Las Vegas Recovers Select Jobs, Increasing Multifamily Sales
- Feb 01, 2012
Multifamily sales in the Las Vegas metro area increased by 59.6 percent between the third quarters of 2010 and 2011, this in concurrence with the overall unemployment rate dropping from 15.5 percent to 14.2 percent. According to Real Capital Analytics, 4,612 units were sold during the first three quarters of 2011, and the average unit price rose to $51,082 from $43,560 the previous year.
The rise in employment occurred mostly in the services industry, while jobs in finance and construction remained stagnant. Colliers International expects population growth in Southern Nevada to accelerate in order to accommodate a return of employment along the strip, likely rekindling development that was halted by the recession.
According to Colliers International, Class A properties saw vacancy rates rise from Q1 to Q3 of 2011, while Class B and C properties saw these rates decline substantially. As might be expected, the overall decrease in vacancy rates caused asking rates for rentals to increase considerably. The downtown area saw the average asking rate for a one-bedroom apartment rise from $520 to $623. The Henderson and Green Valley area saw these rates jump even higher, from $589 to $736.
Gary Banner, vice president of the multifamily division at Colliers, does not foresee any improvement in the single-family market that might affect trends in multifamily. “I don’t believe houses should be investment property,” Banner says. “They’re not made for that.”
Banner adds that the vacancy rate for single-family homes in today’s market stands at around 50 percent. “Those average rents typically start at about $1,200 a month,” Banner says. “A Class A apartment tops out at about $1,400. For those that do not have school-age children at home, it would be wiser to rent in a market where the housing prices are still falling.”
With respect to multifamily, downtown continues to be the area with the highest renter occupancy rate, coming in at 63 percent in the third quarter of 2011. Banner says that “momentum is building” in downtown, and that this will only continue with the relocation of Zappos.com from Henderson, Nev. to the former City Hall building at Las Vegas Boulevard and Stewart Avenue.
Tony Hsieh, the 37 year-old CEO of the online company, has already leased incubator space for the building, as well as three floors of living space in a high-rise condo for employees. Banner says that the overall employee count will be around 2,000.
“Tony is from the Bay Area and he wants that eclectic feel in the downtown districts of Las Vegas,” Banner adds. “He’s going to input about $350 million into the downtown districts.”
As for 2011, the largest regional multifamily sale was the 341-unit Colonial Grande at Palm Vista, which sold for $41.05 million, or $120,381 per unit. This property was built in 2007, shortly before the onset of the financial crisis, and it remains one of the newest complexes in the metro area.
The monthly driver’s license count in the region rose by 11 percent between July 2010 and 2011, while the residential electric meter count ticked up 1.2 percent during this same period, reinforcing the indication that Southern Nevada is slowly recovering from an exceptionally severe economic downturn.
For more news from Las Vegas, click here.