In Las Vegas, Demand Still Exceeds Deliveries

Steve Nosrat

As we come close to ending the first quarter of 2023, so far multifamily rents in Las Vegas have been holding firm, and vacancy has risen slightly with the fourth quarter ending at 8.3 percent. Current vacancy is hovering around 8.8 percent. This increase is largely due to approximately 1,550 newly developed units coming online in 2023, adding a much-needed infusion of new rental property choices to supplement the influx of renters. In 2022, Las Vegas also experienced a boost in inventory, with the addition of 15 new multifamily buildings totaling 3,154 units. This brought the total amount of new units delivered over the past five years to 18,067.

With interest rates rising, there has been a pullback in the market from investors. As of March 9, there has been just one multifamily property with more than 50 units sold this year. To give some perspective, in 2022 there were 40 transactions with 17 transactions in the second half (over 50 units). In fact, the Las Vegas multifamily market saw its second-highest reported annual value in transactions for 2022, reaching $3.1 billion. So far in 2023, just north of $7 billion of capital has been sitting on the sidelines, waiting for opportunities to deploy with extremely tight inventory.

Las Vegas doesn’t face the same issues as its southwestern counterparts, such as the Phoenix market where there has been a spike in multifamily deliveries. With continued accelerated migration to Nevada from states like California, we are still looking for deliveries to match the demand. We are excited to see new apartment communities in the Southwest coming to market from major players like Calida and Ovation.

Although the unemployment rate in Nevada was high in December, the state is still showing a pattern of recovery from the pandemic. According to the Nevada Department of Employment, Training and Rehabilitation’s (DETR) January 2023 Economic Report, the total number of jobs in Nevada has passed 1.53 million with the addition of jobs as of January 2023. Also, 38.8 million visitors came to Las Vegas in 2022. Convention business continued to bounce back, with nearly five million attendees—up from 2.2 million in 2021. Additionally, Forbes is calling Las Vegas the Best City for Sports Fans, as professional teams continue to be added to the market. With an NFL franchise, an NHL franchise, and a WNBA franchise, the city may be soon hosting a team for all five major sports. Las Vegas will also be hosting the F1 Vegas Grand Prix in November 2023 and is set to host the Super Bowl in 2024.

All this activity and growth bodes well for the Las Vegas multifamily market, and we are confident this sector will see continued demand from both investors and tenants well into the future.

Steve Nosrat is a principal in Avison Young‘s Capital Markets Group specializing in multifamily.