LAS VEGAS, NV - A souring economy, rising unemployment, and a housing downturn are negatively affecting Southern Nevada's apartment market. The valley reported flattened rent growth in the first quarter, along with rising vacancies, says Applied Analysis, a Las Vegas-based financial consultancy. Valleywide vacancies were 7.3 percent in the first quarter, same as the previous quarter, and 1.4 percent higher than a year ago, Applied Analysis adds.
Rents, meanwhile, have stayed flat at about $888 a month (99 cents per square foot) during the last six months. The southwest submarket commanded the highest rents at $1,016 a month; the northeast had the lowest at $771 a month. The north submarket had the strongest annual rent growth at 5.3 percent; the central/east submarket was poorest at a negative 0.4 percent.
"While current conditions remain somewhat challenging, the apartment sector is anticipated to experience a supply shortage during the next several years," Applied Analysis principal Brian Gordon said. "More dramatic demand for housing is possible starting in 2010, depending on the performance of land prices, construction costs and other factors."
While 319 units were absorbed in 2007, marking the fourth consecutive year of decline, the market's softening became evident in the first quarter with 1,678 move-outs, reports Hendricks & Partners, a national multifamily real estate specialist. And things could worsen in the future with 1,300 nonfarm jobs lost during the last 12 months, and a glut of new inventory, totaling some 2,725 units that came on line last year.
"Apartment properties will continue to face significant competition in 2008 from condo and single-family rentals," said Carl Sims of Hendricks & Partners. "The average apartment vacancy rate will remain elevated and is expected to settle at 7.5 percent by year-end, while in 2009, stronger employment growth and an absence of new apartment deliveries will help drive the average vacancy rate down to 6.3 percent. Average rent growth will range from 2 percent to 2.5 percent over this period."
Source: Las Vegas Business Press