Why Las Vegas Multifamily Is On a Roll
Strong demand has continued amid the pandemic and a difficult local economy, according to Steve Nosrat of Avison Young.
While the pandemic hit Las Vegas’ economy hard, its multifamily market has remained strong through 2021. High in-migration means that demand for multifamily housing has increased and occupancy is high across the city. Rental rates are up, and vacancy is at a record low of just 2 percent. The multifamily market is strong and trending positively, with more growth predicted for the remainder of the year.
The current average cap rate in Las Vegas is between 4.25 percent and 4.62 percent, according to Yardi Matrix data, and average rents have climbed to $1,662, up significantly from the first-quarter average of $1,198—a 22.7 percent increase year over year. It is predicted that Las Vegas’ rental growth will be one of the highest in the country for 2021. According to Zillow estimates, had we continued with pre-pandemic rent growth, we’d be around $1,452 per month.
To meet the demand of our rapidly growing population, properties are being added constantly. As of March, Yardi Matrix shows 6,410 units under development in Las Vegas, and developers are actively working on new proposed properties to add to the growing market. With these numbers, the multifamily market in Las Vegas is robust and promises to continue to provide excellent investment opportunities. A few of these projects include:
- Decatur Commons, 480 units (Expected August 2022)
- Elysian at Centennial Hills, 306 units (Expected January 2022)
- Elysian at Tivoli, 359 units (Expected September 2021)
- Auric at Symphony Park, 324 units (Expected November 2021)
- Parc Haven, 290 units (Expected October 2021)
- UnCommons, 850 units (Expected early 2022)
Of the 98 markets ranked by Yardi Matrix, Las Vegas was No. 1 in employment growth, and No. 7 in rent growth. We’ve also seen an increase in renters choosing to rent for lifestyle, as opposed to renting by necessity, with lifestyle renters increasingly surpassing necessity renters.
In the last year, Las Vegas has seen $2.17 billion in sales, ranking 16th among the 98 markets surveyed nationally by Yardi. Out of the 57 multifamily properties sold, the highest priced sale of the past three months was Tuscan Highlands, a 304-unit luxury apartment complex boasting world-class amenities and securing a record-breaking per-unit price of $378,289.
With thousands of jobs restored as pandemic restrictions are eased, and Nevada reopening businesses at 100 percent for the first time in over a year, the job market is currently strong and unemployment is down below pre-pandemic rates. Additionally, with new properties opening like Resorts World, Circa, and the Raiders Stadium, the job market is not only strong, but quickly expanding and fueling the ongoing growth in Las Vegas, creating a perfect environment for sustainable future growth that can help Las Vegas continue to be one of the strongest markets in the country for years to come.
Las Vegas has proven to be a strong, adaptable, and robust market for multifamily properties, and continues to add value to residents and businesses alike, ensuring a bright future for the city and expansion into exciting new markets.
Steve Nosrat is principal of Capital Markets Group at Avison Young.