Apartment rent growth slows

Station Casinos signs five-year, $4.5 million lease
for West Charleston office space

February 25, 2008 - Southern Nevada's apartment market continues to be impacted by the for-sale housing market as well as an expected employment growth slowdown, reports Applied Analysis, a Las Vegas-based economic research firm. Las Vegas Valley employment grew only 1.1 percent at the close of 2007, which is well below its average. Although office using employment was up 2.1 percent from the previous year, construction related industries fell 4.1 percent due to a slowdown in the housing market.

Local area apartments, as a result, reported a 92.3 percent vacancy rate at the end of December, which is 3.1 percent less than a year ago. Six consecutive quarters of decreasing occupancies have taken place, Applied Analysis reports.

Rents, meanwhile, also hit a plateau in the fourth quarter. Average asking rents were $883 per unit (or 99 cents per square foot), which is the same as the previous quarter. Only a 2.8 percent rent growth in 2007 occurred as opposed to 4.6 percent the previous year. But a market upswing could soon be around the corner.

"While current conditions remain somewhat challenging, the apartment sector is anticipated to experience a supply shortage during the next several years," said Brian Gordon, principal of Applied Analysis. "More dramatic demand for housing is possible starting in 2010. While it is likely that developers will respond to a potential supply shortage, we anticipate apartment demand to easily exceed the performance of the past several years."

As such, the multifamily investment market outlook still looks strong. The Hoffman Family Living Trust, for example, recently bought the 32-unit, 12-year-old Merlayne Villas at 409 E. Merlayne Driv ein Henderson, for $2.8 million, or $88,281 per unit, from George and Charlotte Miserlis. It equals a sale price of nearly $103 per square foot.

"Apartment sales have slowed substantially this year," said Carl Sims, an apartment specialist with Hendricks & Partners. "But we expect the long term multifamily outlook to be good with 46,000 hotel rooms coming online by 2011 and creating 120,000 jobs, which bodes well for the market."

Projects

Waller Kaufman Sutter is developing a $14.5 million shopping center at Lake Mead Drive and Calico Ridge Road in Henderson. Called Monument @ Calico Ridge, it calls for 5 buildings combining for 40,587 square feet of retail and restaurant space. Dakem Construction is the contractor, with Vedelago Petsch as architect. The 5.25-acre complex is scheduled to finish in mid-2008. Lease rates are $3 per square foot. Colliers International's Jimmy Marsh and George Connor are representing the project.

LM Construction Co. completed a 22-acre marshalling yard at Sunset Road and Las Vegas Boulevard for GES Exposition Services. The $3.04 million facility has the capacity to house over 600 diesel trucks and includes three truck weigh stations and three modular trailers.

Million Dollar Deals

AT&T Services signed a seven-year, $12.1 million lease for 71,607 square feet of office space at 10450 W. Charleston Blvd. in Las Vegas. CB Richard Ellis' Brad Peterson represented the tenant. The reported average rent equals $2.01 per square foot.

Kidville Summerlin signed a 10-year, $4.47 million lease for 16,118 square feet of retail space inside The Village at Queensridge at 270 S. Rampart Blvd. in Las Vegas. CB Richard Ellis' Penny Mendlovic represented the tenant. The reported average rent equals $2.31 per square foot.

Station Casinos signed a five-year, $4.25 million lease for 25,530 square feet of office space inside Charleston Festival at 10801 W. Charleston Blvd. in Las Vegas. CB Richard Ellis' Brad Peterson represented the lessor, Charleston Pavilion LLC. The reported average rent equals $2.77 per square foot.