Big Revenue Losses Smack Vegas

Like quite a few other markets across the country, Las Vegas registered reasonably decent apartment demand during 2009's 2nd quarter. The metro managed to absorb approximately 1,700 units for the quarter, despite losing jobs at an annual pace of about 59,000 positions (backtracking by 6.3 percent). That demand was enough to push up occupancy by half of a percentage point on a quarterly basis. The June occupancy, figure, then, came in at an even 90 percent. But, of course, occupancy is only half the revenue story, and the bump that Las Vegas posted in its apartment renter count during recent months didn't come close to countering the huge declines suffered in rental rates.

Effective rents were whacked another 2.4 percent in Las Vegas during 2009's 2nd quarter, measuring change on a same-store basis. That quarterly cut took the annual pace of price reduction to 5.7 percent. Furthermore, the sizable downward adjustment in rents seen for the metro as a whole carried through to every niche of the market. Rents faltered by 4 percent to 9 percent in every product age segment during the year-ending June, and losses were at 4 percent to 10 percent in every single neighborhood.
 

The near-term challenges for apartments in Las Vegas go beyond continuing job losses and a vast selection of shadow market condos and single-family homes offered for lease. The metro also is going to have to contend with quite a bit more new supply. About 5,500 apartments remained under construction going into 3rd quarter, with those additions set to expand the metro's total inventory by 3.6 percent. In particular, the Summerlin/West Las Vegas submarket and the North Las Vegas/Sunrise Manor area are going to receive new completions that could be tough to process in a timely manner.

Overall, then, metro Las Vegas looks like it will rank among the nation's weakest apartment sector performers through the remainder of 2009, and that position relative to other metros across the country doesn't seem apt to change much during calendar 2010.

 

 

 

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