Las Vegas land values appear to be near bottom, according to report

The vacant land market in Las Vegas appears to be reaching the bottom of the economic cycle, though the pressing question is how long will it stay there, business advisory firm Applied Analysis said in its third-quarter land report.

Pricing edged up to $212,101 an acre during the quarter after reaching nearly an eight-year low of $187,779 in the previous quarter. It's down nearly 20 percent from $264,040 a year ago.

Excluding resort corridor property, land values have depreciated 77.4 percent from their peak in fourth quarter 2007.

Also, traditional "arm's-length" land transactions outpaced those involving a lender for the second straight quarter. Sales volumes declined significantly to 178 transactions from 348 in the previous quarter and 249 a year ago.

Overall, 454 acres changed hands during the quarter, a 39.1 percent decline from the second quarter and 9.2 percent increase from third quarter 2009.

Demand for raw land in the Las Vegas Valley is limited by excess supply in both the commercial and residential sectors, Applied Analysis principal Brian Gordon said. He's showing 35 million square feet of available commercial space and 16,000 homes on the market.

"The opportunity for new development that pencils out is significantly restricted in today's challenging economic environment," Gordon said. "This will continue to put downward pressure on land values."

Recent transactions are likely being picked up by investors who maintain a longer-run vision and are more willing to ride out the downturn, he said.

The mix of properties transferring deeds plays a key role in average land values, Gordon said. For example, about 44 acres along the Las Vegas Beltway in the southwest submarket transferred with a "trustee's deed upon sale," or foreclosure, at $450,000 an acre.

An estimated 56.6 percent of acreage was sold through traditional transactions during the quarter, indicating there's still a large amount of land entering the market through lender acquisitions, Gordon said. The pricing of bank sales will be a key consideration in coming years, he said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.