Las Vegas is experiencing a significant influx of California businesses driven by Nevada’s favorable tax environment, according to Jennifer Lehr, Senior Associate at Colliers International, who sees this migration as a key factor in the market’s historically low retail vacancy rates.

The Tax Advantage

“We have a lot of California businesses moving into the valley, because the tax climate in California just is not as beneficial, and there’s zero taxes in terms of income tax in Nevada,” Lehr explains. This tax advantage is creating a competitive edge for Las Vegas in attracting both businesses and investment.

Market Response

The impact of this business migration is evident in the numbers, with retail vacancy rates at historic lows of 5.7%. Lehr notes that the limited construction pipeline, with most new space being pre-leased, is further tightening the market.

For investors looking to capitalize on this trend, Lehr suggests focusing on specific property profiles. “You’re looking for a stabilized asset with a mixture of national tenants and regional and maybe a few mom and pops,” she advises, “because I think the mixture does help bring traffic to the center.”

Competitive Edge Over Other Markets

Las Vegas’s advantages extend beyond just tax policy. “Phoenix and Austin, I don’t believe have the same opportunity in terms of entertainment and dining,” Lehr observes. “We also have the opportunity where you have brands coming in from all over the world.”

However, Lehr notes that institutional investors remain selective, particularly focusing on strip-adjacent locations and properties with proven foot traffic patterns. “They want to see the strength of the foot traffic and make sure that it’s going to be steady before they make an investment into the product,” she explains.