Las Vegas continues recovery in 2014
After a stellar 2013 that saw year-over-year growth in property sales of 89 percent — the second-largest growth in the nation — investment momentum in Las Vegas has remained strong in first quarter 2014 with year-over-year sales growth in every major sector except hotels, according to data from Real Capital Analytics. This is further evidence that capital is finally making its way out of the primary markets
The $3.7 billion in property investment in the Las Vegas area in 2013 made it the 26th largest market in the country, its highest position since before the global financial crisis and eight spots higher than in 2012. The MSA was ranked as low as 47th in the country just three years ago in the wake of one of the worst housing market collapses during the global financial crisis.
Through the first quarter of 2014, Las Vegas has already seen $438 million of property investment in the area, with the largest year-over-year growth in the office sector, which increased by 160 percent with $88.9 million between eight transactions. First quarter 2014 was the second largest for the sector since 2012, behind only second quarter 2013, which saw $492 million in transactions, making it a major outlier even without including the $347 million purchase of the Hughes center by The Blackstone Group. First quarter 2014 even experienced a 9 percent growth over fourth quarter 2013 in the office sector, despite the usual surge of transactions at year’s end.
The biggest property sector in the region, apartments, experienced year-over-year growth of 83 percent after seeing $207.1 million transacted in 15 properties. Seemingly just behind the market at large, the Las Vegas multifamily sector has been surging lately, with rolling 12-month growth up 113 percent through first quarter 2014. The largest deal in the quarter was the Griffis Group’s purchase of The Wellington, a 332-unit apartment complex, from The Picerne Group for $43.2 million.
The retail sector experienced moderate year-over-year growth of 37 percent after seeing $82.3 million in transactions in the year’s first quarter, though the sector has been in decline since recording $888 million in transactions during second quarter 2013 (all without a single transaction bigger than Stoltz Real Estate’s $50.5 million purchase of the Deer Springs Town Center).
The area’s typically modest industrial sector also experienced year-over-year growth of 122 percent with more than $54 million in transactions. The market’s 12-month industrial transaction volume is up 156 percent after five straight quarters between 2012 and 2013 that saw transaction volumes under $60 million.
The Las Vegas hotel market has remained largely inactive, and was the only property sector to not experience year-over-year growth, with a drop of 60 percent. To date, there has only been one hotel transaction, Sage Hospitality’s $5.6 million acquisition of the Hampton Inn & Suites West Summerlin from RLJ Lodging Trust. Despite modest growth for three straight quarters, the sector has only seen one quarter in the last three years with investment volume of more than $50 million.
Despite nearly a fourth of all of 2013’s investment volume coming from second quarter retail transactions, fundamentals look strong in most sectors in the Sin City as the continued recovery disseminates into smaller markets.