The Las Vegas Housing Market & the Commerical Sector

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The Las Vegas residential real estate market has started 2013 by continuing to ride the momentum of 2012. Glossing over the fact that we are in an artificially inflated market, let’s sound the fanfare for the fact that the Greater Las Vegas Association of Realtors reported that the median sales price of bank-owned single-family homes in December 2012 was $140,000. That's up 33.5 percent from $104,900 a year earlier. The residential market is dominated by short sales, which accounted for a record 46 percent of sales in December, while foreclosures accounted for 10 percent. This article takes a look at some of the most recent news in the commercial sector.

The Las Vegas commercial sector is still in the doldrums:

  • No.1 for Office Vacancy: our office buildings boast the largest percentage of empty space in the country. The Las Vegas Valley had a 25.8 percent office vacancy rate in the quarter ending Dec. 31, down from 26.4 percent a year earlier, according to a report from CBRE. 
  • No.3 for Apartments Vacancy: Vegas apartment complexes had the third-highest vacancy rate in the country last quarter at 9 percent. That's up from 8.6 percent a year ago and above the fourth-quarter national rate of 5 percent. Apartment specialist Jeff Swinger of CB Richard Ellis showed 7.16 percent vacancy for 39,931 Class A units, or premium apartments; 10.51 percent vacancy for 47,970 Class B units; and 13.76 percent vacancy for 30,719 Class C units.
  • No.5 for Retail Vacancy: The retail vacancy was tied for fifth-highest with Cleveland at 16.4 percent retail vacancy in the quarter ending Dec. 31. Apartments complexes 
  • Also, industrial properties had a 14.6 percent vacancy rate, up from 13.7 percent a year earlier and above the national average of 12.8 percent.
  • Las Vegas saw more than $120 million in commercial loans go into default in November 2012

Some big deals showed that the market has signs of life:

  • In a nearly $300 million deal, Las Vegas developer Terri Sturm has sold six shopping centers to an Illinois real estate giant. Inland Diversified Real Estate Trust acquired a majority stake in the centers, which total 1.7 million square feet, from Sturm’s Territory Inc. The properties include the 525,000-square-foot Eastern Beltway Center at Eastern Avenue and the 215 Beltway, and the 860,000-square-foot Centennial Center near the U.S. 95-beltway interchange in northwest Las Vegas. The $296.3 million bulk sale, recorded Dec. 28, might be the largest real estate deal in Las Vegas in years.
  • Patrick Sauter of NAI Sauter Cos. negotiated the sale of the 840-unit Renaissance Villas apartments at 5419 W. Tropicana Ave. for $74.8 million, the largest multifamily property sale in Las Vegas since 2007. The Class B property was built in 1989 and was 95 percent occupied.
  • CityCenter, MGM Resorts International's 67-acre Strip megaresort, sold 427 condo units at Veer Towers for $119 million. The bulk sale shows an interest in the Las Vegas condo-hotel market by private equity investors, in this case Lexin Capital of New York. The transaction is estimated at an average sales price of $300 a square foot.
  • Penta Building Group has begun construction of the United Brotherhood of Carpenters International Training Center at 6801 Placid St. in Las Vegas. The two-story, 222,000-square-foot center will be built with more than 50 tiltup steel and concrete panels, the largest panel weighing more than 259,000 pounds and standing 52 feet tall.Penta is also building the 20-story Grandview time-share tower near South Point on Las Vegas Boulevard; Zappos headquarters in downtown Las Vegas; and a new showroom at The Cosmopolitan of Las Vegas. All of those projects are $40 million or more.
  • Tony Hsieh, CEO of Zappos, has been making waves in Las Vegas lately by going on a mini real estate buying spree in a concentrated area of Downtown Las Vegas. Hsieh founded and has provided the bulk of funding for the Downtown Project, a $350 million vision aimed at attracting business and growth to Downtown Las Vegas. Andrew Donner of Resort Gaming Group is Hsieh's chief real estate deal-maker and has recently purchased 14 downtown parcels totaling around $45 million.

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Thank you for reading.

Philip Gusterson

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