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Las Vegas land market mostly stabilizing after downturn

Southern Nevada’s land market is bouncing back from the downturn, with sales and prices on the rise.

What that means for you depends on whether you own or need to buy property.

A new report from local research firm Applied Analysis reported 809 sales of land parcels across the Las Vegas Valley, up from 159 purchases in the first quarter of 2012. The number of acres sold jumped from 323 to 578.4, and the price per acre went from $158,927 to $183,813. Some submarkets boomed more than others: The west led the way, at nearly $600,000 per acre.

Still, marketwide prices were only about 20 percent of what they were in 2007, when cost per acre averaged almost $940,000. Plus, sales moderated from the end of 2012 to early 2013. Total parcels sold came in at 2,101 in the fourth quarter, with an average price per acre of $179,950 — not much lower than the first quarter’s going rate.

In short, the local land market has mostly stabilized.

“The vacant land market appears to have moved beyond the trough in the latest cycle, when prices were plummeting and there was relatively little demand for raw land,” said Brian Gordon, a principal of Applied Analysis. “But not unlike housing, we’ve seen increased interest as of late for raw land. Prospective buyers have been willing to edge up pricing in an effort to acquire assets in the Las Vegas Valley.”

So who’s buying? Mostly investors and homebuilders, Gordon said. Investors flooded the market when land prices plummeted, looking for bargains. And builders are running out of new-home supply and need additional land. And they’re willing to pay well above market averages in some neighborhoods: Pardee Homes recently bought two parcels totaling nine acres near Sunset and Fort Apache roads from a Los Angeles investor for $404,814 an acre.

Those prices reflect just how low on inventory builders are, and how much they’re looking to add to their pipeline of land for development one to two years from now, Gordon said.

How this all affects you depends on whether you’re in the market for real estate yourself.

If you’re a business owner looking for commercial property for new space, the latest numbers shouldn’t mean much. That’s because vacancies on existing buildings are still high, so there’s no need to buy land for new projects. Industrial vacancies stood at 17.2 percent in the first quarter, while office vacancies hit a record 26.2 percent, according to Applied Analysis.

For homebuilders, prices haven’t yet proved a deterrent: Without land, they won’t be able to build and sell new homes, so at this point, builders are “willing to ratchet up price points to fill the demand they expect,” Gordon said.

So if you’re in the market for a new home, brace yourself for rising prices in a year or two, because costs for dirt have to filter through to cover the expense of buying parcels.

“Those land prices are going to become concerning when we think about where the housing market is today and where it will be tomorrow,” Gordon said.

And if you hold land you’re thinking about selling, you have to weigh a few factors to know whether it’s the right time. Consider when you bought the land, how much you purchased it for and whether you have the financial wherewithal to continue sitting tight, Gordon said. Think about those factors, but also remember that values “have come off the floor and are going north because of renewed demand,” Gordon added.

Also, everyone should consider that at some point — few experts like to go on the record predicting when — land prices will reach a point where projects won’t make financial sense. Then, prices will stop going up as fewer people buy.

The Applied Analysis numbers didn’t include one big outlier — the $4-million-per-acre sale of Boyd Gaming’s 87.2-acre Echelon site to Genting Group of Malaysia.

Colliers International completed several recent transactions.

• Greg Tassi represented Shelby American in its lease of a 135,000-square-foot industrial space at 6405 Ensworth St. Colliers’ Dan Doherty, SIOR, Chris Lane and Jerry Doty represented the lessor, GKT II and GKT II Acquisitions, in the $4.2 million deal.

• Dan Gluhaich represented Daniel and Cathy Pereya in their $3.1 million purchase of a 26,133-square-foot property at 50 N. Gibson Road in the Gibson-Wigwam Business Center. Mike DeLew, SIOR, and Greg Pancirov, SIOR represented the seller, Gibson Road Trust.

• Crestron Electronics signed a 60-month lease at 3763 Howard Hughes Parkway, in the Hughes Center. Soozi Jones Walker of Commercial Executives represented Crestron. Colliers International’s Tom Stilley, Lizz Stilley, Patti Dillon and Ryan Martin, CCIM, represented property owner Crescent Real Estate Equities. The four brokers also represented Crescent in its Hughes Center lease of 4,708 square feet of space at 3773 Howard Hughes Parkway to AEG LIVE-LV LLC.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.

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