Nevada

— By Mike Ballard, Partner, Ascent Multifamily Accounting in Las Vegas — Las Vegas — known for its vibrant entertainment scene and thriving real estate market — is experiencing the early signs of a recession. With one of the most substantial construction forecasts in the nation, the Las Vegas multifamily real estate sector is poised to witness a surge in supply with 8,000 units to come online by 2025, according to Avison Young.  However, despite the anticipated surge in deliveries, the Las Vegas market has seen fewer construction starts this year. We can anticipate that the Valley will once again have a shortage of rental housing in 2025 and 2026, which will increase rents and cause concessions to evaporate.    It is also anticipated that up to 10 percent of commercial real estate within the Valley may face foreclosure in the next 18 months. The city is currently experiencing one of the highest rates of foreclosure in the country, with nearly one in every 1,800 homes experiencing foreclosure. This can be attributed to high interest rates and the prospect of a recession forming a dark cloud over the nation’s real estate market.  According to CoStar, quarterly multifamily sales volume has yet to eclipse $150 million in 2023. The surge in supply is also …

— By Jeffrey Swinger, Executive Vice President | Las Vegas, Multifamily Investment Sales, Colliers — Las Vegas is on a roll right now, continuing to raise the bar year after year, and we are bullish on the long-term outlook of Southern Nevada’s future. UNLV’s Center for Business and Economic Research predicts that Southern Nevada’s population will gain 41,900 new residents in 2023 and increase another 2.4 percent in 2024. This wave of growth, coupled with strong local economic activity and enhanced infrastructure investments, has created more jobs and more demand for housing.  With more than $8.12 billion of new major projects delivered in 2023, there is another $2 billion currently under construction with plans to deliver in 2024 and 2025. Additionally, there is another $17.25 billion of announced and proposed projects keeping Las Vegas’s momentum moving forward. Significant projects that were delivered in 2023 include the Fontainebleau, the MSG Sphere and the inaugural Formula 1 Heineken Silver Las Vegas Grand Prix. The Fontainebleau is the latest hotel/casino along the Strip, valued at $3.7 billion, and will add 3,644 rooms to the hotel inventory count. The MSG Sphere is Las Vegas’s newest entertainment venue featuring the largest spherical building in the …

— By Paul Sweetland, SIOR, Vice Chairman, Colliers Doherty Industrial Group — Throughout 2023 we were often asked if the Las Vegas industrial market had “missed the memo” on the slowdown since other western markets were experiencing a slowdown that we had yet to see. With record under-construction numbers and net absorption numbers being on pace to finish the year with the second highest total of the last five years, Las Vegas didn’t appear to be slowing down. However, there are certain sectors that show initial signs of a pending change.  Land Sales:  Land sale transactions have seen a 75 percent drop from the prior year. Peak land pricing was $36.00 per land square foot in the summer of 2022, and by the fourth quarter of 2023 it had dropped 25 to 35 percent as demonstrated in the limited closings that occurred. Although lease rates continued to increase, developer underwriting had seen significant changes in exit CAP rates along with debt, equity and construction financing due to an unstable interest rate environment with the Feds continued rate increases at the fastest pace in 40 years. Lower land pricing or significant lease rate increases are going to be necessary for the …