Valley's land prices double in 12 months

December 23, 2004 - Southern Nevada's runaway population growth has fueled a real estate boom that has seen vacant land sale prices double over the last 12 months. During the third quarter, property sales averaged $402,500 per acre, or $9.24-per-square-foot (excluding outlying areas), representing a 99 percent valleywide increase over 2003, reports Applied Analysis, a Las Vegas-based economic research firm. It was an active quarter with 598 transactions, totaling 2,463 acres worth of land movement.

"Property values continue to climb, appreciating at levels that nobody could have historically anticipated," says Brian Gordon, a principal with Applied Analysis. "We've witnessed phenomenal price increases due to significant investment and acquisitions by homebuilders, commercial developers, land speculators and institutional investors."

Lenders like Builder's Capital, Inc., have experienced a high volume of activity, providing 163 commercial loans valued at over $200 million this year. By comparison, the company had only 112 loans totaling $98.45 million in 2003.

"There is a lot of money looking for real estate investments here in town," says Steve Brockman, president of Builders Capital. "Although we dealt primarily with the same group of clients, we doubled the number of transactions and average loan amount over last year."

The northwest valley saw the largest growth with a 107 percent increase in average sales prices during the third quarter with 289 acres worth of land exchanging hands. Prices are currently averaging $337,900-per-acre, or $7.76-per-square-foot.

Meanwhile, the central/east submarket reported an unusually high amount of activity along the resort corridor, averaging $2.2 million per acre. Sizeable transactions included the Hard Rock's $86 million acquisition of the 23.3-acre Paradise Bay Apartment complex at 4185 Paradise Road on September 17, plus Krystle Sands' $26.2 million acquisition of the 3.6-acre Algiers hotel-casino at the northeast corner of Riviera and Las Vegas boulevards, and a 7.1-acre site for $35 million by Parball (a Caesars Entertainment company) at the Paris/Bally's compound.

Significant jumps in average prices were also reported in the Airport/South submarket, reaching $657,600 an acre, primarily due to a $34.8 million acquisition by Gemstone Development of 46.7 acres on the west side of Las Vegas Boulevard immediately south of the new South Coast Casino, plus other Las Vegas Strip transactions at the south-end by potential condominium developers.

The southeast reported a 91 percent increase averaging nearly $300,000-per-acre, or $6.82-per-square-foot, and the north area saw a 73 percent gain in prices, reaching $322,400-per-acre, or $7.40-per-square-foot. Homebuilder D.R. Horton bought nearly 72 acres in three separate transactions in the north submarket during the third quarter, including a 40-acre parcel that fetched $332,000 per acre.