Similar to real estate trends across the nation, the multifamily housing market is also in high demand.
The current state of the market in Southern Nevada, along with new and renovation projects in the Las Vegas area, was discussed during a rental roundtable moderated by multifamily housing industry expert Mike Ballard and hosted by the Las Vegas Review Journal.
Kevin Romney, founding partner of the Camino Verde Group, was one of a handful of multifamily industry leaders discussing the issues with low rental property inventory in the area and current projects that might help with the growing demand for multifamily housing. Unlike many multifamily investment companies, the Camino Verde Group focuses on purchasing and completely renovating existing apartment buildings to attract more tenants to the property.
“Our goal when we go in and purchase the properties is just to reposition it, to renovate it, to lift it up and make it a better place for the working men and women in Las Vegas to live,” Romney said.
The Camino Verde Group recently purchased six properties in the shadow of the Las Vegas Strip to renovate and lease out. In the firm’s most recent two purchases, up to 25 percent of the units were not inhabitable and needed significant renovations to be reentered into the market, including updated sewer lines, new or repaired roofs, updated HVAC units, fresh coats of paint inside and on the exterior, updated appliances and advanced security systems throughout properties.
Although multifamily property sales were down 70 percent in 2020 from 2019, Romney pointed out that the multifamily industry has started recovering as more investment dollars reemerge into the market. Average unit valuations are up across all multihousing property classes, and the city recently saw Tuscan Highlands sell for $378,000 per door, a new record for Las Vegas.
Susy Vasquez, director for the Nevada State Apartment Association, said that there is an abnormally high demand, but low inventory, for both renovated and new multifamily units. Clark County currently has a 4.5 percent vacancy rate, which is down 6.4 percent from last year, and also below the national average of 5.8 percent.
Currently, nearly 8,000 units are vacant, significantly lower than the average number of vacancies of 10,000 to 11,000 units. However, more units are making their way into the market, Vasquez said, with 3,834 new units under construction in the area.
Two of the planned units for the area are mixed-use buildings. The Watermark project in Henderson will add 151 new units, while the Art Symphony Park in Las Vegas will add 324 units. Both will have office and retail spaces, along with the units. An additional planned multifamily property by Nevada HAND will have 480 units and will be a blend of all affordable housing programs offered in the area.
Vasquez said Clark County is currently below the national average in rental rates. While the average rental rate is $1,273, which is $161 higher than last year, it’s still below the $1,456 national average. She said rental rates will likely not stabilize in the near future.
Brian Gordon, principal of Las Vegas-based Applied Analysis, said Southern Nevada’s high demand for rental properties is due to several factors, particularly Nevada’s increased number of residents coming from neighboring states. Nevada was third in population growth last year due to an influx of out-of-state residents. Of those moving to the Silver State, four out of every 10 people moved from California, according to license surrenders.
Gordon said the current job market in Nevada is not keeping up with the surge of residents, with the state being 123,000 jobs behind where it was pre-pandemic. While job numbers are starting to rise, the hospitality and travel industry will likely not make a full recovery for an estimated 12 to18 months, Gordon said.
A side effect of the pandemic has been high housing demand sales activity. Gordon said that the pandemic pulled house sales ahead two to three years from where they normally should be, and no housing market fallout is in sight.
Finally, multifamily property owners also have several new pieces of legislation to be aware of. Vasquez said some of these new guidelines include tenants having evictions automatically sealed, a new 60-day notice on rent increases, glide paths for evictions and being able to pass on solar energy savings to residents.
For the video of the full Rental Roundtable discussion, click here.