History of Las Vegas Real Estate: Shifts in consumer uses

History of Las Vegas Real Estate: Shifts in consumer uses

Real Estate amenities and enhancements come expected in the luxury home market in Las Vegas.

Initially parties turned to their contracts to determine responsibility for implementing such changes. For new buildings, or in circumstances where landlords took on such costs, we will likely see an increase in common area charges and maintenance expenses, which landlords will ultimately pass on to tenants.

Nevada’s Best Places to Buy Property in 2022

The Decline of Brick-and-mortar Retail

The year 2020 witnessed the rapid acceleration of the much-discussed decline of brick-and-mortar retail, as government mandates forced stores to close or reduce capacity to a fraction of former levels. Simultaneously, we witnessed a surge in online shopping, which encompassed retail but also grocery and restaurant delivery. 

This abrupt change in demand resulted in supply chain issues and shortages of common commodities, as the country struggled with disruption of daily travel.

Gravitating to Las Vegas

As a result, the industrial and warehousing market continues to skyrocket, with companies seeking distribution outlets for their vast national supply chains. Such facilities traditionally gravitated to Southern Nevada, with our promise of large tracts of vacant land.

However, areas such as West Henderson have steadily developed, leaving less undeveloped acreage. As demand for warehousing continues, we likely will see pressure on our land bank and continued requests to the federal government to expand the BLM disposal boundary.Expansion of contractual protections.

The “boilerplate” in real estate agreements has proven vitally important, as parties sort out issues of payment, maintenance and closure. The force majeure clause in particular, which relieves or delays certain contractual obligations due to acts beyond a party’s control, took center stage.

Relying on common law doctrines  

Unfortunately, force majeure traditionally covers “acts of God,” such as natural disasters, and often contains carve-outs for monetary obligations like payment of rent. Absent such a clause, parties justifying a default must rely on common law doctrines such as impossibility and frustration of purpose.

We have seen an increase in litigation of such narrow and often hard to prove common law doctrines this year, and the resolution of such matters in 2021 and beyond will have a lasting impact on contract interpretation.
Predictability of restrictive governmental regulations
Hoping for predictability if current directives continue or re-emerge, parties have begun to carefully craft these provisions to encompass events such as pandemics and restrictive governmental regulations.
Parties have also begun negotiating for exceptions and contingencies to prevent defaults of monetary obligations in such circumstances, a drafting trend we anticipate to continue.

Major tourist destinations are beginning to revive, buoyed by an increasing number of visitors. Hotels, restaurants and entertainment venues are looking to make up at least some ground with a year that looks more like 2019 than 2020.But the path to recovery for places that depend heavily on tourists isn't going to be straightforward, tourism experts say. Destinations need to offer new attractions and emphasize familiarity and comfort.

As an antidote to last year's strangeness and discomfort is to persuade still-skittish vacationers to return this summer while navigating other challenges like fully re-staffing.Bet on Strong Commercial Real Estate in Nevada

Anyone who’s been to Las Vegas lately knows how quickly it’s growing and changing. The famous Strip boasts an increasing number of new and expanded hotel/casino projects, just a sampling of which includes the New York-New York Hotel & Casino, which debuted last year, a $100 million Sahara Hotel & Casino expansion, and the proposed $2 billion Venetian Hotel Casino Resort.

The hospitality boom in Las Vegas—with roughly two-thirds of the state’s entire population (Reno has another 25 percent)—has contributed to Nevada’s vast growth. 

"Virtually every time you look around, there’s an article proclaiming Las Vegas’ [job] growth as being number one in the United States," says current and native Las Vegan Charlie Mack, CCIM, of Mack Realty Corp. And new jobs have led to new residents, and subsequently, some active commercial real estate segments. Here’s a taste of what’s going on in the Sagebrush/Silver State.

Migration Spurs Multifamily

New residents have been flocking to the Las Vegas area so fast that Clark County has become one of the nation’s fastest-growing school districts—and its multifamily segment has been on the go. "The multifamily market continues to be strong in Las Vegas," says William Spivock, CCIM, of Encore Commercial, which is based there.

"Many of the 40,000 to 50,000 new residents moving to Vegas each year reside in apartments before moving into homes." This leads to high turnover, particularly at the higher-end complexes, he says. "Sales prices continue to rise. Several properties have topped the $70,000-per-unit price."About 10,000 new units were developed in 1997 and about 11,000 more are planned for 1998, Spivock says.

"Many of our multifamily builders—of which a handful are building the majority of the new projects—are selling their projects before completion and some are attempting to sell them before construction commences." Buyers often are pension funds, real estate investment trusts (REITs), insurance companies, and several private investment funds, he says. 

"Financing has loosened up greatly this year with money chasing the deals," says Spivock, who foresees more growth. "Without a slowdown in sight in construction on the Las Vegas Strip, which directly relates to new jobs and new residents for our city, there will be a continued demand for more apartments," he says.

"Although new construction is outpacing absorption, this impact will only be felt in the higher-end units, which are the stopping grounds for new home buyers." The older B-quality units tend to have longer-term tenancy and will not be affected as much, he says. 

Although vacancies will increase slightly, there still will be upward pressures on rental rates because the supply of land is diminishing and impact fees continue to climb, Spivock adds.Jackpot for Retail

Like multifamily—and just about everything else in Las Vegas—"The retail market will follow lockstep behind the resort industry," Mack says. Since passing the one-million population mark a few years ago, "We have seen the influx of many national tenants who never would have looked at us twice earlier," he says. "This is especially true in the food-and-beverage area." Those industries had concerns about population, competition with hotels that can charge less for meals because of gaming, and perceptions about unions’ strength. "

All of these reasons have been proven to be false," Mack says.Retail occupancy in regional/specialty malls is nearly 100 percent, Mack says, with some malls such as the Strip’s Forum Shops at Caesars Palace and Showcase Mall having long waiting lists. 

Occupancy is about 93 percent for anchored retail and about 88 percent for unanchored retail.

Lease rates run the gamut from $12 psf annually for unanchored space to more than $75 psf annually in some regional/specialty malls, Mack says. Additionally, "We are seeing REITs and closely held investment trusts taking a more active role in purchasing existing shopping centers."

Since the subsectors of Leisure and Hospitality – food and beverage, travel and tourism, lodging, and recreation – require in-person interaction and disposable income, it is understandable that the necessary coronavirus prevention measures, such as social distancing, shelter-in-place orders and the shutdown of nonessential businesses, have brought the Leisure and Hospitality sector to a standstill.

What the Bureau of Labor Statistics (BLS) says

According to the Bureau of Labor Statistics (BLS), in March the industry lost 459,000 jobs, with the food and beverage subsector being heavily impacted. 

The March job loss numbers are much larger than the BLS reported, as the BLS numbers for that reporting were based on a survey done between March 8 and 14, with a reference date of March 12. For example, Disney and some other theme parks in the Orlando-Kissimmee-Sanford, Florida metro did not close until March 14 or later, so the full impact on the reported job loss numbers were not counted. In 2019, Leisure and Hospitality made up 10.8% of the jobs in the U.S. 

ThinkWhy predicts this number will drop to 7.7% in 2020 or a loss of 30% of all the jobs in the sector. For comparison, ThinkWhy forecasts that the Orlando metro will lose 20% of its Leisure and Hospitality jobs in 2020.The job loss by metro across the country has been uneven, depending upon the share of employment each subsector has in the metro.

For instance, the Orlando-Kissimmee-Sanford, Florida metro where all subsectors are large, lost only 0.11% of its Leisure and Hospitality jobs in March, while Toledo, Ohio lost 12.9% of its jobs in its subsectors. (This comparison can be misleading due to the survey reporting period.)Related: A Tale of Two Industries During COVID-19The pain is being felt heavily across almost all food and beverage establishments. 

The National Restaurant Association states that since March 1, the restaurant industry has lost more than 3 million jobs and $25 billion in sales. It also reports that roughly 50% of restaurant operators were expected to lay off more workers in April.“

Association research found that 54% of operators made the switch to all off-premises services; 44% have had to temporarily close down. This is uncharted territory,” said Hudson Riehle, the National Restaurant Association’s senior vice president of research. “The industry has never experienced anything like this before.”

Sandstone Equity Group allows users to find promising properties that match their investment standards, which is particularly useful for buyers from out of state. This means they no longer need to fly multiple times in order to search for rental properties. They simply need to call Sandstone Equity to dominate the Las Vegas real estate market.

It is visited by millions every year.

Nevada's Vegas is just one of many attractions. Nevada's tourism capital, Vegas, is home to 75% of Nevadans. But there are many other attractions that the Silver State has. The Strip is not the only place where tourism is concentrated. Its natural beauty has many fans, which makes up a large portion of the tourism pie.

Investment in real estate is almost always a good option, regardless of where you live.

Real estate, regardless of where it is located, can be a great way to diversify your portfolio. Because it is very closely related to bonds and stocks, this can be used as an inflation hedge. real estate is a great way to make money if the stock market goes sideways. This is especially true in areas with a high population growth rate.

If you want to make money in real estate.

Nevada is a great state for property owners and landlords, even though it has stricter short-term rental rules.

It is home to a vibrant economy, which includes large contributions from tourism and mining. Both are always hiring, making the state appealing to people from other states.

The state's job opportunities have contributed to a steady increase in its population. The demand for quality housing is increasing as Nevada continues to see an increase in in-migration. Investors can still get good returns on their investment by turning a Nevada property into a long-term rental.

Nevada is a great business location that attracts many travelers. Although rental properties are illegal in Clark County, there are many thriving properties within the region that can generate decent Airbnb rental income.

There are no income taxes on personal or corporate earnings. Do we need to say more?

Resident property owners in Las Vegas can house hack their way to a successful Airbnb business, despite the fact that they are not allowed to rent short-term properties on The Strip.

Despite the restrictions, Nevada Property owners still have great opportunities to make a lot of money. Before purchasing a Nevada vacation home, it is important to be familiar with the Nevada laws regarding short-term rentals.

Once you have a good understanding of the laws in the area, you can begin to search for properties that match your investment goals. This is the great advantage of platforms such as Sandstone Equity Group that make it easy for investors to locate property.

Sandstone Equity Group allows users to find promising properties that match their investment standards, which is particularly useful for buyers from out of state. This means they no longer need to fly multiple times in order to search for rental properties. They simply need to call 
Sandstone Equity to dominate the Las Vegas real estate market.

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