According to a recent quarterly market report from Marcus & Millichap Real Estate Investment Services, the apartment operations in Las Vegas are going to improve as job growth strengthens throughout the year. It is expected that employers will add 12,000 jobs during 2012, which is a 1.5% increase in payrolls compared to the 1.1% gain last year.
It is expected that nearly every business sector will add jobs this year, though the Bellwether Leisure and Hospitality Industry will be adding the most with 7,400 new employees, according to the report. As unemployed workers re-enter the workforce it is expected that demand for apartment rentals will increase.
Lower-paying hospitality jobs are a strong driver of apartment demand and greater absorption has also supported rent increases as well. During the first quarter of 2012, asking rents appreciated 1.4% to $806 a month with effective rents increasing 1.9% to $756 a month. In addition to that, Marcus & Millichap predict that these numbers will increase to $822 and $771 a month, respectively, by the end of the year.
What’s good about the improving apartment operations and favorable pricing is that it has attracted both institutional and mom-and-pop investors to the Las Vegas area. The number of transactions doubled last year with the median price rising 4% to $28,100 per unit in 2011, compared to a 57% drop the year before.
Real estate investors Daniel Gaeta and Robert Fox purchased a 10-unit apartment complex in downtown Las Vegas for $165,000 via online auction. The two stated that they will put nearly $30,000 into renovating the units with rent prices averaging between $550 to $650 per month. According to Fox, “I’m perfectly happy investing in the downtown Las Vegas area and in fact, I would prefer to do that as opposed to other areas.”
The apartment industry is definitely looking up in Las Vegas as inventory has increased 0.7% year-over-year in the first quarter of 2012. This is an increase of 1,026 units, which includes 320 units in the South Boulevard apartments that opened back in March.
Source: Las Vegas Business Press – Forecast jobs uptick expected to stoke apartment demand