Uptick seen in local commercial real estate

Commercial real estate investment and leasing activity in Las Vegas has increased from a year ago, though the market is still dominated by lender-owned properties, a panel of commercial brokers said Friday.

It has taken lenders a couple of years to "get their arms around pricing" because everyone was stunned by how far prices had dropped, Cathy Jones of Sun Commercial said at a panel discussion presented by Commercial Alliance Las Vegas at the Gold Coast.

The most significant difference between today's market and what it was in late 2008 is the amount of lender-owned transactions, Jones said. She said she had a traditional sale a couple of months ago and initially wondered if she still remembered how to do them.

Mike Montandon, former North Las Vegas mayor and now managing director of Voit Real Estate Services, said commercial brokers have had to change the way they sell properties as the market went through its cycle.

"Just two years ago, someone would ask, 'What do you specialize in?' You'd say, 'Distressed assets.' That covers everything. Now, in the last six months, you have to be specialized, either retail or industrial," he said.

Montandon, who comes from a background in real estate appraisal and construction management, said commercial prices appear to be bouncing along the bottom in all sectors.

Commercial brokers may have felt their livelihood was threatened by an auction earlier this year by LNR Partners, with another one scheduled in October to dispose of commercial assets held by the Federal Deposit Insurance Corp., Montandon said.

"It did have an effect. I think they sold 60 percent to 70 percent of the notes, but more interesting is they haven't done it again and some of those properties that didn't sell are back on the market," he said.

Montandon mentioned that most of the auction sales were nonperforming notes, which is different than buying the actual property, so it does make a difference in pricing. However, the last bid at auction definitely sets the "comp" for pricing, even though the marketing period is shortened, he said.

Auction sales usually have some kind of contingency that must be factored into pricing comps, said Hayim Mizrachi, managing director of NAI Global Las Vegas. A sale at auction is a little different than one on the open market, he said.

Mizrachi said he's talking to clients who will buy office condos in Las Vegas at $90 a square foot because they know they can sell it at $120 a square foot.

Jones said most sales at auction have to close in 30 days, so they're usually cash deals. That takes people who need financing out of the bidding equation, she said.

Some agents won't do bank-owned transactions because of "broker fatigue," Mizrachi said.

"They're going from the borrower to an asset manager to who knows where -- a black hole sometimes," he said of distressed properties.