After lagging behind most major markets for some time, Las Vegas’ apartment sector is seeing an acceleration of activity. Vacancy in the third quarter of 2012 stood at 6.8 percent—110 basis points down from where it was one year prior. Meanwhile, asking rents have skyrocketed—as landlords and operators are seeking to cash in on a renewed interest in rentals.
Colliers International reports that effective rents rose an astounding 4.4 percent between the second and third quarters of 2012, and that year-over-year rent growth came in at a whopping 7.2 percent. Average rents in the third quarter stood at $824 per month.
Class A properties performed the best over the past year with a 6.2 percent vacancy rate and average asking rents of $944 per month. Meanwhile, Class B and C properties held an average rate of 7.4 percent and rents of $718 per month.
It is expected that local growth in multifamily will continue over the next two years, with REIS estimating that overall vacancy will fall as low as 5.3 percent by late 2014—only to be halted by a new wave of construction expected to begin in early 2015. Completions for new multifamily projects have been falling steadily since Q4 2011, before which there was virtually no new construction.
The picture for employment in America’s Playground is beginning to look up as well, with 6,300 net jobs created in Southern Nevada over the past year. Colliers reports that the bulk of the new jobs were concentrated in the trade, transportation and utilities sector, while the leisure and hospitality sector also saw minor gains. Overall gaming revenue grew slightly from $7.7 billion to $7.9 billion between 2011 and 2012.
However, perhaps the key factor driving continued growth in Southern Nevada is population growth. Colliers notes that a reset in home prices has made buying a home quite affordable in Southern Nevada, driving an influx of new residents and indicating that both housing sectors stand to gain from improvements in the local economy.
The largest sale by far to take place in Las Vegas in 2012 was the Renaissance Villas, an 840-unit complex that sold for $78.8 million. The most highly valued per-unit, however, was The Willows at Town Center—a 2006-built property with individual apartments priced at $117,000 each.
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