Las Vegas Market Shows Signs of Recovery, Rent Growth in 2010

By Anuradha Kher, Online News EditorLas Vegas–The Las Vegas apartment market will stay in flux during 2009 due to lingering economic stresses, but signs of a recovery are starting to appear, according to the 2009 National Apartment Report by Marcus & Millichap.”We are seeing some of the fundamentals that lead us to believe that there will rent  increases in 2010,” Michael Shaffner, associate vice president of investment at Marcus & Millichap, tells MHN. “Because there isn’t much construction going on now or through 2009, property managers and owners will start shedding off some of the concessions they have been offering and rents will go up on 2010.”John Vorsheck, regional manager of Marcus & Millichap’s Las Vegas office, says, “Fundamentals in the local apartment market are expected to begin stabilizing late in 2009, which may present opportunities for investors waiting on the sidelines for a turnaround.”In addition, the opening of City Center in the third quarter of 2009, “will create 12,000 jobs, injecting much needed adrenalin into the local market,” says Shatner.Even with rent increases predicted for 2010, new construction will be minimal.According to the report, employers in Las Vegas are forecast to cut 7,400 positions in 2009, a 0.8 percent decline. Builders delivered 2,670 apartments to Las Vegas in 2008; and production will slow to 280 units this year. The report finds that the impact of shadow-rental stock will begin to dissipate in 2009, resulting in a 60 basis point uptick in the vacancy rate to 8.9 percent. Last year, vacancy increased 220 basis points.Asking rents are expected to dip 0.2 percent to $873 per month, while effective rents drop 3.2 percent to $804 per month.Value-add plays in North Las Vegas may surface in the coming years, stemming from plans to rehabilitate older neighborhoods along Las Vegas Boulevard North. Nearly $1 billion in gentrification projects are proposed for the 238-acre redevelopment area, the report finds.The report also includes the firm’s annual National Apartment Index (NAI), a snapshot analysis that ranks 43 apartment markets based on a series of 12-month forward-looking supply and demand indicators.Las Vegas moves down two places this year to No. 16. San Francisco retained the top position in this year’s NAI, supported by the strongest effective rent growth in the ranking. San Diego climbed six places to No. 2, due to the lowest vacancy rate of the markets covered. Washington D.C. moved up six places to No. 3. Los Angeles checked in at No. 4, and Seattle moved up three places to claim No. 5. Two Midwestern markets, Minneapolis-St. Paul and Milwaukee, posted the most significant upward moves in the index.