD ,414,601 3,835, % 209, % 4,045, % 21.3% (299,912) (299,912) ,992 $0.53 LI 2,482 30,171,049 4,530, % 92, % 4,623, % 14.8% (118,269) (118,269) ,680 $0.60 INC 354 8,126,232 1,416, % 21, % 1,438, % 16.8% (70,828) (70,828) $0.71 FLX 366 5,962,523 1,716, % 53, % 1,769, % 27.9% (101,171) (101,171) $0.96 Total 4, ,079,010 16,044, % 1,405, % 17,449, % 15.4% (497,401) (497,401) ,608 $0.59 Quarterly Comparison and totals Q1-10 4, ,079,010 16,044, % 1,405, % 17,449, % 15.4% (497,401) (497,401) ,608 $0.59 Q4-09 4, ,079,010 15,546, % 996, % 16,542, % 14.2% (815,284) (2,951,893) 495,529 1,790, ,608 $0.61 Q3-09 4, ,583,481 14,236, % 945, % 15,181, % 13.4% (831,975) (2,136,609) 212,270 1,294, ,229 $0.66 Q2-09 4, ,371,211 13,191, % 1,028, % 14,220, % 11.9% (1,016,256) (1,304,634) 342,574 1,082, ,104 $0.71 Q1-09 4, ,028,637 11,833, % 744, % 12,577, % 11.0% (288,378) (288,378) 739, , ,955 $0.76 Q4-08 4, ,288,834 10,804, % 775, % 11,580, % 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. 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 15

16 Office LAS VEGAS QUARTERLY NORTH LAS VEGAS NORTHWEST WEST CENTRAL 15 DOWN TOWN EAST LAS VEGAS 95 SOUTHWEST 215 AIRPORT HENDERSON Market Indicators Vacancy Net Absorption Construction Rental Rate Q1-10 Q Projected Office Review 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 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 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 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 Photo by Chris Poese 2009 Colliers Las Vegas 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 Unemployment in the Las Vegas MSA stood at 13.9 percent in February 2010, up from 10.3 percent in February 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-tosuit 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. LVQ Q1/10

17 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 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 While this was the fourteenth straight quarter of rising vacancy, it was also the fifth straight quarter in which the yearover-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 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 Over the past year, health services, insurance services, legal services and financial services Colliers Las Vegas First Quarter 2010 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 sublease 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 $ % -7.5% Net Absorption (SF) -65, , , % 79.6% New Completions (SF) 87, , % -85.9% 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 17

18 Office LAS VEGAS QUARTERLY 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. 1 Forward supply is a combination of space presently under construction in a quarter and space planned to begin construction within the next 4 quarters. Office Employment Feb 2010 Feb 2009 Change Financial Activities 41,000 43,900-2,900 Professional & Business Services 102, ,600-1,000 Health Care & Social Assistance 63,800 60,900 +2,900 Total 207, ,400-1,000 Source: Nevada Department of Employment, Training and Rehabilitation. quarter of The amount of sublease 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 While sales activity continues to be light, leasing activity in office properties has recovered substantially since hitting bottom in the first quarter of 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 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 LVQ Q1/10

19 Colliers Las Vegas First Quarter 2010 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 Q offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 19

20 Office HISTORICAL NET ABSORPTION VS COMPLETIONS OCCUPANCY vs Office EMPLOYMENT 800, , % 82.0% 600, , , , , , % 78.7% 78.5% 81.0% 80.0% 79.0% 200, , , , , ,581 40, ,683 22, , ,618 34, ,186 65,120 4 Q Q Q Q Q Q 2010 / : , , , , , % 77.4% 210, , , , , ,400 4 Q Q Q Q Q Q 2010 Office Jobs Occupancy Rate 78.0% 77.0% 76.0% 75.0% 23.5% 21.5% 19.5% 17.5% 15.5% 13.5% 11.5% 9.5% 7.5% VACANCY VS RENTAL RATE $2.45 $2.41 $2.40 $2.40 $2.36 $2.35 $2.33 $2.30 $2.27 $2.25 $2.23 $2.20 $ % 20.4% 21.3% 21.5% 22.3% 22.6% $ Q Q Q Q Q Q 2010 Vacancy Asking Rental Rate 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 1,337,000 Average Asking Price/SF $179 $191 $246 Average Cap Rate 9.7% 9.0% 7.6% Space Sold (sf) 45, ,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 months 39,478 sf $2.10 MG Class B Professional Office The Park Business Center Jan months 36,600 sf $1.32 NNN Class B Professional Office Green Valley Corp Center III Jan months 13,949 sf $2.06 FSG Class A Professional Office 630 Trade Center Mar months 12,077 sf $1.35 FSG Class B Professional Office 150 Valley View Mar 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 $ 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 $ Medical Office Quail View Jan 2010 $769,000 5,025 sf $ Class C Professional Office Tarkanian Professional Center Feb 2010 $1,125,000 5,000 sf $ Class B Professional Office LVQ Q1/10

21 Colliers Las Vegas First Quarter 2010 Office MARKET STATISTICS First Quarter 2010 EXISTING PROPERTIES DIRECT VACANCY SUBLEASE VACANCY total VACANCY NET ABSORPTION SF u/c and PROPOSED SF avg RENTS total Type Bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate Sq Ft SUB MARKETS Vacancy Rate Previous Q Current Completed Completed Airport Submarket A 6 644, , % 11, % 440, % 72.8% (42,427) (42,427) $2.99 B 37 1,841, , % 83, % 372, % 15.7% (78,688) (78,688) $2.16 C 252 2,677, , % 28, % 665, % 25.2% 2,286 2, $1.89 Med 9 117,194 12, % 0 0.0% 12, % 2.0% (9,983) (9,983) $1.76 Total 304 5,281,287 1,366, % 123, % 1,490, % 27.1% (128,812) (128,812) $2.29 Downtown Submarket A 4 700,065 34, % 0 0.0% 34, % 7.4% 5,471 5, $2.83 B 22 1,531, , % 19, % 297, % 16.8% (35,249) (35,249) $2.35 C ,511 63, % 0 0.0% 63, % 5.6% (20,348) (20,348) $1.49 Med ,762 51, % 0 0.0% 51, % 8.9% (3,860) (3,860) $2.03 Total 110 3,532, , % 19, % 447, % 11.3% (53,986) (53,986) $2.23 East Las Vegas Submarket A 9 1,351, , % 90, % 303, % 20.2% (17,594) (17,594) $3.05 B 17 1,038, , % 1, % 308, % 27.6% (21,257) (21,257) $1.53 C 96 1,879, , % 0 0.0% 473, % 21.7% (64,699) (64,699) $1.49 Med 58 1,573, , % 1, % 294, % 19.6% 13,946 13, $1.85 Total 180 5,843,570 1,285, % 93, % 1,378, % 21.8% (89,604) (89,604) $1.84 Henderson Submarket A , , % 0 0.0% 273, % 35.3% $3.00 B 65 2,183, , % 32, % 425, % 22.3% 47,198 47, $2.33 C 150 1,572, , % 0 0.0% 399, % 27.4% 29,157 29,157 27,683 27,683 - $1.94 Med 98 1,261, , % 1, % 282, % 22.1% (9,413) (9,413) $2.42 Total 324 5,805,548 1,346, % 34, % 1,380, % 25.4% 66,942 66,942 27,683 27,683 - $2.37 North Las Vegas Submarket A n/a 0 n/a 0 n/a n/a $- B 8 200,796 61, % 0 0.0% 61, % 34.1% $2.46 C ,624 70, % 1, % 71, % 23.3% 35,152 35, $1.76 Med ,385 5, % 0 0.0% 5, % 7.5% 4,239 4, $1.61 Total , , % 1, % 138, % 23.5% 39,391 39, $2.07 Northwest Submarket A 19 1,509, , % 16, % 509, % 33.7% (456) (456) $2.46 B 73 2,508, , % 55, % 739, % 30.9% 35,643 35, $2.40 C 214 2,240, , % 36, % 556, % 24.6% 6,831 6, $2.03 Med 95 2,352, , % % 363, % 16.4% 69,961 69,961 60,000 60,000 - $2.56 Total 401 8,610,923 2,058, % 109, % 2,167, % 25.8% 111, ,979 60,000 60,000 - $2.35 Southwest Submarket A 3 397, , % 0 0.0% 296, % 67.4% (28,774) (28,774) $2.82 B 56 2,338, , % 67, % 710, % 29.9% 9,191 9, $2.54 C 240 2,617, , % 56, % 811, % 32.1% 1,950 1, $2.03 Med 91 1,206, , % 10, % 366, % 30.0% (4,934) (4,934) $2.35 Total 390 6,558,878 2,049, % 134, % 2,184, % 33.1% (22,567) (22,567) $2.36 West Central Submarket A 2 227,624 45, % 9, % 54, % 22.1% 5,094 5, $2.33 B 45 1,622, , % 0 0.0% 144, % 7.8% (18,465) (18,465) $1.94 C 167 2,725, , % 17, % 481, % 19.3% 40,965 40, $1.73 Med , , % 2, % 107, % 11.8% (16,057) (16,057) $1.97 Total 274 5,350, , % 29, % 788, % 14.8% 11,537 11, $1.84 Period YTD This Qtr Sq Ft YTD Under Constr Rate MARKET TOTAL A 54 5,617,610 1,784, % 128, % 1,912, % 33.8% (78,686) (78,686) $2.80 B ,265,973 2,798, % 260, % 3,058, % 22.5% (61,627) (61,627) $2.28 C 1,248 14,938,194 3,381, % 140, % 3,521, % 24.0% 31,294 31,294 27,683 27,683 - $1.86 MED 453 7,947,136 1,466, % 16, % 1,482, % 18.7% 43,899 43,899 60,000 60,000 - $2.27 Total 2,078 41,768,913 9,430, % 545, % 9,975, % 23.8% (65,120) (65,120) 87,683 87,683 - $2.23 Quarterly Comparison and totals Q1-10 2,078 41,768,913 9,430, % 545, % 9,975, % 23.8% (65,120) (65,120) 87,683 87,683 - $2.23 Q4-09 2,075 41,681,230 9,277, % 657, % 9,934, % 23.2% (312,186) (914,060) 0 821,566 - $2.27 Q3-09 2,066 41,681,230 8,965, % 698, % 9,663, % 22.9% (34,833) (601,874) 40, ,566 - $2.33 Q2-09 2,054 41,641,230 8,890, % 650, % 9,541, % 22.0% (247,618) (567,041) 160, , ,364 $2.36 Q1-09 2,031 41,480,649 8,481, % 631, % 9,113, % 20.6% (319,423) (319,423) 620, , ,750 $2.41 Q4-08 1,995 40,859,664 7,541, % 869, % 8,411, % 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. 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 21

22 Retail LAS VEGAS QUARTERLY NOR T H LAS VEGAS NORTHWEST 15 WEST CENTRAL DOWN TOWN UNIVERSITY RESORT EAST CORRIDOR 215 NORTHEAST 95 SOUTHWEST HENDERSON Market Indicators Vacancy Net Absorption Construction Rental Rate Q1-10 Q Projected Retail Review 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 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 Retail employment has declined for two straight quarters, after a small increase in the third quarter of On a year-over-year basis, the pace of retail job losses has been lower than -5.0% since the fourth quarter of 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 Photo by Chris Poese 2009 Colliers Las Vegas 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 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 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, LVQ Q1/10

23 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 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 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 triplenet basis (NNN) between the first quarter of 2010 and the fourth quarter of 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 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 Colliers Las Vegas First Quarter 2010 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 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-Q Y-O-Y Change Vacancy Rate 9.3% 8.4% 7.1% % % Asking Rent (PSF, NNN) $1.72 $1.83 $ % % Net Absorption (SF) -199,221-72, , % % New Completions (SF) 0 130, , % % 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 23

24 Retail LAS VEGAS QUARTERLY 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 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 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 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 For all the challenges facing the retail market, there is the possibility that it will hit bottom in 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 Rents will continue to fall in 2010, but probably at a slower rate than in 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. LVQ Q1/10

25 Colliers Las Vegas First Quarter 2010 HISTORICAL NET ABSORPTION VS COMPLETIONS OCCUPANCY vs Retail EMPLOYMENT 600, , % 95.0% Square Feet 500, , , , , , , , , , , , , , ,000 72, ,000 39, , , Q Q Q Q Q Q ,000 95,000 90,000 85,000 80,000 75, % 92.1% 91.6% 91.2% 90.7% 100,000 91,600 90,900 91,500 90,000 86,500 4 Q Q Q Q Q Q % 93.0% 92.0% 91.0% 90.0% 89.0% 88.0% / :5261 Retail Jobs Occupancy Rate Retail Sales 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% VACANCY VS RENTAL RATE $2.05 $ % 9.3% $ % 8.4% $ % $1.73 $ % 4 Q Q Q Q Q Q 2010 Vacancy Asking Rental Rate $2.10 $2.00 $1.90 $1.80 $1.70 $1.60 $1.50 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 $211 Single 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) Average Asking Price/SF n/a n/a n/a Shopping Center - Investment Sales Space for Sale (sf) 0 163, ,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 months 40,351 sf $0.90 NNN Freestanding Retail Siena Promenade Oct months 6,155 sf $2.57 NNN Strip Center Canyon Lakes Nov months 3,693 sf $2.80 NNN Neighborhood Center Sunrise Mountain Plaza Nov months 3,130 sf $0.87 NNN Community Center Rhodes Ranch Town Center Oct 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 $ Freestanding Retail 5593 Losee Rd Oct 2009 $1,850,000 5,874 sf $63.39 Freestanding Retail * Source: CoStar COMPS 294 offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 25

26 Retail Retail MARKET STATISTICS Fourth Quarter 2009 EXISTING PROPERTIES DIRECT VACANCY SUBLEASE VACANCY total VACANCY NET ABSORPTION SF u/c and PROPOSED SF avg RENTS total Vacancy Completed Current Completed Under Type Bldgs Inventory Sq Ft Rate Sq Ft Rate Sq Ft Rate Rate YTD This Qtr Rate Period YTD Constr Sq Ft Previous Q Sq Ft SUB MARKETS Downtown Submarket PC n/a 0 n/a 0 n/a n/a $- CC 5 684, , % 13, % 186, % 27.5% 1,980 1, $1.07 NC 5 518,070 3, % 0 0.0% 3, % 1.3% 2,746 2, $0.95 Total 10 1,202, , % 13, % 190, % 16.2% 4,726 4, $1.07 Henderson Submarket PC 8 2,896, , % 1, % 330, % 11.3% (3,564) (3,564) $1.57 CC 20 2,825, , % 0 0.0% 349, % 9.5% (83,426) (83,426) $1.50 NC 25 2,797, , % 85, % 332, % 10.8% (30,743) (30,743) $1.88 Total 53 8,518, , % 86, % 1,012, % 10.5% (117,733) (117,733) $1.63 North Las Vegas Submarket PC 2 832, , % 0 0.0% 123, % 13.7% (9,244) (9,244) $2.09 CC 12 2,254, , % 0 0.0% 149, % 6.5% (3,661) (3,661) $1.90 NC 15 1,895, , % 1, % 151, % 6.2% (33,401) (33,401) $2.07 Total 29 4,981, , % 1, % 424, % 7.6% (46,306) (46,306) $2.02 Northeast Submarket PC n/a 0 n/a 0 n/a n/a $- CC 8 1,398,026 71, % 18, % 89, % 5.9% (7,873) (7,873) $1.53 NC 15 1,306, , % 0 0.0% 129, % 9.2% (9,943) (9,943) $1.40 Total 23 2,704, , % 18, % 219, % 7.5% (17,816) (17,816) $1.45 Northwest Submarket PC 7 2,840, ,207 n/a 1,266 n/a 190, % 6.6% (1,604) (1,604) $1.96 CC 17 3,715, , % 0 0.0% 448, % 10.7% (51,824) (51,824) ,360 $2.40 NC 31 3,705, , % 113, % 477, % 11.2% (64,578) (64,578) $1.54 Total 55 10,261,866 1,001, % 115, % 1,116, % 9.7% (118,006) (118,006) ,360 $2.00 Southwest Submarket PC 1 944,314 45, % 0 0.0% 45, % 4.8% $3.17 CC 9 3,216, , % 0 0.0% 169, % 5.5% 6,168 6, $2.05 NC 13 1,623, , % 71, % 225, % 16.4% 41,414 41, $1.90 Total 23 5,783, , % 71, % 441, % 8.4% 47,582 47, $2.12 University East Submarket PC 3 1,210,223 69, % 0 0.0% 69, % 5.5% (28,155) (28,155) $1.59 CC 19 2,761, , % 1, % 241, % 9.0% 6,060 6, $1.35 NC 17 1,950, , % 19, % 215, % 11.0% (1,700) (1,700) $1.64 Total 39 5,921, , % 20, % 526, % 8.9% (23,795) (23,795) $1.50 West Central Submarket PC 3 1,138,224 74, % 0 0.0% 74, % 6.9% 4,530 4, $1.16 CC 15 1,649, , % 2, % 264, % 20.3% 69,527 69, $1.21 NC 16 1,583, , % 0 0.0% 117, % 7.3% (1,930) (1,930) $1.47 Total 34 4,371, , % 2, % 456, % 12.1% 72,127 72, $1.27 MARKET TOTAL PC 24 9,861, , % 2, % 833, % 8.3% (38,037) (38,037) $1.79 CC ,504,513 1,864, % 35, % 1,900, % 9.9% (63,049) (63,049) ,360 $1.70 NC ,380,387 1,362, % 291, % 1,654, % 10.1% (98,135) (98,135) $1.70 Total ,746,722 4,058, % 329, % 4,388, % 9.6% (199,221) (199,221) ,360 $1.72 Quarterly Comparison and totals Q ,746,722 4,058, % 329, % 4,388, % 9.6% (199,221) (199,221) ,360 $1.72 Q ,746,722 3,859, % 357, % 4,217, % 9.2% 39,028 (176,871) 267,342 1,406, ,360 $1.73 Q ,479,380 3,631, % 383, % 4,014, % 8.7% (72,841) (215,899) 130,000 1,139, ,744 $1.83 Q ,349,380 3,428, % 344, % 3,772, % 7.9% 125,108 (143,058) 532,000 1,009, ,080 $1.89 Q ,817,380 3,021, % 358, % 3,379, % 6.1% (268,166) (268,166) 477, ,250 1,961,892 $1.95 Q ,340,130 2,276, % 321, % 2,597, % 5.6% 387,385 1,197, ,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. LVQ Q1/10

27 Colliers Las Vegas First Quarter 2010 Industrial y-o-y Vacancy Change 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 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% 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 Office y-o-y Vacancy Change 8.0% 6.0% 4.0% 2.0% 0.0% 2.0% 4.0% 6.0% 1.5% 0.1% 1.7% 3.1% 3.9% 2.8% 0.5% 1.0% 0.3% 0.2% 0.5% 0.1% Y O Y Vacancy Change 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% 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 Retail y-o-y Vacancy Change 5.0% 4.0% Y O Y Vacancy Change 3.7% 4.1% 3.3% 3.4% 3.0% 2.0% 1.0% 0.0% 1.0% 0.3% 0.9% 1.1% 1.1% 0.9% 0.7% 1.3% 0.9% 0.1% 0.2% 0.7% 0.2% 0.2% 0.3% 0.1% 0.4% 0.6% 0.7% 2.0% 2.2% 2.0% 3.0% 1.6% 2.1% 2.0% 2.2% 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 Q offices in 61 countries on 6 continents $48.1 Billion in Annual Transaction Volume 1.1 Billion SF Managed 12,749 Professionals 27

28 Land LAS VEGAS QUARTERLY NORT H LAS VEGAS NORTHWEST EAST LAS VEGAS WEST CENTRAL AIRPORT SOUTHWEST HENDERSON Market Indicators Residentia Volume Resort Corridor Volume Southwest Volume Q1-10 Q Projected Land Review Residential Land There 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 Bank repossessions in Nevada were down 3% from the previous quarter, but defaults increased 27% and auction sale notices Photo by Chris Poese 2009 Colliers Las Vegas 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 Land Gaming 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 LVQ Q1/10