Let’s See What 2022 Has in Store For Us…
So, what do I think 2022 will have in store? I am going to break it down into a few different categories. I will start with some current trends and how they will have an effect on businesses this year, next I will share what is going on in the Las Vegas market, and lastly I will touch on the new “virtual” reality that seems imminent whether we like it or not. Let’s dive into it!
Commercial Real Estate Trends
Food 4 Clout
The word “Foodie” originated in 1980s, but picked up again in 2006 and hasn’t gone away since. Being a Foodie means that you seek out only the best of the best no matter what city you are in, you find it. These types of consumers will go great lengths to find the newest and coolest restaurants that they can brag about to their friends or post all over the internet for some clout.
Now what makes a restaurant sought out? I’m glad you asked. We are seeing chef driven concepts be some of the most successful nationwide. What this means is having a strong food and beverage program combined with over the top build outs while tying in ambiance of the restaurant into the meal, and thus creating an assimilated magical “unique experience” that everyone is chasing. These chefs that are running these restaurants have experience in working at renown restaurants world wide and are able to pull from their management experience in previous jobs while having the creative freedom to let their mind run free on the story they are trying to tell through their dishes and drinks.
Retail-tainment and Omni-Chanel
To follow what I said above, people want something that they can post about and be entertained by. We have seen this trend across different Business to Consumer based businesses and don’t see a sign of this stopping. While there are a lot of interactive museums and other immersive type activities, we are seeing a big change in how traditional retailers are connecting their store fronts to their online stores and are feeding them off of one another to capture as much of the consumers dollars as possible, ie utilizing the omni-channel model. Consumers still want to be able to see the product and try it before they buy it. Some retailers that I think have done a fantastic job at utilizing both e-commerce and brick and mortal storefronts are Nike, Alo, and Casper. These groups have led the way in blending the experience for their customers. It is not necessarily so important to have a ton of physical space anymore but rather more important to have a presence in both digital and physical space when interfering people’s shopping habits. For example, Casper has storefronts at malls now. Do you honestly think people are going to the mall to buy a mattress? Maybe some are but not the majority of the customers they capture. You might be walking by their window and think, hmm that looks interesting and pop your head in. Moments later, you are laying on a bed under a teepee with fluffy clouds around you and lights and music enchanting you. In that moment you might think, wow this is a pretty cool experience and carry on with your day. However, a few days later when you find yourself in a moment of weakness after a bad nights sleep, you will remember that experience and go online to frantically buy a magical Casper mattress that will solve all of your problems. How do I know this? Definitely not based off of a personal experience, but I can understand how this could happen (I am absolutely lying, this was totally me lol). So the point of that story is actually not to focus on my irrational spending habits, BUT to prove that storefronts with an experiential twist can capture an audience in person now too. In addition to selling physical items, retailers can also utilize experiences as a form of marketing to stay relevant and in the minds of consumers.
Remember: Retail isn’t dead, stuffy retail is!
Pads, Pads & More Pads
We are seeing so much activity in pad acquisition and development for retail. Since the pandemic, a lot of the national tenants have revamped their business models and a lot of them are requiring to be out on the street with easy accessibility to their stores and visibility. This has driven up the costs in rent for pad space since now there are multiple users all competing for the same land. For example, convenience stores, drive-thru restaurants, quick lubes, urgent cares, and other retail/office users are all looking at the same spaces. Now what does that mean for existing retail? Shopping centers are still staying pretty full and in-line shop space is doing fine, but we are seeing that space be absorbed by more Mom & Pop type shops. When it comes to building new developments, we are seeing a trend of two to three free-standing buildings fronting the street either kitty-corner or directly across the street from an anchored center. Once again, this demand for drive-thrus and curb side pick up is another ripple effect from COVID-19. However, I do not see this trend going away as people really do like the convenience factor of not having to get out of their cars.
Supply vs Demand
It is no secret that the economy has been all over the place since COVID-19 started impacting the way we all live. The major shock wave that was created from the initial freeze in business as usual is still being felt two years later. The government dumped a ton of money into the economy so that we could use it to stimulate the economy when nothing was going on, however, now a two years later materials are not able to be produced fast enough because people are still not working, and we have reached a point of where inflation is getting out of hand. I know you aren’t probably reading this for an economy lesson, so I will get to the point. Basically, the supply and demand chain is effecting new deals as a lot of developers and tenants are not able to pencil deals anymore due to the rise in construction costs on lumber, steel, and additional materials. It is so bad that some of these items have increased by 200% in cost from just two years ago. Developers are having to go back and increase the rents to justify the prices of construction and the land and tenants are having to rerun numbers and figure out ways to improve their business models to make more money to justify the rents. If they can’t, then there is no deal to be had. How do we fix this? We need people to return to work again and we also need the Consumer Price Index to adjust so that the cost of goods and services balance again. When will that be? Maybe this year? Maybe next year? I’ll circle back with you all when my crystal ball comes in.
What's Happening in Vegas
Exciting New Developments Underway
Hard Rock Casino
Est. Opening: 2024
MGM Sphere
Est. Opening: 2023
Fountainebleau
Est. Opening: 2023
The Loop
Partially Open/Under Construction
Project 63
Est. Opening: 2023
Brightline West
Est. Opening: 2025
UnCommons
Est. Opening: 2022
Durango Station
Est. Opening: 2023
LifeTime Fitness Southwest
Est. Opening: 2023
Vegas Travel Numbers are on the Rise 📈
Air traffic has picked back up and is reproaching 2019 travel numbers. It has been reported that at Las Vegas' Harry Reid airport, TSA screened approximately 18.6 million departing passengers and crew in 2021, making it the fifth busiest airport for TSA security checkpoint screening operations. By comparison, TSA screened 10.4 million departing travelers at the Las Vegas airport in 2020. TSA stated that the 2021 figure represents at 79% increase over 2020 passenger volumes.
Supper Clubs Making a Come Back
Supper Clubs are making a come back and are giving people a glimpse of what Las Vegas was so famously known for in the 40s and 50s. To start, Delilah just opened their supper club at the Wynn and it is close to impossible to get a reservation. Here you don’t know what kind of entertainment is coming, but their main focus is the food, drinks, and ambiance. On the other hand, you have the Mayfair Supper Club at the Bellagio, which is a more traditional show with performances you can anticipate, however, still so much fun. And for a bonus, I am going to throw in a new restaurant put on by the Spiegel Brothers, Superfrico in the Cosmopolitan. While this is technically not a supper club, it is eater-tainment, which is the trend I am trying to hit home right now. All of the above have the same thing in common, you are being entertained and submerged into an experience as you are also indulging in a world class dining experience. It is vivacious, it is fun, and most importantly, you can post it on social media (except that is frowned upon at Delilah’s).
Conventions are Back… Well Sort of.
Las Vegas hosted CES this month in the midst of the COVID-19 Omicron variant outbreak. While attendance was down, we are still seeing people show up and attending conferences. I think this is the year that conferences come back and while attendance might be lighter than usual, it is the start of reengaging in hosting these events. I see this picking up as the year goes on and going back to pre-COVID numbers in 2023.
Lack of Inventory - Las Vegas Land
Recently, the cost of land has gone through the roof in the Las Vegas market. With the rise in demand for needing more space to build residential single family homes, multi-family units, and industrial space, it has turned into quite the bidding war between different product types for what used to be retail land traditionally. Categorically, these uses have not had to compete for the same pieces of land in Las Vegas, but with the recent shift from COVID-19, it has changed things up quite a bit. I think that this will cause for more creative solutions and prototypes to come about, potentially more mixed use projects even though those have not done well in our market in past.
You Didn’t Think I Was Going Leave Out Sports Did You?
Welcoming the Las Vegas A’s: I think we will figure out if this will be happening for sure or not in the beginning of this year. Two spots that have been rumored to be of interest are the Tropicana Resort & Casino and a piece of land over by Sahara Ave & Las Vegas Blvd… Guess we will see!
Top Landing Site for a NBA Expansion Team: Although the NBA is not currently adding an expansion team at this point, it has been said that Las Vegas will be in contention to land a franchise when that time comes.
MLS Coming Soon: While there is still more to figure out on the process and timing of the expansion, Vegas is confirmed to lead the race to land MLS's 30th team.
Vegas Golden Knights - 2022 Stanley Cup Champions: (Maybe this is wishful thinking). As Vegas locals, obviously we are rooting for our team to finally clench the championship trophy once and for all. Even though we have endured a lot of heartbreak with the change in the roster this year, we are still hopeful that the Knights will be able to compete in this years Stanley Cup Final. GO KNIGHTS GO!
The Digital World is Becoming Our [Virtual] Reality
Holy Meta
This concept personally frightens me a bit. I think the metaverse is a slippery slope in allowing people to get fully sucked into a virtual world. I believe that the beauty in life is to be experienced without goggles over your eyes, but who knows, that might just be my opinion. The Metaverse is a place that will allow for others to escape and live an alternate life so much so that you can ever work and make money here. Pretty weird. On the flip side of the coin, this new technology can be utilized for teaching and learning more about subjects in ways we have never seen before. For instance, traveling back in time and understanding history in a “live” format is so unique. Another example in how this could be used for good is for science and learning more about space and technology. It is crazy to me how futuristic things are becoming and it is happening FAST.
Interested in leaning more? Here’s the link to their announcement of what the Metaverse has to offer. https://about.facebook.com/meta/
Cryptocurrency
If your friend, brother, cousin, or son hasn’t tried to convince that they are a self proclaimed trade broker in Cryptocurrency do you live under a rock or are you just lucky? LOL. So, what is cryptocurrency you might ask? Let me try to help explain. Cryptocurrency is a decentralized digital money that is designed to be conveniently used and traded world wide across the internet. Most of you have heard of Bitcoin, which was one of the first to come around in 2008. Over the past few years there have been thousands of new currencies released to the market and even some companies are allowing you to buy goods or services with them. You might be thinking, well how is this backed? It isn’t. Businesses are accepting this currency as form of investment in the future of this being the main format of exchanging money internationally. Will it take off? I think it has to at some point. Do I understand it? Not really. So don't take my word for it. Unless you make millions from reading this, I will take some credit of course.
Beeple Sells NFT for $69 Million
NFTs
Another fun digitally monopolized item. Let’s dive right in. NFT stands for “non-fungible token.” Not sure what that means or why it is important? So, the term “non-fungible” means that something is unique and cannot be replaced by something else. A NFT can be anything digital such as drawings or music for example. Seems silly right? Well, what if I told you this NFT sold for $69 million? Clearly there is a market for this stuff. Not sure where NFTs are going (not anywhere outside of the internet lol), but I think it is definitely something you might want to keep a pulse on.
The Future is Leading Us to Be Present
I will leave you with a sliver of optimism with all of this overwhelming digital information. Something that I have picked up through social media is that people are leaning more away from super edited and staged feeds. People are seeking more wholesome content and it is refreshing. For instance:
Instagram “photo dump” showing fun authentic shots that are real raw photos from your camera roll that can be a compilation of pictures from the a trip, a fun weekend, or literally anything you want.
Disposable cameras are back. I personally love using these. It’s an in the moment shot that you can’t recreate which makes the pictures very special and cherished to individuals.
Some people may not love this, but to me TikTok is a place where people can express themselves authentically. It is all short videos of people dancing, making funny videos, or reviewing products. I like how it connects you to what you have interests in and honestly I like that it shows people being people. Of course as more businesses pick up on how popular this platform is, it will also start to go through an over saturation phase like instagram, but hopefully not too bad.
Like any new year, there are things that come with us from the previous years and then there are new and exciting things to come as well. This year I hope you all enjoy the ride and make the most out of 2022!
Cheers!