The Las Vegas multifamily market appears to have turned a corner in 2023 following five consecutive quarters of negative absorption. In retrospect, an uptick in Apartments.com search activity at the end of 2022 signaled a renewed interest in Las Vegas from renters.
On the other hand, supply pressure will likely drive the vacancy rate higher in the short term. Approximately 10,000 units are under construction, which would expand inventory by 5.5% once all projects in the pipeline complete.
The Las Vegas industrial market has bent, but not broken. A glut of supply should continue to put upward pressure on vacancy and availability in the near term. Even with the recent rebound in leasing volume, it is unlikely to prevent a further rise in the vacancy rate, which sits at 3.1%. While this number is low by historical standards, it is above the trough if 1.9% set in 22Q3. The availability rate has increased at an even faster pace in that time, soaring from 5.1% to 8.7%.
The Las Vegas office market is beginning to show signs of weakness, albeit later than many major metros. After a run of seven quarters of robust absorption, the vacancy
rate jumped by roughly 200 basis points from 22Q4- 23Q2 as Las Vegas recorded its first back-to-back quarters of negative absorption since 2020-21. The market is still relatively stable as the current vacancy rate
of 10.5% is below the historical average of 13.6%.
Tailwinds from record tourism numbers have buttressed the Las Vegas retail market, although assets off-Strip
have also performed well. The vacancy rate has ticked up slightly in the past year, but at 5.4%, remains near a 15-year low. The single-tenant vacancy rate is structurally lower and typically sits 300-400 basis points below multi-tenant vacancies. On the other hand, the single-tenant vacancy rate has risen from 2.3% in 22Q2 to 3.2%, while multi-tenant buildings have remained relatively flat during that period.
The latest iteration of Las Vegas luxury apartments largely started in 2008 but was paused through the financial crisis. The sector reemerged in 2015 with two to three deliveries per year since then.
Elysian @ The District, developed by The Calida Group and The Gramercy, built upon a prior, stalled condominium site.
The Boring Company, a tunnel construction firm founded by billionaire Elon Musk, is expanding a major underground transportation project in Las Vegas and adding a corporate location in Austin, Texas, as the startup tries to test superfast hyperloop transit across the United States that could eventually affect real estate development.
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Tom Naseef | (702) 737-8000 | BS.016103
Coldwell Banker Commercial Premier
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