Viva,Viva Las Vegas: Sin City’s Multifamily Housing Market Continues to Thrive
Las Vegas is infamously known as a vacation destination for families and entertainment and gambling enthusiasts to visit but never to reside. However, families could soon be singing a different tune. Due to Sin City’s positive economic outlook and diverse job market, international and domestic investors are starting to look into developing properties for renters to make this desert oasis a place to call home.
According to EDR Insights, “the increasing popularity of cities such as Las Vegas, Columbia, S.C., San Antonio and Charleston, S.C., is the result of peaking prices and stiff competition, especially from foreign capital, in primary metros.” Furthermore, findings from a REIS study showed that multifamily vacancy in Southern Nevada decreased in the first quarter of this year, extending a three year long streak. Perhaps it’s time to make your next multifamily property. Considering this tertiary market’s rise, it is a gamble that is worth the risk.
Tech’s Influence on Vegas’ Commercial Real Estate Market
We can owe this buzz around Las Vegas’ commercial real estate market in great part to Zappos CEO Tony Hsieh. The relocation of Zappos HQ from the Bay Area to Vegas brought roughly 1,500 employees alone. Hsieh’s $350 million investment in revamping downtown Vegas — known as the Downtown Project (DTP) — as a hub for emerging startups is a story that has made national headlines month after month. While some question just how Hsieh’s investment will pay off in the long run, there is no question that Hsieh’s ability to build and cultivate a community seems to always end in success.
Since Hsieh made the investment in 2012, DTP has partnerships with 300 local businesses and has hired 800 people. Container Park, the area’s sustainable, walkable retail and entertainment center cultivates the community by offering outdoor activities and amenities such as yoga, weekly movie screenings and concerts complete with food trucks.
Nevada’s Economic Boom and Diverse Employment Industries
Findings from the U.S. Department of Labor and Wells Fargo Securities, LLC state that this increase in economic activity “can be attributed to the region’s important leisure and hospitality industry, which employs nearly 28 percent of workers in the state, many of whom concentrated in the Las Vegas metro area where more than 30 percent of workers are employed in the industry.”
Interestingly enough, Vegas’ employment industries are no longer all about leisure. The University of Nevada at Las Vegas (UNLV) has plans to expand by opening a four-year medical school and starting a drone program. The addition of UNLV’s medical school has the potential to increase investment in health related industries and research grants from prospective donors. The university took an interest in drone technology and created a minor in unmanned autonomous systems, which is supported by the Federal Aviation Administration’s (FAA) choice to name Nevada as one of the six unmanned aerial vehicle (UAV) development centers across the country.
How This Impacts Your Overall ROI
Rental rates continue to climb more quickly than during 2014, but this is no surprise considering the low vacancy rate and high net absorption of southern Nevada’s multifamily market. According to the Colliers International Q2 2015 report, asking rents for multifamily stood at $889 per unit in the first quarter of this year with a steady increase by $30 per unit year-after-year and $11 per unit since last quarter. Class B/C properties have an average asking rent of $773 monthly, which increased by 1.3 percent since the Q1 2015.
It is “Viva Las Vegas” time for multifamily property owners. The positive economic outlook and diverse job market are making this once exclusive vacation location a place to call home.