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Investor MCA Realty likes what it sees in Las Vegas


Investors love Las Vegas real estate these days, but some investors love the city more than others.

Take MCA Realty of Santa Ana, Calif. Its partners launched the company in 2011 to acquire properties in Las Vegas, Phoenix, Southern California and Austin, Texas.

But Las Vegas has been the company’s biggest investment market by far: It’s home to seven of the 11 properties MCA has bought, including five of the eight projects it’s purchased in 2013 alone.

Principal Tyler Mattox called Las Vegas an “extremely attractive investment market” that lets MCA buy at a big discount relative to replacement cost. That means income yields that other regional markets just don’t offer.

“The fundamentals of the Las Vegas market have not yet fully recovered from the recent downturn, resulting in ongoing competitive pricing,” Mattox said.

MCA most recently took advantage of that competitive pricing to buy Civic Center Corporate Park, an 86,216-square-foot complex at 3848-3908 Civic Center Drive. The $5 million purchase closed in late October.

MCA already owned Arville Business Center, Northpark III, Gowan Business Center and Whitney Ranch Business Center, among others. Its local portfolio has nearly 310,000 square feet of space, and principals have dropped nearly $13 million in 2013 alone to build it.

But Mattox said the market dynamics that have encouraged MCA to invest big in Las Vegas are changing.

“The scuttlebutt on the street when we started two years ago was that the sky was falling, and the city was never going to recover,” Mattox said. “That seems to have changed. Las Vegas today is viewed less as an outlier and a risky market, and more as a market that warrants investment capital.

“We’re already seeing a lot of other capital come in more quickly than we anticipated. And the perception that the worst is over is well-recognized. That wasn’t the case even a year ago.”

How quickly have things turned? Mattox pointed to a 14-year-old industrial property near McCarran International Airport. MCA kicked the tires a year ago on the building that needs a new roof. It had a value of about $11 million then. But by the last week of October, four separate investors had all offered more than $15 million, without asking for any discount for the roof’s condition.

In the long run, Las Vegas has strong fundamentals, Mattox said. California is “regulating itself out of existence for a lot of businesses,” and driving companies to Southern Nevada and other markets, he said. And tourism is at record levels.

“The Strip is such a unique demand generator. People might be spending less, but they’re still coming. That’s never going to stop,” he said.

Still, MCA expects to find good deals here for at least the next 12 to 18 months. That’s because there’s still a big oversupply of industrial space, and it’ll be a while before the market absorbs it all.

“A lot of stuff that was built (in the boom) should never have been built. But there was a lot of available capital back then.

“There’s stuff out there that we wouldn’t buy at any price because it’s not functional product. That has to get sifted through, whether it’s torn down or its use gets changed.”

Colliers International’s Dan Doherty, SIOR, Chris Lane and Jerry Doty represented both MCA and the seller, ATC Realty One LLC, in the Civic Center Corporate Park deal.

■ The local apartment market continues to reel in out-of-state investors willing to pay top dollar for Class A complexes.

Mystic Sands LLC, whose managing members are from Canada, just dropped $28.7 million on the 2-year-old, 252-unit Inspirado at 6885 W. Lone Mountain Road. That’s nearly $114,000 a unit, well above the $65,000-per-door average the market bore in mid-2013.

Coldwell Banker Premier Realty’s Strategic Services Division brokered the deal.

Brian Krueger, senior vice president of the division, said Inspirado appealed to its new owners for its low vacancy, its growing submarket and its location near big employment centers.

Krueger added that upscale apartment communities should benefit from demographic trends, including 20-somethings looking for their first place and declining homeownership rates as the region and nation continue to recover from the housing bust.

Plus, local population growth will help drive new residents into rentals.

It’s not the first time in 2013 that investors paid big for high-end apartments. Griffis Residential of Denver spent more than $41 million to buy the 310-unit Quest Apartments at American Pacific Drive and Stephanie Street in May. The $132,500-per-door price was the highest in the local market since 2008.

And in early October, the Bascom Group of Irvine, Calif., entered the local market when it bought Broadstone Montecito at 9745 Grand Teton Drive for $36.6 million, or nearly $110,000 per unit.

■ Brokers with Colliers International coordinated several sales and leases in the last couple of weeks.

Dan Doherty, SIOR, Chris Lane and Jerry Doty represented ATC Realty LLC in its $950,000 sale of a 19,608-square-foot industrial property at 2410 Gowan Road. Dudziak Murphy LLC bought the property.

David Grant helped CML-NV GMF LLC of Florida sell a retail/office building at 10875 to 10885 S. Eastern Ave. Larry Hawker and Michael Park represented CM Partners LLC of Nevada buy the 10,935-square-foot property. The deal was worth $820,125.

Shears Litho signed a 60-month lease on 26,206 square feet of industrial space at 4133 W. Patrick Lane, inside Promontory Corporate Plaza. Doherty, Lane and Doty represented Shears Litho, while Mike De Lew and Greg Pancirov represented landlord Shemger Enterprises LLC. The lease value was $779,781.

Spencer Pinter represented landlord EJM Arroyo North|Property LLC in its lease of 13,671 industrial square feet to Style Event Design LLC. The property is at 6630 Arroyo Springs St., inside the Arroyo North Business Center. Jessica Beall and Cathy Jones of Sun Commercial Real Estate represented the tenant in the $268,227 deal.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com. Follow @J_Robison1 on Twitter.

 

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