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.”
Monday, February 26, 2007
Saturday, February 17, 2007
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.
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.
Wednesday, February 7, 2007
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.
“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."
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."
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