ACCESS LASVEGAS DECEMBER 2007 | JANUARY 2008
YOUR ACCESS TO THE LAS VEGAS MULTI-FAMILY HOUSING MARKET
MGM’s Vdara Offers An Eco-Friendly Retreat At CityCenter The term "city within a city" has been coined to describe a number of mixed-use developments in high-density metropolitan settings. MGM Mirage is attempting to elevate this phrase to new heights with CityCenter, the largest privately financed development in the history of North America. Located in the heart of the Las Vegas strip, this 76-acre project is not only generating excitement for its scope and high-profile design, but also because it's pursuing the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) silver certification. Situated between the Bellagio and Monte Carlo resorts, the $7.4-billion CityCenter will open in late 2009. A design collaboration between MGM Mirage and eight internationally acclaimed architects, the development will feature a 61-story, 4,000-room hotel and casino; two 400-room, non-gaming hotels; a 500,000 square feet retail and entertainment district and approximately 2,650
luxury residences. "When we say 'city within a city,' we [don't mean to] sound cliché," says Tony Dennis, executive vice president of CityCenter's Residential Division. "It's hard to come up with a new term in the dictionary to define CityCenter." Among the stylish hotels, high-end condominiums and entertainment venues from one of the world's premier developers and operators of luxury resorts, Vdara will be the only condo hotel in CityCenter. This 57-story tower is intended to attract second and third homebuyers interested in a vacation home that generates rental income to help offset ownership costs. New York-based, world-renowned architect Rafael Viñoly designed this chic condo hotel, with interior design by Brennan Beer Gorman Monk Interiors, implementing environmentally friendly building practices. MGM Mirage is touting the potential of Vdara to transform the way people (Continued on Page 10)
ACCESSLASVEGAS December 2007 | January 2008
Top 10 Multi-Family Markets To Watch In 2008 Includes Las Vegas Source: Sperry Van Ness
Like so many in the nation, the majority of those involved in primary and secondary U.S. multifamily markets are operating in a wait-and-see mode. Wait and see what long-term interest rates and the resulting efficiency of borrowed money will do. Wait and see if the glut of newly built and newly converted condominiums will hurt apartment fundamentals. Wait and see if a potential rush of single-family home rentals will further increase that damage. Wait and see what the true severity of the lending industry fallout will be. Each of these factors causes concern for apartment vacancy rates and therefore an investor's return. In formerly strong residential condominium markets like San Diego and parts of Florida, auctions are becoming a quick and easy way for developers to sell off condominiums that have fallen out of demand. Lenders are causing additional woes in these
â€œ...the lack of affordability in single family housing means great things for apartment owners in growing primary, secondary and tertiary markets.â€? - ACCORDING TO SPERRY VAN NESS, REIS AND ECONOMY.COM
uncertain times by unlocking and raising the interest rate to which a borrower originally agreed. As the shakeout continues, the real estate industry can expect further problems relating to the lending industry and disposable income, and should brace for a period of readjustment as the market finds new footing. On a brighter note, the lack of affordability in single family housing means great things for apartment owners in growing primary, secondary and tertiary markets. As overall population growth for the nation continues at a hefty pace, improvements in technology also make for a more mobile workforce and affords renters the opportunity to live in almost any market. While this could put a renter anywhere from a bustling metropolis to a quiet mountain retreat, an increasing majority of renters seem to be looking for areas where they can both live and play. For that reason, the markets in the Sperry Van Ness Top 10 Markets to Watch are, for the most part, not new to the multi-family scene. While buyers and money are coming from almost everywhere in today's more global market renters are flocking in large part to established multi-family environments that offer the vision and resources to grow and
change as demand does through 2008 and beyond. The Top 10 Markets Note: In Alphabetical Order
Dallas/Fort Worth Multifamily housing in the Dallas/Fort Worth area is still on a very positive track, forecasted for continued strong fundamentals, bolstered by the expectation of yet another 125,260 residents in 2008 and recognized as having the tenth highest population increase of our surveyed major metro areas. Industries that are expanding outside the energy sector include such supporting businesses as legal, finance and accounting. Geographically, the metro area is expanding in every direction, from Plano and Frisco to Keller and Southlake, as well as in the Dallas and Fort Worth CSD areas, where there is still demand for condominiums in both cities. Another projected highlight includes apartment vacancy rates, which are expected to drop by 1.3 percent between 2007 and 2008, even as construction completions add a much-needed 4,258 units in 2007 and 3,665 units in 2008. Effective rents currently average $709 in the metro, attractively below other markets in our index, and as demand continues and supply lessens, landlords can continue to push average effective rents up as much as 3.1 percent. Investor activity in Dallas and Fort Worth is still putting active 1031 exchanges on the board, and some out-of-state swappers have additional funds they're looking to place-and are happy to do so-in and around these two thriving cities. Houston With 23 of the Fortune 500 companies based in its MSA, Houston is poised for long-term growth as it continues to be a hub not only for energy and energy-related industries but also for technology and aeronautics. A steady influx of immigrants and a large student population of more than 300,000 are all drawn to Houston because of promising employment opportunities and affordable living. Average effective rents are projected to rise from $682 in 2007 to $706 in 2008, fueled by the addition of 117,000 new residents and a job growth rate that is double the national average. A particular hot spot with stellar growth is the class A apartments on the inside of the 610 Loop, which experienced average effective rental increases of about 11 percent last year. Projected construction in Houston reflects national economic trends, as local multi-family starts as a percentage of inventory are expected to be down to 10.83 percent in 2008 from 16.24 percent in 2006. Still, these completions will
support the heavy demand as the area continues to flourish. Overall, Houston has a strong foundation of both job and population growth. As we look toward 2008, it seems that the prosperity surrounding the Energy Capital of the World, like gas prices, has nowhere to go but up. The Inland Empire in Southern California San Bernardino and Riverside Counties
The Inland Empire. made up of San Bernardino and Riverside counties, continues to be one of the fastest growing regions in the nation. Compared to neighboring Southern California counties San Diego, Los Angeles,
third-highest population increase of the surveyed metro markets and a market filled with residents looking for an affordable way to live. Yet reasonably priced housing in Southern California remains a challenge. Average effective monthly rents in the Inland Empire are projected to increase by a hefty 4.4 percent to $l,079,compared to Orange County ($1,558), Ventura ($1,439), Los Angeles ($1,450) and San Diego ($1,292), all of which are outpaced only by San Francisco and New York. With little to no respite in sight on the rental rate front and population growing steadily, multi-family owners and the supporting neighborhood businesses in these communities will continue to flourish, making the IE one of this year's multifamily market success stories. Las Vegas
Ventura and Orange, the Inland Empire (IE) is attractive because it's still considered affordable and still offers opportunity for growth. Aiding its rampant growth is the IE's high exposure to sub-prime loans and the expectation that the market, like Phoenix, will soon see above-average foreclosures and loan payment defaults. All this means that through 2008, it will continue to be a great time to own apartments in the Inland Empire, Chino, south Ontario, Rancho Cucamonga, Upland, University City and Riverside are the Inland Empire markets showing the strongest activity and growth. In these and other areas across the county, institutional investors have increased their interest in the market as private investor activity has slowed due to current rising interest rates. Following the trend of San Jose and Phoenix, l00-plus unit properties lead the area for dispositions and acquisitions. Construction completions expected for fourth quarter 2007 will add 1,504 units, and 1,855 units are scheduled to break ground in 2008, yet demand for multi-family product is such that vacancy rates will still drop by more than 9 percent, to 4.9 percent, in 2008. At the same time, the population is projected to increase in 2008 by just more than 100,000 residents, or 2.5 percent, giving the Inland Empire the
Population growth through 2008 for America's Playground is projected to be a substantial 3.9 percent, which blows away second-place Austin's projected and still incredible 2.8 percent So what is so attractive about las Vegas that generates this kind of growth? While few firms are based here, the massive economic foundation that's been built on the entertainment, hospitality and leisure industries more than bridges the gap. The affordability and newness of the sprawling desert community attracts residents, and residents stay because of the vast choices for shopping and entertainment, light traffic (not including the Strip), new schools and job growth. Or is it the job growth that attracts the residents? The result of this seemingly reciprocal relationship generates even more demand for neighborhood services that include but are not limited to medicine, business and professional services. and financial, insurance and real estate services. As they move to and expand within Las Vegas, residents and businesses enjoy another local bonus: the incredible tax benefit. With the lowest state taxes of any of the 50 states, Nevada charges no personal or corporate income, inheritance, gift, estate, inventory or franchise taxes. The 7.75 percent local sales tax charged to the nearly 40 million visitors each year takes care of the burgeoning area's tax-served needs, which are significant considering local population growth. Through 2008, the city will continue to be an attractive multi-family investment market because of the incredible demand, low percentage of construction starts vs. recent years, and a shrinking availability
of land, as Las Vegas is surrounded by mountains and government land that restrict housing growth. Phoenix In addition to being named the nation's largest metro area for employment growth by JP Morgan Chase for two years in a row, Phoenix has also been ranked by Forbes as the second-best U.S. city for jobs. With such notoriety and solid fundamentals, Phoenix can expect to see average effective rents increase 4.1 percent from $724 in 2007 to $754 in 2008. With owners reversing some of the recently converted condominiums back to apartments, vacancy rates could rise, but Phoenix's single-family foreclosure rate, which is 75 percent higher than the national average, may more than offset that as foreclosed homeowners look to rent. Sales velocity has increased with large properties of 100-plus units. And as is the case in San Jose, smaller properties with less than 50 units have seen a sharp decrease in transactions because of the restricted capital market for small investors. Even though prices are leveling off, Phoenix will retain value because of rent increases and stable vacancy rates. As the Valley of the Sun cools down, Phoenix still remains a top market to watch due to its low unemployment rate,
strong population growth and relatively moderate number of new units coming on the market. Raleigh-Durham The cities of Raleigh, Durham and Chapel Hill, North Carolina, make up the coveted area called the Research Triangle, which includes a research and development park attractive to multinational bio-technology, information technology and communications firms. Further sealing the strength of this diverse economy is a bevy of steady local, county and state government operations, and the close proximity of three major universities that generate an impressive labor pool from
ACCESSLASVEGAS December 2007 | January 2008
which new and expanding companies can hire employees. In terms of income growth, Property & Portfolio Research projects the Raleigh-Durham market will continue to rank among top performers in the United States in terms of rental household growth for the next few years. The submarkets surrounding the Research Triangle Park continue to see the most activity in apartment sales. In 2006, more than 50 percent of the local multi-family market's total dollar volume was generated in this area. With these market strengths in mind, it's no surprise this thriving market made it on our top ten list. It's also no surprise that it's earned acclaim from others, including Business 2.0 magazine, which in 2004, named the Research Triangle the No.1 area in the United States for generating high-paying jobs. Population growth projected for 2008 is substantial, and at 2.5 percent, it's ranked third of all our measured markets in percentage growth. At the same time, apartment construction starts as a percentage of inventory are low, which forced apartment vacancy to drop by 4.4 percent to just more than 8 percent. Thankfully, this market has seen very little condominium conversion activity because of low demand. Sellers in the area are mostly private, out-of-state clients, followed by private, local owners; the same goes for the buyers. While REITs and institutional buyers do seek multi-family communities here, most soon realize the scarcity of debt-free product that meets their criteria. Yet the large investors are still keeping Raleigh-Durham on their radar screens, as are so many others in this market that is most definitely one to watch. Sacramento With several exciting projects in the queue, downtown Sacramento continues its evolution as a very desirable and dimensional market. Among the new â€œdimensions" being added here are the development of a 240-acre mixed-use
project called the Rail Yards, expected to open in 2009, and the construction of the 92-unit L Street Lofts, slated to be completed in the fourth quarter of 2007. In addition to strong fundamentals, Sacramento is popular because it's the last of the somewhat affordable and desirable areas around the Bay Area, that includes fellow markets-to-watch San Francisco and San Jose, and is centrally located not only to the coast but also to the Sonoma wine country and the mountains, which boast both Lake Tahoe and Reno. Average effective rents in Sacramento are expected to continue to increase just above the national average, hindered only by a few failed condo conversion projects that are making their way back on the market as apartments, thus softening rent growth vs. prior periods. But with strong job growth in professional and business services, transportation, utilities and manufacturing, and state capitol government jobs beckoning residents, Sacramento can expect vacancy to further tighten to 5.4 percent in 2008 as another 31,000 residents join the community. Higher land values and construction costs will further aide occupancy by slowing apartment development and strengthening the fundamentals that make Sacramento a market to watch.
effective rents-projected to increase in 2008 by an aggressive 3.9 percent. The SOMA (south of Market Street) and Mission Bay submarkets are seeing the majority of apartment and condominium development, with 585 rental units currently under construction at just three projects. Many more condominiums are in the proposal queue but have a tough approval process ahead. Still, the likelihood of constructing even a small percentage of those proposed condominiums doesn't threaten the apartment market much, because price points to own in San Francisco are still unattractively higher than renting. San Jose
During the "dot.com" bust in the early part of the decade, the Santa Clara County, or Silicon Valley, lost 175,000 jobs, forcing residents to vacate and look San Francisco elsewhere for work and affordable living. Occupancy declined because quality The quintessential City by the Bay, San residential and commercial tenants left, Francisco may forever be a draw to and the San Jose real estate market was residents seeking that one-of-a-kind mix left a mess. Such is not the case now. In of vibrant urban lifestyle, gorgeous views, contrast to its bust years, San Jose has and strong economy and job turned toward its fundamental tech opportunities in financial, legal, hi-tech/ strengths and rebuilt itself in recent information systems, and biotech service years. Its industries are revamped, industries. In 2008, this compact city is refocused and reenergized, and it expected to grow by as much as the continues to command attention from market can handle-a seemingly meager high-tech, biotech, green and solar 10,280 residents when not considered to energy, and computer technology firms. scale-but the impact will be substantial That trend, in turn, has lured back when the number of these new residents residents and investors, and should that will rent is taken into consideration. continue to do so for years to come. In very few markets do renters make up Through 2009, a meager 900 apartment such a majority of residents-for the units are expected to complete locally, overall San Francisco-Oakland-Fremont which will do little to quell a high metro area, renters constitute a demand for residences that is spurred by substantial 42 percent of the residents, the more than 14,000 newcomers but for the city alone, the figure is expected in 2008 and a growing upwards of 65 percent. This continues to affordability gap for single-family attract institutional investors, as well as housing that even San Jose's high-tech, plenty of activity from high net worth high-wage earners can't overcome. The individuals. Many of San Francisco's vacancy rate through 2008, as a result, is apartment owners, however, are actual projected to drop a substantial 4.3 users, which limits investment percent, while at the same time, opportunity for those itching to take apartments are expected to have the advantage of the upswing in average highest average effective rent increase,
business district), the area's military bases, and, as the sixth largest container port in North America, by port and international trade-related jobs. The City of Destiny offers residents the charm of a small town with the convenience and amenities of a big city, and has forward looking plans to step up light-rail efforts that will afford residents welcome new transportation options. Developers are being enticed with tax breaks to build multi-family housing in mixed-use projects, adding to Tacoma's vibrancy
growing by 4.8 percent to $1,498, further making the case for San Jose's apartment investment success. Investment options are limited though, as a great many interested parties continue to seek out opportunities among owners who want to hold their investment and reap long overdue profits. Sales of complexes of 100 units or more are wildly popular, as in most of our top markets to watch, and typically don't even hit the market before a transaction is made from an unsolicited offer. These unsolicited offers are driving up values. For smaller apartment properties, the investment landscape has also changed. Smaller, private investors typically have to borrow more money through loans in which interest rates play a larger role, since the cost to borrow money is increasing. Because of this, buyers of complexes with 50 units or less are more reticent than those buying the larger complexes. If the smaller apartment product is priced right, the product will sell relatively quickly. If not, it will just sit. Yet with roughly one-third of all venture capital in the United States going to firms located in the Silicon Valley, the forward-looking industries that make up the area's economy help ensure that the health of all types of San Jose multifamily properties will continue to increase and will continue to make this a top market to watch. Tacoma Tacoma is a superior example of a great live-work-play opportunity for residents. The mid-size city has a stunning coastal location and is nearly equidistant to both active and commercially important Olympia and Seattle. The economy is driven by Tacoma's CBD (central
No Holiday Cheer: Las Vegas Housing Market Outlook Still Grim Source: LasVegasNow.com
The prices of new and existing homes have been steadily dropping in Las Vegas since mid-2006 and likely will continue to plummet. That's according to several professional traders and national economists monitoring the valley's real estate market. Futures contracts on the housing market that trade on the Chicago Mercantile Exchange indicate Las Vegas is sliding toward the country's largest price decline. Some are predicting as much as a 20% drop in home prices by 2010.
The impact is being felt by buyers, sellers and realtors. Last month, the world's and character. While Tacoma's leading Century 21 realtor filed for fundamentals in terms of employment bankruptcy in Las Vegas. Realtors say are also impressive -- with household income growth at a robust 4.8 percent for they are feeling the pinch. Kelly Kuntz bought a real estate business last year as 2008, ranking it third among our indexed markets, and population growth the housing market was starting to crash. He calls the situation dreadful. He ranked fifth among the indexed markets says although he has plenty of work, he -- developers have not yet hit the area won't make any money this year. with force. In fact, apartment construction starts as a percentage of "What happens is this doesn't become a inventory are incredibly low. But with slow market, I am swamped." He is vacancy rates expected to continue swamped with sellers, many of whom are shrinking to a low 7 percent as effective desperate to sell. "They believe that rents continue to climb at 3.6 percent through some miracle somebody is going Tacoma will no doubt thrive as another to come to their home and the chances of America's most livable regions, as are very very remote," Kuntz said. awarded by Partners for Livable Communities, with the fundamentals and He says it keeps him awake at night lifestyle that leaves apartment investors trying to figure out how to make his real and residents smiling. estate business grow. ABOUT THIS REPORT Sperry Van Ness analyzed more than 60 primary, secondary and tertiary markets, examining economic factors that impact future multifamily investment real estate. This report looks at future trends and the markets that show the greatest potential for income growth based on these economic movements, rather than current market data. The market rankings for this report focus on such factors as population growth and inventory, vacancy factors and rental trends. We hope you find this report to be a valuable resource for you and your colleagues. For more information on Sperry Van Ness, please call us at 800.353.7500.
UNLV's economics department estimated home prices would stop dropping and people would start buying in the next five months. But the most recent estimate by housing experts is that it could take up to another two years for that to happen. SalesTraq reported the median price for new homes in the Las Vegas valley in August was $309,241, 13 percent below its peak in April 2006. The median existing-home price was $270,000 in August, down 6.8 percent from its June 2006 peak.
ACCESSLASVEGAS December 2007 | January 2008
Apartment Sales Drop, Prices Rise In Third Quarter
Source: Las Vegas Business Press
Third quarter sales in Southern Nevada's apartment market slowed amid diminishing inventory and lack of new construction. The slowdown is in response to a softening single-family home market as well as rising land and construction costs. More than 200 apartment buildings, about 11,196 units, sold in the third quarter or 46 percent less than a year ago, reports Michael Belnick, an apartment specialist with ReMax Central Commercial. Only $1.2 billion in sales - a 31 percent year-to-year drop - were reported. Despite the dramatic decrease, median sale prices still increased six percent to $107,400 per unit. "We are seeing drastic sales declines even stronger than the residential market," Belnick said. "However, there are low interest rates, temporary housing needs and the potential for added values." The Las Vegas Valley apartment market inventory consisted of roughly 181,085 units in the third quarter, with a 7.7 percent vacancy rate. Yet the valley is still seeing roughly 5,000 new residents a month attracted by the region's low taxes and job market.
hotel-apartment hybrids it calls “flexible-stay” properties. Last month, the company paid $13.75 million for Coliseum Villas, a 186-unit, 3.64-acre property near the corner of Paradise Road and Twain Avenue, across the street from the Wynn Las Vegas golf course and about one mile from the Falls apartments. The Siegel Suites business model provides furnished and unfurnished units, allows guests multiple payment options and does not require they sign long-term lease commitments or handle their own utilities. The chain's average tenant stays for about four months, Siegel says. “They can pay by the week or by the month,” Siegel says. “It’s all about ‘no commitments’.”
Advanced Management Group Offers Innovative Approach To Property Management
"We are experiencing a slower real estate investment market for residential income properties than most markets," said Belnick. "But we will not be as affected as much as areas like San Diego or Phoenix due to our job and population growth over the next several years."
Advanced Management Group, a Las Vegas-based real estate management company, offers an innovative management fee structure, incorporating accountability and a vested interest in the property owner’s bottom-line. Unlike traditional property management companies, Advanced Management Group’s fee structure is based on the financial performance of the properties they manage.
The Siegel Group, for one, has gone on a buying spree this year, most recently acquiring 5-year-old, 225-unit Emerald Suites Tropicana at 3890 Graphic Center Drive. The group paid $20.25 million, or $90,000 per unit, to Las Vegas-based Mona Co. Development. Siegel, a Studio City, California based firm, now has 11 properties in the valley, totaling 2,500 units.
According to Bret Holmes, vice president of operations for Advanced Management Group, the accountability fee structure demonstrates their commitment to the property owners and the overall success of their properties. The fee structure is based on property meeting the budgeted operating income goals on a monthly basis, which creates a win-win situation for the management company and the property owners.
The company acquires aging, mismanaged or undervalued properties that are quickly converted and branded into "flexible-stay" properties. Siegel Group president/CEO Stephen Siegel claims the properties become cash flow positive within 90 days after acquisition.
Advanced Management Group currently manages 996 units in Las Vegas for The Edge Group, a Las Vegas-based development, gaming and management company. According to Jeff Williams, executive vice president and general legal counsel of The Edge Group, the accountability fee structure is a logical choice for his properties.
The Siegel Group additionally acquired the Falls apartment complex near the University of Nevada Las Vegas campus for $14.75 million and promptly reflagged it Siegel Suites Cambridge. The 230-unit, 4.8-acre property on South Cambridge Street was the 10th property to join the company’s 2,500-room, Vegas-area chain of
“Complacency is very common among management companies,” explained Williams. “The performance-based fee structure encourages superior property performance with a financial reward for all parties involved.” Advanced Management Group Nevada, LLC is a real estate management company with more than 40 years experience in providing property management, financial, and asset management services for multi-family properties. Advanced Management Group currently manages more than 2,000 units in Las Vegas, Nevada, including conventional, weekly/flexible stay assets and hotels.
Las Vegas Metro Occupancy November 2006 through October 2007 95% 94%
Source: CB Richard Ellis (96,658 Apartment Units Surveyed in October)
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ACCESSLASVEGAS December 2007 | January 2008
Las Vegas Snap Shot KEY INDICATORS
Source: Red Capital
2Q 2007 RESULTS
YEAR OVER YEAR CHANGE
STABLE / DECREASING
Access Investment Offerings COMMUNITY (UNITS) Wynn Palms (554)
ASKING PRICE $ 57,750,000
PER UNIT PRICE BROKER / CONTACT INFORMATION $ 104,242 Colliers International / 702.735.5700
Emerald Suites Las Vegas Boulevard (396)
The Bentley Group / 702.855.0440
Brittnae Pines Apartments (208)
National Properties, LLC / 702.376.4305
Emerald Suites Cameron (96)
The Bentley Group / 702.855.0440
Elmwood Villas (156)
The DT Group / 818.286.1209
Palm Hills (113)
The DT Group / 818.286.1209
Park Forest (204)
Kevin F. Keefe / 702.215.7128
Access Recent Transactions COMMUNITY (UNITS)
PER UNIT PRICE
Siegel Suites Cambridge
October 18, 2007
The Siegel Group
Siegel Suites Twain
October 10, 2007
The Siegel Group
September 18, 2007
Randy M. Hansen
Rancho Del Rey
August 28, 2007
August 27, 2007
Summerhill Villas (440)
August 3, 2007
Artisan Real Estate
Adobe Ranch (234)
August 2, 2007
Capri Capital Partners
For additional information and / or broker information on Access Investment Offerings and / or Access Recent Transactions contact Michael Fazio at 702.755.7477.
Las Vegas Multi-Family Housing Building Permits Shoot Up 330%
Renters Suffer: Owners Missing Payments and Risking Foreclosure
Source: Las Vegas Business Press
Source: Multi-Family Housing News
Single family resale inventory remains elevated, despite multi-family growth.
Renters, the newest housing crisis casualty, are being evicted from homes and apartments they have paid rent for because the property owners have defaulted on loans. This prompted the House to pass a mortgage act November 15 that includes renter protection.
In September, Clark County housing construction permits for residential properties totaled 2,883 according to the University of Nevada, Las Vegas' Center for Business and Economic Research. This represents a 96.3 percent year-over-year increase in total number of homes permitted for construction, mainly due to a substantial increase in multi-family permitting activities while single family unit permitting levels continue to
The act requires new owners to give tenants a 90-day warning that the property is about to be foreclosed upon and up to six months to leave after the foreclosing. Although exact figures for foreclosure-related renter evictions don't exist, a 2007 Mortgage Bankers Association survey found one in eight foreclosures (a number the MBA feels is low) involved properties that were non-owner-occupied, The New York Times reports. Renters, who are often evicted so that a property can be sold, may not even know their home is about to be foreclosed upon. They then suddenly find themselves in need of cash to move and put deposits on a new rental property.
“Banks don’t want to be landlords,” said Vicki Vidal, senior director of loan administration and government affairs at the Mortgage Bankers Association. “They’re in the business of making mortgages. You need to recoup the money to keep the process moving.” Las Vegas, Nevada has a particularly high number of renter-related foreclosures: In addition to having one of the highest foreclosure rates in the country, 28 percent (more than twice the national average) of the state's defaulted mortgages earlier this year were for homes the owners did not live in.
wane. Single family permits comprised 578 units, or 20.4 percent of all permits issued, while multi-family units accounted for 79.6 percent, or 2,296 units. The number of single-family units permitted decreased by 37.3 percent compared to the prior year, while multi-family units more than tripled (330.8 percent) from the same month in 2006. Residential building permit valuations in September 2007 totaled $779 million, up 160.9 percent from the same month last year. The number of resale homes remains elevated, with total inventory approaching 29,000 units. The market reported a slower-than-average rate of new home sales and elevated resale housing inventory levels. While housing market conditions in southern Nevada continue to influence consumers' willingness and ability to spend, elevated retail gasoline prices, utility costs and interest costs also played a role. Home price declines and increases in the number of for-sale listings and foreclosures are indicators of excess inventory levels facing the Las Vegas community. Along with the weaker residential housing market, we anticipate continued declines in inflation-adjusted per-capita spending through the end of the year.
Foreclosure-plagued Arizona and Florida are also above the national average. And 22 percent of the foreclosed-upon properties in California weren't owner-occupied. More than one million properties are expected to enter foreclosure this year.
ACCESSLASVEGAS December 2007 | January 2008
Prices Drive Renters to Homes Rather Than Apartments Source: LasVegasNow.com
People who are renting apartments are finding this is a good time to find a house to rent. Rental prices for apartments are rising while rental prices for single family homes are expected to fall in the coming months. A neighborhood with new houses and quiet gated communities are the kind renters dream about, and now because of the housing boom, renters are moving in and getting more bang for the buck. Gary Maxwell is getting his new rental home ready for the family. There is a spacious formal dining room, family room, and outside there's a fish pond and dog run. "The amenities offered here are very good for the price we are paying," shared Maxwell. At 2,100 square feet, it would cost $3,000 a month to buy this $400,000 home. He could buy it, but he doesn't want to. "Now is a good time to rent, an iffy time to buy. Renting is good," said Maxwell. He is getting a great deal because of what homeowners are going through. "It's very hard to sell, very difficult; buyer's market, definitely," said Patti Decelercy, a home owner. "We suspecting there's a flood of listed homes that aren't going to sell that will become rentals," said Al Tamura, a broker. He has been running the numbers and owners are desperately looking for renters to pay mortgages they can't afford. "Yeah, right now, they are in survival mode," said Tamura.And that's making renters like Maxwell happy. "Yes, but when you say happy, would we be happy paying less? Yes, but we are still happy." Tamura says they might be paying less in the rental market's winter doldrums. In the coming months, he expects single family home rentals to offer free rent and other incentives. This may be short lived. There will be a lot more renters coming into the Las
Vegas market in the coming months. Plus people have been shut out of the home market by rising interest rates and are looking to rent. And all that means the lower priced apartments, their prices are either stable or climbing.
Continued: MGM’s Vdara Offers Eco-Friendly Retreat people think about buying and living in Las Vegas. Vdara aims to balance the energy of Las Vegas with an exclusive, non-gaming environment, offering buyers an ideal balance of access and escape. Vdara is connected to Bellagio via a pedestrian walkway and is steps away from CityCenter's resort casino. With an estimated 1,543 fully furnished and equipped turnkey residences, featuring well-known brand-name appliances, fixtures and furnishings, Vdara offers studios, deluxe studios, one- and twobedroom units, one- and two-bedroom penthouses and two-story penthouse lofts. Units, which range in size from about 500 to 1,740 square feet, cost between $600,000 to $2 million. MGM Mirage is offering a full complement of luxurious amenities and sophisticated services, similar to four-star resorts, designed to entice buyers to this urban retreat. Steps away from Bellagio and CityCenter Resort & Casino, Vdara will offer more than a traditional condominium amenities package. A resort-style pool, cabanas and whirlpool will be perched atop the porte cochere. The building includes a wellness spa, fitness center, full-service salon, a lobby with a lounge and bar, state-of-the-art conference facilities, a restaurant, 24-hour fully staffed lobby and valet parking services. Homeowners will also enjoy privileged access to all of the MGM Mirage Properties. Benefits include VIP treatment and preferred access to its resorts, restaurants, entertainment, special events, nightlife, shopping, and golf and spa offerings, including in-home spa treatments. In Las Vegas, several high-profile
projects have been cancelled. Despite a well-known condo bust in Sin City, about 40 percent of Vdara's units have been sold since sales commenced last February. The demographic of buyers comprises empty nesters from the Southwest; international investors from Asia, Canada and the UK; and second or third homebuyers from the Midwest or the East Coast. "We're selling very well," says Dennis. "There's a market appeal for this product. Multi-housing is very important for the hotel industry." MGM Mirage is taking an innovative approach to site development, water savings, energy efficiency, materials selection and indoor air quality. CityCenter will be the only development in Las Vegas to feature an on-site nine-megawatt co-generation plant that will capture heat and use it to produce all the hot water needed for the 7,000-plus hotel rooms and residences. The developer is also installing fluorescent bulbs for the resort parking garages, saving almost a million dollars a year in electricity. The 18-million square feet project will become one of the world's largest environmentally sustainable communities. In terms of providing green solutions, "MGM wants to be a leadership organization. It speaks to a better future," says Dennis. To foster a healthy environment, Vdara will be a smoke-free environment, a significant step for a Las Vegas condo hotel, and offer organic foods at its restaurant. To impact the skyline of Las Vegas, Viñoly conceived a distinctive crescent shape and unique skin of patterned glass for Vdara. "It's like a gigantic sculpture," he says. "It's been an absolutely fascinating process." Viñoly envisioned the exterior blueprint as three sliding sheets of curved volumes to fit within the context of CityCenter's architecture while retaining a distinctive identity. "The exterior shapes are familiar, friendly and welcoming," says Dennis. Designed with a sophisticated, international flair, the interior of each unit will feature an open floor plan and horizontal windows delivering expansive city and mountain views. Acclaimed designers Brennan Beer Gorman Monk Interiors, based in New York, envisioned contemporary environments infused with comfort. "Vdara was designed to be attractive and compelling," Dennis says.
Customer Service 101: Reach Out & Welcome Your Residents Phase 2 of a 5 Phase Series for Leasing Consultants and Managers
Phase Two: A Welcome Visit Thirty days after your resident has settled in, send him a welcome letter saying, “We hope you are enjoying your new home.” Enclose a small gift. We recommend welcome labels. Welcome labels work to get your residents “stuck on you.” They are inexpensive, self-adhesive return address labels that are presented as your special “welcome gift” to each new resident, or “thank you” to each renewal. This thoughtful gesture creates instant goodwill and secures positive relations from the start. Welcome labels are easy to order and surprisingly inexpensive. There is no contract or commitment. As the management company, you simply enroll your properties and welcome away...
Now Consumers Receive Immediate Notification When Apartments Become Available For the first time, consumers searching for apartments online can sign up to receive Availability Alerts directly to their mobile phone through text messaging or via e-mail. Apartment Availability Alerts is a free enhancement to the VaultWare online leasing solution used by marketing professionals in the apartment industry. Millions of people who are interested in moving go online every day to Internet Listing Services and apartment community websites to search for available apartments. Now properties using VaultWare can provide those
We suggest Welcome Labels, who provides a manual instructing your property managers about proper ordering and distribution procedures. Custom printed labels are returned within ten days, nationwide! The program only costs $1.69 per set of labels. You may contact Welcome Labels at 800.852.3350.
When you send this follow-up letter to your new resident, include a “community calendar” and coupons from local merchants (start cross marketing)!!! Also, extend a personal invitation to the next community activity or program and encourage the resident’s involvement. Ask for service requests and resident referrals.
consumers with the ability to be immediately notified when an apartment that meets their pre-set criteria becomes available if they don’t initially find an apartment that suits their needs. Mike Cornell, COO of Realty DataTrust, said, "What’s exciting for the apartment industry is that Availability Alerts can help apartment communities
retain interested online prospects who aren’t finding an available apartment that meets their needs or timeframe for moving. Availability Alerts are another way consumers can control their online leasing search. The rate of successful completion of online transactions increases dramatically when the consumer can dictate their next steps online. Additionally, alerts are not only a tool for the consumer, but also the apartment community’s marketing staff.”
VaultWare’s Availability Alerts Summary Page gives property managers the ability to see who is interested in their properties and from which listing service they found them. This provides apartment managers with the ability to market directly to qualified consumers whom they know are seriously interested in moving in. The future is now, focus on it...
ACCESSLASVEGAS December 2007 | January 2008
Happy Holidays From Access Las Vegas Access Las Vegas and its parent company, Advanced Management Group, wish you and your families a safe holiday season and a happy New Year. We have enjoyed developing this newsletter and hope our information and articles have helped benefit you at your property(s). We look forward to delivering even better content in 2008...so Access Las Vegas, and leave the rest to us. Access Las Vegas ensures accurate market information, industry articles and multi-family housing trends that are delivered with flawless precision. The multi-family housing industry changes quickly and we do not want owners or asset managers to fall behind. Financial success depends on staying ahead of changes.
Advanced Management Group can be contacted at 702.699.9261. For information, article consideration and featured columns Access Las Vegas can be contacted at 702.755.7477. The editor of this newsletter is Michael Fazio.
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