SIOR Names Top 2007 Real Estate Professionals

The Society of Industrial and Office REALTORS (SIOR) Nevada Chapter recently presented their 2007 awards to chapter members and corporate sponsors at their annual holiday party at The Foundation Room located in the Mandalay Bay Hotel & Casino.

The awards, presented by chapter president Dean Willmore, SIOR of Prudential/IPG Commercial, were divided into two categories: the People’s Choice awards and the commercial real estate transaction-based awards.

Donna Alderson, SIOR of CB Richard Ellis and LaPour, a Las Vegas-based commercial real estate development firm, won the People’s Choice Broker of the Year and Developer of the Year awards. The winners of the People’s Choice awards were voted upon by the SIOR Nevada Chapter members and corporate sponsors.

Chuck Witters, SIOR of Lee & Associates received the 2007 Top Cooperating Broker award, which was based on the member who has co-operated on the most real estate transactions with other SIOR Nevada Chapter members. The CB Richard Ellis office team of Randy Broadhead, SIOR and Brad Peterson, SIOR received the 2007 Top Producer award for having the highest transaction volume for the year.

Showcase Mall undergoes $80 million expansion

The Showcase Mall will soon have more space to show off. The venerable Strip retail and entertainment complex last month broke ground on an $80 million, 95,800-square-foot addition at 3771 Las Vegas Blvd., South. Matt Construction Corp. of Santa Fe Springs, Calif. is the general contractor, with Boston-based Kling Stubbins as architect.

The three-level extension will be located immediately north of the existing 4.3-acre, 190,000-square-foot mall originally built by Henderson-based Makena Development and Forest City Enterprises of Cleveland in 1998. City Center Retail LLC of San Francisco and New York-based Angelo Gordon & Co. bought the property for $142 million, or $747 per square foot, in early 2005, after plans for a 52-story, 700-unit Westgate timeshare tower fizzled.

The Showcase Mall and its iconic 100-foot-tall Coca-Cola bottle have become a popular Strip attraction among visitors and locals. The venue's whimsical facade, indoor climbing wall, and unique mix of tenants like M&M World, United Artists Theaters, Adidas and Gameworks have made it a hit. The mall addition looks to continue the fun with a new three-story, 41,000-square-foot Hard Rock Café.

The café will feature a 700-seat restaurant with outdoor dining, a live concert venue, a main bar and a 3,364 square foot retail store. The three-quarter-acre expansion will additionally incorporate an existing Denny's restaurant and ABC Store, while making room for two to four new tenants, says City Center project manager Tim Bacon. New York City-based Robert K. Futterman is overseeingleasing efforts.

The new building has a sleek modern look with a backlit glass curtain wall fronting the Strip. Construction is being funded by a two-year, $57.75-million loan from Key Bank National Association arranged by the Los Angeles office of Holliday Fenoglio Fowler. It has a 75-percent loan-to-value ratio. The loan was arranged by HFF's Scott McMullin and John Crump.

The Showcase Mall expansion is expected to finish in the first quarter of 2009.

Wal-Mart heiress buys $19 million home in Henderson

Nancy Walton Laurie, daughter of James "Bud" Walton, who co-founded Wal-Mart with his brother, the late Sam Walton, recently bought an 18,378 square foot residence inside MacDonald Highlands at 1186 MacDonald Ranch Dr., Henderson, for $19 million, or $1,033 per square foot, from Mark and Holly Wattles. Mr. Wattles founded Hollywood Entertainment Corp., a chain of video rental and game stores. Coldwell Banker Premier Realty’s Stan Hicks and Mason Richburg represented the buyer.

Home foreclosures skyrocket in second quarter

Southern Nevada's housing market has seen better days. A total of 3,147 new foreclosures were reported in the second quarter, 792 percent more than a year ago, reports Applied Analysis and Urban Environmental Research. And the dramatic slide doesn't look like it will slow anytime soon, with another 4,535 foreclosures actively under way in the second quarter -- 820 percent more than in 2006.

Unincorporated Clark County -- the area where much of the new area development is happening -- led in foreclosures, followed by Las Vegas and North Las Vegas, respectively. As foreclosures occur they inevitably add to the valley's swelling home inventory. There was a record 24,087 units on the market at the end of July, reports the Greater Las Vegas Association of Realtors. It marks an 18.8 percent increase from 12 months ago.

"This is more proof of what we've been telling prospective home buyers for months," said Devin Reiss, 2007 GLVAR president. "Now may be the optimal time to buy a home."

Yet there were only 1,318 homes sold in July or 34 percent less than last year. Median sale prices dipped to $295,000 last month, which is nearly 5 percent less than in 2006. There was also a record 6,269 units worth of condo/townhomes available in July, too. It marks a 28 percent increase from last year, yet sales are still sluggish with only 303 units sold last month for a 40 percent year-to-year drop. Median sale prices softened only slightly to $195,000, or 3.2 percent less than in 2006.

"The latest figures suggest supply levels will continue to escalate before reporting any signals of improving conditions," said Brian Gordon, principal of Applied Analysis, a Las Vegas-based economic research firm. "We remain concerned about the duration of the current cycle as foreclosures reside at elevated levels."

LV Chamber sells building to Wynn, moves to Town Square

The Las Vegas Chamber of Commerce is vacating its aging facility for new digs inside a mega-mall on the South Strip. The 7,000-member trade group yesterday closed escrow on the sale of its longtime headquarters building situated at 3720 Howard Hughes Parkway to Steve Wynn owned entity for an unspecified sum. The chamber bought the two-story, 35,000-square-foot building and on 4.65-acre property for $5 million in 1988, county records show. Yet it had only occupied 15,000 square feet inside in the building, subletting the added space to other tenants. Wynn will subsequently inherit those subleases. The chamber building and property was assessed at $8,822,302 for 2007-08.

The nonprofit business group has since signed a 10-year lease to occupy 25,000 square feet of office space inside Town Square, a new $750 million, 117-acre mixed-use project, located at Sunset Road and Las Vegas Boulevard, South. The move will increase its facility size by 40%.

“We’ve outgrown our current space. We looked at renovating, but it made more sense to look at new office space,” said Cara Roberts, public relations manager for the Chamber. “This really puts the commerce in the chamber of commerce. We are going to be front and center where business takes place.”

The 63-employee chamber looks to move in late November. Town Square is a joint-venture development between Centra Properties and Turnberry Associates consisting of 1.7 million square feet worth of retail, entertainment, and office space. It, too, is expected to open in November.

“We liked that Town Square was conveniently located with high visibility,” said Roberts. “It’s next to Interstate-15, the Beltway and the Strip, making it easy for people to get there.”

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Valley Home Sales Dampen In April

Southern Nevada’s housing market failed to bloom in April with a scant 1,381 sales valley wide for a precipitous 39.1 percent drop from a year ago, reports the Greater Las Vegas Association of Realtors. Signs of recovery still appear far off with a record 22,242 units available last month, or 25.1 more than in 2006.

Median home prices, meanwhile, remained flat at $305,000 in April, same as the month before, but 1.6 percent less than 12 months ago.

“We’re not expecting to see any significant increases in price or sales through the summer months, but we should still see the kind of stable market we have experienced lately,” said Devin Reiss, GLVAR president. “As for inventory, this may be the new reality for a while. The bright side is that prices are holding steady.”

Condos and townhome sales also saw little sunshine in April with 1,358 sales valley wide, a 14.8 percent drop from March, but a 4.5 percent improvement from 2006. There were a whopping 6,178 condo/townhome units available last month or 62.6 percent more than a year ago. Yet median sale prices inched-up to $202,000 for a slight 1.1 percent gain over March, but still 0.5 percent less than a year ago.

There was a total of $538 million in home sales in April, which is 35 percent less than last year, while condos and townhomes racked up $76.6 million in total sales last month. That was a 34.5 percent drop over 2006.

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Former Carpenters Union bookkeeper sentenced

A former bookkeeper of a Southern Nevada union was sentenced on March 23 for stealing. Judge James Mahan, U.S. District Court for the District of Nevada, sentenced Kay Joy Andrews, 57, of Whittier, Calif., to six months of home confinement and five years probation. He also ordered Andrews to pay $40,087 restitution.

Andrews was charged nearly a year ago with embezzling funds from Carpenters Local 1780 in Las Vegas, which represents more than 800 workers in Southern Nevada. She pleaded guilty September 29, 2006, to taking cash and checks that were supposed to have been deposited to the union’s account between September 9, 2002, and July 31, 2003.

An employee of the Carpenters Southwest Regional Council, Andrews was assigned as the sole bookkeeper for Carpenters Local 1780. She was responsible for collecting member dues, maintaining dues receipt records and depositing the dues to the union’s bank accounts. The union’s accountant discovered the theft when conducting an annual audit. The union terminated Andrews’ employment on September 2, 2003.

The U.S. Department of Labor’s Office of Labor-Management Standards (OLMS) and the department’s Office of Labor Racketeering and Fraud Investigations within the Office of Inspector General investigated the case. And Assistant U.S. Attorney Christina Brown tried the case.

New Airport Class-A office complex breaks ground

A new $50 million, 180,000-square-foot Class A office complex recently broke ground at Sunset and Pilot Roads. Situated on 9 acres, the Sunset Pilot Plaza will consist of two, 3-story buildings with divisibility from 5,000 square feet. (One building is 100,000 square feet, and the other is 80,000 square feet.) The project is a joint-venture development between Stoltz Management Co., a Bala Cynwyd, Penn.-based real estate developer, and GoldenTree InSite Partners, a New York-based investment firm.

“Sunset Pilot Plaza provides excellent access to the Beltway and Strip, McCarran International Airport and I-15,” said Wes Jenson, senior vice president of Stoltz’s Las Vegas office. “It central location will allow tenants to draw from a broad labor pool throughout the valley, since it’s equidistant between Green Valley and Summerlin.”

Designed by JMA, the project consists of steel-framed buildings with floor-to-ceiling glass windows and a 4.5:1,000 parking ratio. It will also have a 10,000-square-foot elaborately landscaped interior courtyard with Wi-Fi, seating and a food vendor. The common areas feature stone floors, stainless steel accents, and wood paneled walls.

The first building will open in the first quarter of 2008. Martin Harris Construction is the general contractor. Building two will follow with expected completion in the first quarter of 2009. Asking rents are $3.10 to $3.25 per square foot, full-service. The plaza could see over 500 employees a day upon completion.

Housing woes continue in March

Southern Nevada’s housing market continued its year-long slide into March, with fewer sales, more listings and softening prices, reports the Greater Las Vegas Association of Realtors. There were 1,605 homes sold last month, or 36.3 percent less than a year ago, while median sale prices dipped to $305,000 for a 3.2 percent drop versus 2006. Available inventory, meanwhile, reached 21,287 homes in March, which is 22.4 more than 12 months ago. Despite this, local realtors remain optimistic on the market’s future.

“As we approach the summer months, we’re generally going to see more activity. This is the time of year when people are ready to make a move,” said GLVAR President Devin Reiss. “This is why we’re going to continue to see an increase in inventory as well as an increase in sales.”

Yet condo/townhomes saw a disappointing 341 sales in March, which is a 47.2 percent drop from a year ago. And median condo/townhome sale prices declined to $199,900 or 2.5 percent less than in 2006. Available inventory, however, hit 5,995 units last month for a 63.5 percent increase over the last 12 months.

There was $604.8 million worth of total home sales in March, a 36.9 percent dip from a year ago, while condo/townhomes saw only $79.8 million in activity for a 46 percent drop.

Commercial Center sells for $17 million

Mark Kaufman recently bought the 45-year-old, 116,267-square-foot Commercial Center at 953 E Sahara Avenue for $16,994,560, or $146-per-square-foot, from Sahara Plaza LLC and the Ron and Judith McMenemy Living Trust. NAI Horizon’s Ron McMenemy and Jeffrey Boughrum represented the seller.

Situated on 2.71 acres, the one-building retail center is 99 percent leased with such tenants as Q Club, Apollo Spa, Serge’s Wigs and Louts of Siam restaurant. The seller bought the building a year ago for $9.5 million, or $81.70-per-square-foot, from the Hornwood Living Trust. It spent $650,000 upgrading and repositioning the center before reselling it for a 40 percent profit.

Luxury Condos Struggle to Go Vertical

Luxury condo projects are struggling to go vertical due to high construction costs and inexperienced developers, says Restrepo Consulting Group, a Las Vegas-based economic research firm. There were 136 projects totaling 71,519 units as of mid-February, yet only 9% are coming out-of-the ground. Although another eight projects, combining for 3,654 units, have also broken ground.

“There should be sufficient demand to absorb the 6,665 units in the 14 projects that have gone vertical,” said John Restrepo, principal of Restrepo Consulting Group. “But a large percentage of the projects are trying to gain their footing, and, at worst, are on life support.”

A combination of rising building costs, poor management and bad locations are to blame for struggling high-rise residential developments, Restrepo adds, as well as a lack of financing and past product experience.

As such, about 114 luxury condo projects, or 86% of all inventory, is still just being proposed. Despite this, the Las Vegas economy remains relatively healthy with strong job growth, albeit, incomes and salaries that have remained relatively flat for the last 10 years, after adjusting for inflation.

“While Strip views are an attractive feature to many out town buyers, Las Vegas still lacks the ocean/water views would make it as prominent a high-rise condo market as cities like Miami, Seattle, San Diego, Chicago and Vancouver,” said Restrepo. “Our research also shows that 70% of the projects that have gone vertical are located in the resort corridor and 85% have been purchased by second homebuyers, investors and speculators.”

Lou Ruvo Brain Institute Breaks Ground

Frank Gehry recently made his Vegas debut when the new $70-million, 67,000-square-foot Lou Ruvo Brain Institute broke ground in downtown. It marks Gehry's first building in Las Vegas. Whiting-Turner Contracting Co., Baltimore, is the general contractor for the 1.9-acre complex at Bonneville Avenue and Grand Central Parkway. The five-story building will feature 13 clinical, research and outpatient exam rooms for brain disease victims. Additional plans include a 9,000-square-foot banquet hall, flanked by a Wolfgang Puck cafe and catering kitchen on one side, and an interactive "Museum of the Mind" on the other. The institute plans to rent out its public areas at night and on weekends to help meet its operating expenses.

The building's banquet hall will be covered by a wildly curvy, undulating metal-and-glass trellis reaching up to 75-foot-tall, while the main entrance will be made up of stacked building blocks separated by glass enclosed spaces. The contrast suggests the dual functions of the brain, simultaneously ordered and chaotic, structured and imaginative. The project is funded by the Las Vegas-based nonprofit Keep Memory Alive Foundation for brain disease research, founded by Larry Ruvo, Nevada's senior managing director for Southern Wine and Spirits. The building is named after Ruvo's father, who died of Alzheimer's. The institute is scheduled to open in late 2008.

Home Sales Still Slow in 2007

Southern Nevada home sales got off to a sluggish start in 2007, continuing last year’s market slump. There were 1,397 homes sold in January, a 21.4% drop from 2006, reports the Greater Las Vegas Association of Realtors. Median sale prices dipped to $302,000 last month, or 2.6% less than a year ago.

“2007 is going to be about balance in the market,” said GLVAR President Devin Reiss. “We think prices will remain fairly flat and inventory will gradually decline through 2007.”

Yet there were still 18,774 units available in January, a 13.8% increase from a year ago. Meanwhile, new listing shot up to 5,809 homes, which is 81.8% higher than the previous month, and 3.8 percent more than in 2006.

Condo/townhome sales saw a similarly slow start in 2007, with just 318 sales in January or 30.1% fewer than last year. Yet median condo/townhome prices rose to $205,450 last month for a 4.2% gain from 2006.

However, total condo/townhome sales brought a disappointing $75 million in January, a 25.1% drop from a year ago, while total home sales recorded just $519.7 million or 23.6 percent less than in 2006.

Industrial Supply Dwindles In Fourth Quarter

Southern Nevada's supply of industrial space was already tight, heading into the fourth quarter, with absorption outpacing new completions. Yet things became tighter as the valley recorded an ultra-low, 4.1%, fourth-quarter vacancy rate, despite adding 5.1 million square feet of new space in 2006, reports Restrepo Consulting Group, a Las Vegas-based economic research firm.Vacancies dropped 3.7% from two years ago, despite the market's growth last year. The Las Vegas area now hosts 3,684 industrial buildings, totaling 92.8 million square feet of rentable space."The valley's industrial market had a good 2006, with the absorption of over 95% of all completed and previously vacant square feet," said John Restrepo, principal of Restrepo Consulting Group. "We currently only have about a year and a half of supply left to accommodate the valley's industrial needs."

But relief may come soon from 4.1 million square feet worth of new projects underway in the fourth quarter, including Harsch's 523,000-square-foot Speedway Commerce Center II at Speedway and Hollywood boulevards, Thomas & Mack's 1.92 million-square-foot Northern Beltway Industrial Center in North Las Vegas, just south of the I-15/215 intersection, and Majestic Realty/Thomas & Mack's 3.2 million square feet of industrial space at the Beltway Business Park along I-215 between Decatur and Jones boulevards. Another 4.5 million square feet worth of industrial projects are planned for future development.Any easing of the shortage in the industrial sector could be short-lived, with the market recording a 0.98:1 absorption-to-completion ratio in 2006. That would be 17% below the year before. In other words, space is being absorbed as soon as it's complete."The demand for industrial space has continued grow to the point that the inventory of available product has declined to critical levels," said Vic Donovan, managing partner of Colliers International. "But there may be some relief because of the decline in land demand by homebuilders."Meanwhile, average asking rents climbed to 78 cents per square foot in the fourth quarter, marking five consecutive quarters of price increases. Fourth quarter rents were 11 cents more than a year ago and 28.2 percent above 2004. Warehouse distribution space had the lowest vacancy rate among all product types, at 3.2%, while R&D/flex space was the highest, at 12.4%."The focus of industrial demand is on certain submarkets, like the southwest (valley) and North Las Vegas," said Donovan. "This is being driven by their location along the 215 Beltway and I-15-North, respectively, and a growing economy largely driven by very healthy resort and construction industries."

Valley builders Centex, KB Home write down $793 million

Centex Corp. and KB Home this week said they would report poor quarterly results due to a slumping U.S. housing market that forced them to write down a combined $793 million in losses.

Centex, the nation's third-largest home builder, will book $450 million in the fiscal third quarter to reflect reduced land values and to abandon options to buy property, the Dallas-based company said. Centex was Southern Nevada's eighth biggest in 2005, recording 1,154 new home sales valleywide.L.A.-based KB Home, meanhwile, announced that it will take $343 million in property charges in the fiscal fourth quarter. The builder was the Las Vegas Valley's largest builder in 2005 with 3,936 new home sales. Home construction companies are canceling contracts and taking impairment expenses for their property holdings after facing the worst housing market in 15 years. Nationwide sales of new houses tumbled 18 percent in 2006 to 1.05 million, the biggest contraction since 1990. Shares of Centex fell $1.55, or 2.9%, to $51.61. Shares of KB Home eased 13 cents to $49.22.

Architecture Billings Finish 2006 on Strong Note

Architecture billings finished 2006 on a strong note fueled by robust commercial and industrial sector activity, reports the American Institute of Architects, a non-profit industry trade group. It should translate into a high level of construction activity throughout 2007 since there is usually a nine to twelve month lag time between architecture billings and construction spending. The AIA’s billings index had a 59.5 rating in December, up from 57.4 in November. (Any score above 50 indicates an increase in billings).

“Despite a sluggish economy, there is no sign of a slowdown in nonresidential construction activity in the foreseeable future,” said Kermit Baker, AIA’s chief economist. “This is very positive news for the construction industry and those markets affected by it because 2006 ended on a strong rebound, after trending down for most of the first 10 months.”

The Northeast, West, and Midwest regions remained hot spots of activity, with the commercial/industrial sector recording its highest level of work since 1995. Institutional and mixed-use projects also saw a high volume of architecture billings.

“These very solid billings are further confirmation that the construction market has retained momentum going into 2007," said Mark Hughes, an analyst with SunTrust Robinson Humphrey. “This is important, timely information in light of the drift in many construction-related stocks since mid-year.”

Diablo Industrial Center sells for $59.8 million

SN Properties, a Harsch Investment Properties affiliate, has bought the 499,720-square-foot Diablo Business Center at the northwest corner of Arville Avenue and Russell Road in Las Vegas for $59.87-million, or $119.82-per-square-foot, from Diablo Investments LLC. Voit Commercial Brokerage’s Kevin Higgins represented both the buyer and seller.

The six-building light-industrial mid-bay complex is currently 100% occupied with average rents of 70 cents per-square-foot. The 28-acre complex is anchored by MGM Mirage Inc., which occupies 120,000 square feet, along with Klai Juba Architects and Carrier Corp., among others. The 12-year-old center has Russell frontage, and features 39 spaces with divisibility down to 5,000 square feet. Harsch expects to reposition the property to more office users as leases expire.

Valley Office Demand Softens in 2006

Southern Nevada’s office market finished 2006 with a thud, recording a 10.5% vacancy rate, up 2.1% from the previous year, reports Applied Analysis, a local business advisory firm. It marks five consecutive quarters of vacancy increases. Class A space, as always, remains in high demand with a low 5.2% vacancy rate in the fourth quarter, while speculative space softened to 11.9%. Net absorption, meanwhile, dropped to 2.5 million square feet in 2006, which is 28.1% less than the previous year.

The market grew to 41 million square feet in the fourth quarter, adding 3.7 million square feet since 2005. Major additions included a new three-story, 72,000-square-foot Class A building in Thomas & Mack Development’s Corporate Gateway as well as buildings at GSG Development’s The Park at NorthPointe, among other projects. Much the activity was concentrated in the southwest and northwest submarkets along the 215 Beltway and US 95.

“While the office market’s performance during the majority of 2006 reflected a relatively healthy environment, it is now showing clear signs that a materially softer condition is likely to prevail in 2007,” said Brian Gordon, principal of Applied Analysis. “Forward looking supply remains substantial with under construction projects representing more than 10% of existing inventory, a condition that will certainly cause vacancies to rise.”

There was also 4.2 million square feet of new space under construction in the fourth quarter, with another 4.7 million square feet worth of inventory planned for future development. Yet valley wide average asking rents increased to $2.29-per-square-foot triple net in 2006, a 15-cent gain over the previous year. Henderson had the highest rents at $2.42-per-square-foot, while the North Las Vegas was lowest at $2.24-per-square-foot. But the basic market dynamics remain strong with office using employment seeing a 10.6% growth over the last year outpacing all other major categories.

“Overall, 2006 experienced inflated prices, rising interest rates, construction costs, land prices and much uncertainty,” said Dave Dworkin, a market analyst with Grubb & Ellis. “In the year ahead, new construction will gradually slow while existing vacant product is absorbed into the overall inventory and the market goes through a much-needed, though mild, recovery cycle”

Home Sales Limp through 2006

The Las Vegas Valley’s housing market limped to a close in December following a record breaking year of activity in 2005. There were 1,644 homes sold last month or 32.5 percent fewer than the previous year, reports the Greater Las Vegas Association of Realtors (GLVAR). Median sale prices dipped to $306,100 in December for a 2 percent drop from 12 months earlier. Available inventory soared to 17,834 units last month, which is 33.3 percent more than in 2005.

“[This year] is going to be about a balance in the market,” said Devin Reiss, GLVAR president. “Prices have decreased so slightly that it's hard to believe that we can expect anything other than the status quo for this market through 2007.”

Condo/townhouse sales saw a similar bumpy ride in 2006. There were a scant 977 sales in December, which is 32.7 percent less than in 2005. Meanwhile, condo/townhouse listings swelled to 4,833 units for an 86.2 percent increase over the previous year. And median sale prices dropped to $195,000 last month for a 4.4 percent decline over 2005.

Record inventory and stagnant pricing were reflected in the total dollar value for home sales in December with $614 million worth of activity or 33.5 percent less than in 2005. Condo/townhouse sales didn't fare much better with $86.8 million worth of activity last month, a 32.4 percent drop from the previous year.