US Capital Wealth Management just published their market insights for September 22, 2017. Featured in the article is the Las Vegas convention and visitor attendance is the best it has ever been. This is a great sign for our economy and our community. See below for a preview and the PDF link to download the full report.
September 22, 2017
Good Times in Vegas, on the Road and at Home Signal Economic Expansion
When times are good, people go to Vegas. Since the recession in 2008, Las Vegas convention attendance has climbed to new highs. At the current pace, convention attendance and overall Vegas visitation will set new records in 2017.
People loved Vegas in the 1980s and 1990s. While convention traffic continued to grow through the 2001 – 2002 NASDAQ melt-down, overall visitation to Vegas declined. Both convention activity and overall visitation to Vegas declined during the 2007-2009 Great Recession. Since 2009, visitation to Vegas is signaling economic expansion
Nationally, hotel occupancy is running about the same pace as it did in 2015 and 2016, the two best years on record. In the last recession, hotel occupancy was roughly 20% below current levels for all of 2009. Hotel occupancy looks good.
The National Restaurant Association created the Restaurant Performance Index (RPI) in 2002. It is a monthly composite index that tracks the health and the outlook for the U.S. restaurant industry. The index includes metrics like same-store sales and labor and capital expenditures. The RPI shows expansion.
Click on link below to see this commentary as a PDF:
PDF Version of newsletter: Good Times in Vegas, on the Road and at Home Signal Economic Expansion
Gary Banner CCIM, Sr. Market Analyst for TRU Development received a special invite to attend the Annual Affordable Housing Conference hosted by Cohn Reznick at the Mandarin Hotel in Las Vegas, Nevada. The objective of this conference was to outline how affordable housing gets built. The “Low Income Housing Tax Credit” (LIHTC) was explained in masterly detail over the course of this three-day conference. TRU Development believes in affordable housing and is seeking to incorporate these incentives into our future development projects. Contact our office today at 702-545-0355 and ask for Kelly Kwasniewski to connect with our staff and learn more about our projects.
There are no signs of the Las Vegas valley slowing down. With all the buzz of professional sports teams moving to Las Vegas and the continuum of the Downtown Las Vegas Revitalization, Las Vegas is slowly coming into its own.
A new project called “The Edge” was just approved by Clark County commissioners in a 7-0 vote. This project is situated on 130 acres located on the southeast corner of Las Vegas Boulevard and Sunset Road and features a 15-story hotel, white water rapids, indoor mountain biking and much more. CLICK HERE to read the full article By Eli Segall Las Vegas Review-Journal.
TRU Development stays on the fore front of all breaking new project and community initiatives her in Las Vegas, California and Hawaii. To learn more about our market research and investment opportunities call our office today 702-545-0355 and ask for Kelly Kwasniewski.
There was a great article in the Las Vegas Review Journal on August 22, 2017 By: Madelyn Reese that supports all the activity around our new project Kaktus Life III. David J Tina, president of the Greater Las Vegas Association of Realtors provided additional commentary regarding the demand of this now booming location.
CLICK HERE to preview the full article in the Las Vegas Review Journal.
KAKTUS LIFE III is a mixed-use development opportunity with 608 multifamily residential units and 5,000 square feet of retail situated on 16.93 acres. For more information about this project and others presented by TRU Development please CONTACT Kelly Kwasniewski at 702-545-0355 today to learn about investment opportunities.
CLICK HERE to download the full report
The newest edition of the Banner Report has just been released!
INSIDE THE ISSUE:
- Why family offices high-net worth investors desire real estate allocations
- Jobs-to-Permits Ratio Remains Steady
- Too much apartment construction or not enough? (From CoStar)
- Banner Multifamily Cycle Model Explained¨; Local Real Estate momentum shows strong correlation to cycle model.
- Snapshot Las Vegas Apartments
- Big Picture Indicator
ABOUT THE AUTHOR:
GARY BANNER, CCIM
Sr. Market Analyst | Multifamily
Gary Banner is a real estate consultant that specializes in multi-housing in the southwest region of the United
States. Guiding both institutional and high net worth clients in acquisitions, sales, condo-conversions and site
selection for multi-housing. Gary’s background includes, commercial mortgage banking, brokerage sales, market
studies and expert witness experience over a span of twenty-three years. He holds the prestigious commercial
real estate distinction, Certified Commercial Investment Member – CCIM, and was presented with the CoStar
Power Broker Award in 2013.
We have some exciting news! Kaktus Life I located at 10650 Dean Martin Drive, Las Vegas is under way. This is our Class A mixed -use development with 210 multi-family units and 21,600 sq. ft. of retail space. If you are interested in investments opportunities with TRU Development contact Kelly Kwasniewski today at 702-545-0355 or via email email@example.com.
On August 10, 2017, Gary Banner CCIM attended and completed the AIA Nevada course called “Big Ideas: The Vision 2045 Downtown Master Plan”. The course focused on the fundamentals driving our growth and the positive impacts of planning and urban architecture, the aspects that will contribute to the success of the initiative and the challenges that the developers/businesses will experience as we transition through this environment. At TRU Development we pride ourselves on engagement within our communities like The Downtown Master Plan in Las Vegas.
For more information about The Vision 2045 Downtown Las Vegas Master Plan CLICK HERE
Market momentum to continue, with 83% expecting a further rise in investment volumes in 2015.
Jobs growth in metro markets fueling demand. After a weak, weather-impacted start to 2014, US economic growth accelerated in the second and third quarters. For the whole year, real GDP growth is forecast at 2.1%, to accelerate further to nearly 3% in 2015. It is estimated that this could translate into a gain of 2.5 million jobs in 2014 in 2015, increasing to 2.7 million in 2015, which would be the highest annual total since 2000.
As significant as the improvement in the aggregate economic statistics is the greater number of markets within the US driving growth. Whereas earlier in the recovery the intellectual capital, energy and education (ICEE) markets were the main drivers, growth has expanded to and accelerated in more US metropolitan areas in 2014, including some of the hard-hit housing markets such as Phoenix, Las Vegas and many metropolitan areas in Florida, fueling greater demand for real estate. As an example, half of the US metropolitan areas tracked by Colliers International has recovered all of the office-using jobs lost during the recession, and nearly 90% added office-using jobs on a year-over-year basis in June 2014.
In addition to stronger demand, low supply-side pressure in most markets and property types is contributing to tightening in the US real estate markets. Lender caution, high construction costs (which continued to increase through the recession) and still-elevated vacancy rates in many markets and property types are restraining development. The construction activity that is occurring, especially speculative, is generally targeted, concentrated in the strongest markets and submarkets where tenant demand remains robust, such as Houston, San Francisco, Silicon Valley, Boston and New York. This measured approach to development, coupled with positive demand trends should result in further occupancy gains.
These trends bode well for the investment market, as US survey respondents identified property fundamentals and economic growth as the two most important factors influencing investment decisions.
By Jennifer Robison
Las Vegas Review-Journal
Southern Nevada’s homes market isn’t the only real estate sector seeing falling loan delinquencies.
An improving economy means fewer commercial borrowers are in danger of default, too.
New numbers from Trepp, a New York-based commercial real estate and banking research firm, show a substantial drop recently in late commercial loans. The Las Vegas Valley in December had 53 properties with real estate loan payments that were more than 90 days late, for a 10.7 percent delinquency rate. That was down from 14.9 percent in December 2013.
It was also less than half of the rate in mid-2011 when 24 percent of local commercial properties were behind on their real estate loans, said Sean Barrie, a Trepp research analyst.
Nearly 150 local properties were delinquent in mid-2012.
Delinquencies are an important economic indicator because they reflect whether commercial landlords can make their payments. That’s driven in turn by economic expansion and business formation.
Delinquencies are falling as more borrowers and banks look for loan workout strategies, Barrie said.
Those alternatives to default are available because the local market has stabilized, said Bob Ybarra, an analyst with commercial brokerage CBRE Las Vegas.
“You’re seeing a lot more absorption (leasing of space) in industrial, office and retail properties,” Ybarra said. “The overall fundamentals are better: You have a strong economy, businesses are rebounding, there’s more job creation, and there’s more wealth. We’re not breaking records, but some of these centers are starting to fill up with tenants again. And when they fill up, the landlords can service their debt.”
SHARP SWING IN LEASING
New numbers from CBRE Las Vegas show how dramatically leasing has swung in the recovery.
Net absorption of local office space has totaled about 3 million square feet since 2012. That’s compared with negative absorption, or loss of leased space, of 1.8 million square feet from 2009 through 2011. Office vacancies in the fourth quarter were still high, at 21.2 percent, but that was down from 27 percent in the downturn.
Industrial absorption was 2.8 million square feet in 2014, up 17.3 percent over 2013’s rate. The submarket posted net absorption of 5.2 million square feet in 2013 and 2014, compared with 3.1 million square feet of negative absorption from 2009 to 2012. Industrial vacancy averaged 7.3 percent, down from 10.2 percent a year earlier.
The swing in absorption rates hasn’t been as dramatic in retail because the sector wasn’t as hard-hit. But vacancies continue to trend down as tenants fill space. Retail vacancy averaged 10.4 percent in the fourth quarter, down from 11.5 percent in the fourth quarter of 2013 and well below a 2011 high of 14.1 percent.
Delinquencies varied by submarket. The office sector had 22 properties with late loans in December. Industrial had four. Retail had 17. There were also seven multifamily properties and three lodging properties with loans that were late by 90 days or more.
On top of improved cash flow from new tenants, credit markets have loosened, Ybarra said. That means more access to bridge lenders who can help property owners with refinancing. There are also more investors willing to gamble on the local market.
“During the downturn, there was very little activity here because everyone had a big, red ‘X’ across the state,” Ybarra said. “Now, people are willing to lend in Las Vegas. There are more investors people can go to give up equity in their property as well.”
STILL OUTPACING NATIONAL LEVEL
The news wasn’t all good.
Southern Nevada’s default rate continued to outpace the national level.
December’s nationwide delinquency reading of 5.75 percent was about half of Southern Nevada’s rate.
That was also the case during the recession: When the local rate hit 24 percent in July 2012, the national rate was 10.24 percent.
The largest local commercial loans more than 90 days late include: the Westin Casuarina Hotel on East Flamingo Road, with a loan balance of $136.5 million; hotel Loews Lake Las Vegas, with a balance of $117 million; Sahara Pavilion North, a shopping center at Decatur Boulevard and Sahara Avenue, which has a balance of $56.3 million; Entrata di Paradiso Apartments, at 2701 N. Rainbow Blvd., which carries a $39 million balance; and Rainbow Promenade, a shopping center at North Rainbow Boulevard and Smoke Ranch Road, with $37.9 million in loans outstanding.
The Westin Casuarina entered foreclosure in 2010 after then-owner Columbia Sussex Corp. stopped making payments on the property’s $160 million mortgage. A court-appointed Pyramid Hotel Group its receiver; Pyramid leased the property’s casino to 777 Gaming beginning in 2012.
Pyramid also manages the Loews property, which opened as the Hyatt Regency in 1999 and switched to the Loews brand in 2006. The property has been in receivership since 2009 when it defaulted on it’s $117 million mortgages. It switched to the Westin brand in 2012.
The 333,000-square-foot Sahara Pavilion North has been in default since February 2011, while the 228,000-square-foot Rainbow Promenade has been in arrears since November 2012.
Observers said commercial delinquencies should continue to fall through 2015.
Barrie said the Las Vegas rate should tick down as the national rate does, though he added that it would be difficult to forecast another four-percentage-point drop.
Ybarra said it’s hard to predict default rates, but he said he anticipates an even better year ahead for the local commercial real estate. Economic “fundamentals” should continue to improve, he said. For example, dropping gasoline prices will mean more discretionary income for consumers, which in turn will help the retail sector grow and further cut real estate vacancies.
Contact Jennifer Robison at firstname.lastname@example.org. Find her on Twitter: @J_Robison1