Condo market points down

Potential supply is flattening and market demand is modest in Las Vegas’ luxury condominium market, a local research analyst said.

Potential inventory levels declined for the first time since the condo boom struck Las Vegas in 2003, Brian Gordon, principal of Applied Analysis, a Las Vegas financial consulting firm, said in his first-quarter luxury condo report.

The report showed 4,214 existing units with another 13,409 under construction. Most of those have been sold or reserved. Total units that are built, proposed or canceled exceed 97,000.

Industry insiders are saying that many high-rise condos are being put back on the market for resale and, like single-family detached homes, they’re not selling.

One luxury condo broker said he walked the floors at Metropolis and saw lockboxes on nearly every door. Real-estate agents use lockboxes to access empty homes for showing. He said 70 percent of the units at SoHo Lofts are listed for sale.

"Of course, every project has investors," said Aaron Yashouafar, developer of Sky Las Vegas, which opened this month on the Strip. "Our percentage of investors is substantially less than other projects because we had a hold-back period in the contract from Day One."

Sky Las Vegas owners are restricted from selling for at least six months after buying, he said. About 80 people are making their primary residence at the 409-unit, 45-story building near Circus Circus.

Las Vegas-based SalesTraq reported 213 escrow closings at Sky Las Vegas in April at an average price of $723,480 a unit. About one-third of high-rise closings are showing up for resale the next day on the Multiple Listing Service, SalesTraq President Larry Murphy said.

At the end of the first quarter, an estimated 754 existing luxury units were on the market, Applied Analysis reported. The average asking price was $803,900, or $622 a square foot.

Resale units that were sold during the quarter averaged $764,500, or $537 a square foot.

The mix of properties available continues to determine market-average pricing, Gordon said.

Eric Smith, owner of Corporate Housing by Owner, a Colorado-based company that matches owners of executive homes with potential renters, said: "There’s so many condo owners trying to figure out what to do with their property. They’re on the phone to us all day. It’s a very hot topic."

Smith, who opened an office in Las Vegas this month, said luxury condo rentals fit investors’ goal to hold for long-term appreciation and can save investors from selling at a loss.

"There’s huge demand for corporate housing in Las Vegas, not like San Francisco, but it’s a big market and people want to know what to do with their condo," he said. "If they furnish it, they can turn it into a hotel alternative."

Vertical construction is becoming a more powerful element in the housing market, consultant Steve Bottfeld of Marketing Solutions said. Based on his research, the number of mid- and high-rise condo units closing escrow in 2007 will easily pass last year by 30 percent to 50 percent, probably totaling around 5,000 closings, he said.

Condo presales account for 9.8 percent of the market, while speculative plans call for 56,300 more units, or 57.6 percent of the market, Applied Analysis reported. More than 14,000 units have suspended sales or have been officially canceled.

Buyers at projects such as Krystal Sands, Vegas Grand and Icon filed class action lawsuits against the developer and the next potential lawsuit could involve Spanish View Towers, which has halted construction in the southwestern valley.

"The luxury condominium market continues to evolve and respond to the latest market conditions," Gordon said. "Land owners and developers are dealing with conservative reactions by the investment community and potential buyers in response to recent reports that a supply-demand imbalance is inevitable."

He said the vast majority of units in the construction pipeline have been sold and their total is "exponentially higher" than the present market inventory.

Bruce Hiatt of Luxury Realty Group said: "We still think it’ll take nine to 12 months to absorb the luxury condos coming on the market. Meanwhile prices are escalating. In the future, you’ll never see $600 a square foot again."

Of his 40 clients who bought at Sky, about a dozen are considering renting out their units, he said. Several investors are making their units their second homes.

"People are saying, ‘I’m not sure what to do with it,’" Hiatt said. "One couple from Tucson (Ariz.) bought in Sky and were going to rent it out. Now they’ve put their unit at Metropolis up for sale and they’re going to keep Sky to live in."

The Metropolis condo is listed for $1.6 million, or close to $600 a square foot, he said.

Las Vegas real estate agent Sabrina Porras said she thinks investors will become more receptive to converting their homes to corporate rentals, particularly in today’s market of stagnant home sales. She plans to rent out a client’s condo at Sky for $3,500 a month.

About half of Corporate Housing by Owner’s 34 properties in Las Vegas are high-rise condos.

Porras said owners can expect a minimum net return of $500 a month, providing an avenue for cash flow while waiting out the market slowdown.

ad-high_impact_4
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like