ACCESS LASVEGAS EXTERIOR RENDITION OF VERGE - SCHEDULED TO OPEN LATE 2009 OR EARLY 2010
OCTOBER | NOVEMBER 2008
YOUR ACCESS TO THE LAS VEGAS MULTI-FAMILY HOUSING MARKET
On The Verge Of Something Big In Downtown Las Vegas Verge, downtown’s newest approved mid-rise, mixed-use condominium community is turning heads. Where nostalgia meets hip and fresh, Verge is another testament to the inevitable and vibrant future of the new Downtown Las Vegas. Although attractively priced from $149,900, Verge purchaser’s are buying much more than a condominium. Downtown Las Vegas is currently undergoing an epic $14 billion revitalization to cultivate the first pedestrian-friendly, urban experience Las Vegas has ever seen. This comprehensive plan consists of new residential, retail, live entertainment and dining establishments for the local patron to live, work, and play. Verge’s location is walking distance to all the action, including the fore mentioned and the newly renovated Fremont Street casinos, the Block, Union Park’s World Jewelry Mart and World Market Center, the Smith’s Performing Arts Theater, Lou Ruvo Brain Institute, Fremont East’s Entertainment District and much more. Verge’s 296 residence community offers the latest in modern living,
state-of-the-art architecture and design. There are 39 impressive floor plans including studios, one, two, three bedroom condominiums and spectacular lofts with 23-foot ceilings. Many residences have remarkable views of Downtown Las Vegas. Other onsite amenities include 2 rooftop pools; rooftop restaurant; on-site boutique grocery store; indoor racquet ball courts; fitness center with steam and locker rooms; secure access-controlled parking and entry; and even rooftop pet park.
Verge is certain to become one of the most desired addresses in Las Vegas. It is “Uptown Living, Downtown Cool.” Verge is a promising opportunity at an uncompromising price. As the Las Vegas market turns around, you need to be on the Verge.
ACCESSLASVEGAS October | November 2008
OPTIMISTIC CAUTION: Sin City’s Apartment Market May Still Be Heaven for Multi-Family Investors Las Vegas market expected to see substantial growth beginning in 2010, due to casinos currently under construction opening in late 2009. Source: Sule Aygoren Carranza, GlobeSt.com
While the Las Vegas market is known for its casinos and hotels, it also emerged as one of the hottest for-sale markets during the residential boom. And like many other markets, the area saw a flood of new development of both condos and single-family residences. And like many other markets, the purchasing activity cooled as the housing market slumped, leaving an overhang on inventory. Yet as the market continues to work out those kinks, there are promising signs for Sin City’s multifamily sector. Locally based brokerage firm Bentley Group Real Estate Advisors reports performance figures for the local apartment market for the second quarter trended toward the positive, albeit slightly. Occupancy rose 20 basis points, following a 40 basis-point increase in the first quarter. At 92.9%, the midyear occupancy just shy of the 93.7% reported in the second quarter of 2007. Rents, meanwhile, rose by 1% over the quarter to $889 per month. However, small, the gains are still good news, says Christopher D. Bentley, president and broker of record for the firm’s multifamily/hospitality division. "Since 2006, the shadow market of single-family homes has really affected apartment performance. It’s affected occupancy growth significantly. But if you take rent growth, then performance was flat," he explains, adding that value-add buyers that upgraded C and D-quality product have helped push overall rents up. "So things have remained flat throughout 2006, though they haven’t decreased. And 2007 was a bad year for us. We ended up with employment growth of just 9,000, compared to the 40,000 we’re used to. This year isn’t going to be much different." Bentley notes that there’s no way to accurately quantify the size or full impact of the shadow market since it’s difficult to determine how many single-family homes are on the market as rentals. According to data from the Bentley Group, just 19% of the Las Vegas housing market consists of traditional rentals. "Other" rentals -- single-family residences, condos and townhomes -- account for 21% of the pie and owner-occupied households comprise the balance. Further, the firm points out, the traditional apartment market lost a significant portion of its market share to "other" rentals and the for-sale
market. In 2007 alone, 3,944 households left the apartment pool, while other rentals gained 20,173 households. Over the four-year period since 2003, the number of households in conventional apartments grew by 3,916, compared with 51,479 in "other" rentals. While most would expect the shadow market to impact the class A space, Bentley says it’s the lower-quality assets -- the B and C product -- that are being impacted the most. "We think it’s a function of multiple households moving into single-family homes," he explains. Marty Burger, president and CEO of locally based Artisan Real Estate Ventures, says the pressure came not from condos, but from single-family homes. "It seemed like there was a condo boom here, but there really wasn’t," he maintains. "It was just eight or 10 buildings comprising 7,000 or 8,000 units. For Las Vegas, that’s not a lot of absorption." Plus, he adds, those units were on the high end of the quality spectrum and didn’t necessarily target casino workers. "Where there was a huge boom was in the single-family home market, but now that market has obviously slowed," he continues. "The homebuilders aren’t building on spec anymore." So the huge inventory of homes in the market 18 months ago is becoming depleted. Burger anticipates the local apartment market to pick up in the near future. However the for-sale market works out its issues, Bentley agrees it will present "an opportunity because a lot of these shadow rentals will come
out of the pool. The competition will dissipate" as tenants in shadow space, faced with the possibility of eviction if the homeowner is foreclosed upon, opt to return to the safety of professionally managed rental apartments. "It used to be that landlords did a credit check of a tenant. Now it’s the other way around. You have to make sure the landlord’s making its payments, and in Nevada, there is a 30-day notice on foreclosures and the papers are always reporting on this. That has boded well for apartments, and we think that’s the main reason our occupancy has grown."
MGM’S CITY CENTER
While Bentley expects this year to be flat, he says 2009 will be a year of stabilization as concessions are burned off and rent grows slightly. The market is expected to see substantial growth beginning in 2010, since most of the casinos currently under way are slated to open in late 2009.
Indeed, the city’s global tourism and gaming industry is a major employment driver for the market. According to Bentley Group's data, there are 7.1 jobs -- two direct and 5.1 indirect -- created with every new hotel room addition. By year’s end, 9,119 rooms will be added to the market. Next year will see a whopping 17,223 keys in such projects as CityCenter, Grand Hyatt and Fontainebleau Las Vegas, among others. Historically, apartment occupancy has risen as jobs were added to the market, since the workers in these casino projects typically rent units. Burger, for one, is banking on that. Artisan is on its way to acquiring 3,500 units by year’s end. Its most recent buy -- the 670-unit Canyon Pointe Apartments, located just off the Las Vegas Strip -- marked the sixth property in its portfolio, which now includes 1,975 units worth more than $200 million. The company buys both core and value-add properties, and -despite the tight lending conditions -- it was able to find financing for its last two deals in the form of a Fannie Mae loan through Wachovia and mezzanine debt with RCG Longview. "We have been getting to just about 80% financing, and
we and our equity partners put in the rest," adds Burger.
In terms of occupancy, the fair housing law does not set a standard, Green explained, but individual states may. Las Vegas continues to be one of the Whatever managers choose to do, fastest-growing markets in terms of both however, it is essential to document population and employment, says Burger, policies. To avoid familial status discrimination, Ryan suggests setting up and that is creating a supply-demand a policy explaining that if a minor is imbalance. "There’s a fixed number of brought into the residence, consequently units here and because of construction costs, it’s more difficult to build, so there’s bringing the occupancy standard over its less product being developed," he relates. limit, the residents may stay in the unit Further, all the casino projects “are going until the end of the lease but must move to a larger unit at that time. to have huge demands on the employment sector." With immigration status increasingly Statistics seem to support Burger’s claim. becoming a concern, Green explained that there are no ordinances saying With 250,000 new jobs additions slated for the next five years, Bentley is going so managers have to verify residents’ right to live in the United States and noted far as to forecast a housing shortage as that this is “a non-issue for the industry.” soon as 2010. In 2007, the city had the When it comes to asking for photo largest oversupply of housing ever, at 29,027 extra units. By 2010, the housing identification for any prospective resident, however, she cautioned that supply is expected to fall short by 1,032 managers must know why they are doing units, and then be in the red by 9,167 so, whether it be for security reasons or units in 2011. For apartments only, the otherwise, to avoid potential inventory will fall short 9,620 units in discrimination lawsuits. 2010 and 13,054 units in 2011. That, maintains Bentley, will create an Disability issues are the number one fair environment where landlords can enjoy housing complaint, Ryan asserted, with rising occupancies and rents, with no these being largely related to mental need to offer tenants concessions. disability issues. Some important physical disability issues to consider include assistive animals, which may not always be seeing-eye dogs, that cannot be included in pet policies. For parking requests, which is the number one complaint filed against landlords -- who rarely win such cases -- it is crucial to work with the resident to see what will work before denying the request, warned Source: Multi-Housing News Green.
Are Potential Fair Housing Mistakes Keeping Owners Up At Night?
With the growing concern over potential fair housing violations and the mounting number of lawsuits over such mistakes, it is crucial for the multi-family industry to be aware of a multitude of issues relating to the topic. At Multi-Housing World in Denver, a panel comprised of Anne Sadovsky, certified speaking professional; Nadeen Green, senior counsel, For Rent Media Solutions; and DJ Ryan, fair housing specialist, Kimball, Tirey & St. John LLP, discussed “what should keep owners awake at night.” Whether or not you make all efforts at following fair housing practices, it is imperative that you have insurance to cover violations, the panel explained, as well as to be aware of what and who is covered. Also, choose an attorney who specializes in fair housing law, if possible.
For the mentally disabled resident, if the behavior is a condition of a disability, the resident must be accommodated. Be aware of the difference between direct threats versus simple annoyances, the panel cautioned, and make a concerted effort. Green suggested reaching out to organizations experienced with the disability to seek advice on how best to handle the resident. For each issue, including occupancy standards, familial status, immigration status, and both physical and mental disability issues, the panel advised that all employees must be aware of their policies, know why they are in place and be consistent with all residents or prospects. Additionally, they advised those in attendance to document such policies and make them readily available.
ACCESSLASVEGAS October | November 2008
Industry Observers Agree Fannie, Freddie Takeover Was “Necessary” Could Pose Major Long-Term Negative Impact on Multi-Family Industry Source: Anuradha Kher, MHN Online Editor
Washington, DC -- The United States Government’s takeover of Fannie Mae and Freddie Mac is a necessary step to stabilize the U.S. housing market, according to multi-family industry experts who are still examining the ramifications of the announcement. The takeover will go a long way toward solving what Stuart Saft, partner in the law firm of Dewey & LeBoeuf, called a “Catch 22” that has been bedeviling a critical part of the economy -- housing. Real estate, being an illiquid asset, needs a steady stream of capital inflows, Saft points out. The credit freeze-up has meant that home prices have fallen, thus causing lenders to be much more cautious on their home lending and starving the sector of capital.
one at that, that the takeover will have on multi-family.”
of guardrails will be put in place,” he says.
The takeover presents a “good news, bad news” dichotomy, says Paul Fried, principal of AFC Realty Capital. Jerry Howard, CEO of the National Association of Home Builders (NAHB), agrees. “My reaction is ‘What a disappointment,’” Fried says. “It’s another bailout of a financial institution. Twenty years after the FDIC and the RTC, we’re back there again.”
Whatever the case, Howard advises borrowers to get back into the market now. “The interest rates are down so it’s time. Spreads have come down already and they will come down more, eventually settling at the rate prior to the crisis,” he says.
Fried does see a silver lining, however. “We may have a bottom benchmark, and the markets may begin to repair themselves,” he notes. Howard tells MHN, “In the short-term, this is good; the markets, national and international, have reacted favorably to this move, interest rates are down and this move seems like it might turn things around for the economy. But in the long-term, this could negatively affect multi-family. The portfolio of Fannie Mae and Freddie Mac is expected to shrink with this move and it cannot be predicted where multi-family will land up in the process.” Howard says that there will be changes in the role and make-up of the two companies and in the process, some sector could be ignored. “This could create a vacuum and we don’t know if there is anything else to fill it,” he says. Fried adds that the takeover may dispel some myths about the relative safety of multifamily investments in comparison to other sectors, saying that multi-family investment has always been regarded as a “safe harbor” investment, due in large part to the implicit guarantee that the U.S. government would not let Fannie or Freddie fail. “It shows that investors were making riskier investments than they should have been making,” he says.
The takeover should help the multi-family securitization market get back on track, Saft predicts. But, he doesn’t expect that market to quickly reach the securitization levels of 2006, for example. Brian Harris, Moody’s senior vice president, tells MHN, “The fact that they can ensure availability of financing is the most significant impact, and a positive
Saft believes that talk of eventually making the GSE’s smaller is a positive. He says he proposed creating a third GSE to the Treasury Department “to take the pressure off Fannie and Freddie.” He says the creation of five or six GSEs would create competition in the marketplace, comparing it to the breakup of AT&T in 1982. He says increased government oversight of the GSE’s is a given, and Fried seconds that. “A big set
Doug Bibby, president of the National Multi Housing Council (NMHC) issued a statement, saying, “The impact of the Treasury Department plan on the apartment sector remains to be seen as the details are worked out, but we are optimistic that there will be little to no disruption in the companies' multi-family operations.” He went on to say that the government action is directly related to the companies' single-family investments and their efforts to weather the ongoing decline in that sector. “The multi-family sector, on the other hand, remains strong and is actually producing profits for the firms that are helping rebuild their capital reserves. As a result, we expect them to remain active in the multi-family market.”
Apartment Rents In West Increase Slightly; Las Vegas, Reno Show Stability Source: The Associated Press
Apartment rents in the western United States are barely climbing -- good news for renters but actually a sign of a weakening economy, according to a new report. The good news for renters is that while homeowners have watched the value of their houses drop, and subprime loan holders have seen their mortgages double, even triple, many apartment renters are paying just a few dollars more than they did a year ago, according to a report by RealFacts. Of the 19 major Western metropolitan markets covered in the analysis, 14 experienced quarterly rent growth, but none more than 1.7 percent, and four
actually declined. Rents were flat in Las Vegas and edged up slightly in Reno. That's consistent with national trends, which found average rents across the nation increase by only 0.6 percent since March 2008 and only 2.5 percent in the last year, the report said. Relative to other items in the household budget, apartment rent is lagging behind inflation, which was 5.2 percent in June 2008. But what the slow rate of increase for rents actually means is that times are bad, said Caroline Latham, chief executive officer of RealFacts. "Basically the rental market is reflecting the economy," Latham said. "For many people, there's a misperception that as home foreclosures go up, there is increased demand for rentals and a rise in apartment costs. We don't see that correlation. It's all the housing market and when there's a weak economy, all of it suffers." RealFacts' analysis on some areas with high foreclosure rates found that rents were barely affected from the first quarter of this year to the second. In Stockton, California, for example, which has the highest foreclosure rate in the nation, rents have risen 0.7 percent (and the occupancy rate rose by 1.0 percent). In Riverside / San Bernardino counties, rents have actually declined slightly, by 0.3 percent (with the occupancy rate also declining by 0.3 percent), and rents in Las Vegas have remained unchanged (though occupancy has dropped by 0.9 percent).
Apartment Renters In No Hurry To Buy A Home Source: National Apartment Association
A new survey commissioned by the National Apartment Association finds 67 percent of current apartment renters will not make the move to buy their own home in the next year. The survey also found consumer confidence in the existing state of the U.S. housing market at a low point, with 80 percent of U.S. adults believing the situation will not improve over the next six months. Meanwhile, apartment occupancy is at an all-time high. “The country is deep into the discussion of the economic fallout of sub-prime mortgage lending. However, little attention has been paid to how the crisis is impacting people’s choices to stay in rental homes or apartments and wait out the storm,” said National Apartment Association (NAA) President Douglas Culkin. “The results of this survey reflect what our membership is experiencing across the country. Renters are not eager to take a chance on homeownership this year. If the economy improves, that trend may abate, but, for now, people are generally staying put.” The independent survey of more than 2,000 U.S. adults, conducted by leading market research firm Harris Interactive®, also finds an increase from last year’s survey with respect to the financial benefits of renting vs. owning,
48 percent in 2008 compared to 43 percent in 2007. NAA also reports that occupancy rates in rental housing have seen the largest annual increase (1.5M units) in history dating back to 1965, based on the Commerce Department Data Series. This increase has produced an all-time record high of the number of rental housing units in the country, now totaling 34.7 million units or about 83 million persons.
INVESTORUPDATE “Just last week, the Commerce Department cited that the main reason for an upswing in U.S. homebuilding is the construction of rental properties -- not single-family homes -- further supporting our findings of what the average U.S. adult is experiencing,” added Culkin. Among the key findings in the National Apartment Association survey: • Consumer confidence is low and it’s going to get worse before it gets better: 80 percent of U.S. adults believe that the current housing market situation will worsen or stay the same over the next six months. • Renters not eager to take a chance on home ownership anytime soon: 69 percent of renters said they plan to stay renters for up to five more years. • Renters are staying put: 50 percent of renters plan to continue renting their current residence for the next year and 46 percent of non-homeowners have no plans to buy a residence within the next year. • Homeowners shy of making any quick changes: 72 percent of homeowners plan to remain in their current home over the next year. • Renting seen as favorable to owning: 71 percent of adults feel that there are advantages to renting vs. owning in the current real estate market, 48 percent citing financial reasons (e.g. not being impacted by unpredictable housing values and mortgage rates) over more traditional reasons such as amenities packages (18 percent) or the flexibility of a short-term lease (32 percent). • Economic fallout from the mortgage crisis beginning to affect even non-homeowners: 39 percent of adults feel that the financial security of renters and homeowners is equally affected by the current stage of the housing market, illustrating that an economic impact of the mortgage crisis is also being felt by non-homeowners. “With Congress in the process of deliberating over the next steps to take to fix this problem - our government has an opportunity to rethink our current ‘homeownership at any cost’ housing policy -- and should act deliberately and cautiously to avoid unintended consequences -- primarily a full blown credit crisis,” NAA’s Culkin said.
ACCESSLASVEGAS October | November 2008
Las Vegas Metro Occupancy Trends September 2007 through August 2008 94% 93% 92%
91.01% t us Au g
il Ap r
ar ch M
ua r Fe br
be r ov em N
Ja nu a
Source: CB Richard Ellis (100,321 Apartment Units Surveyed in August 2008)
Las Vegas Snap Shot KEY INDICATORS
1Q 2008 RESULTS
Source: Red Capital Group
YEAR OVER YEAR CHANGE REMAINDER OF 2008 OUTLOOK
Access Investment Offerings ASKING PRICE
PER UNIT PRICE
Broadstone Montecito Apartments (336)
The Bentley Group / 702.855.0440
BROKER / CONTACT INFORMATION
Augusta Apartments (272)
The Bentley Group / 702.855.0440
Brittnae Pines Apartments (208)
Keith Vannattan / 702.376.4305
Winsome West Apartments (228)
Realty Executives / 702.743.8991
Tiffany Place Apartments (182)
The Bentley Group / 702.855.0440
Sunset Hills Luxury Apartments (120)
Marcus & Millichap / 702.215.7128
Rainwalk Apartments (200)
The Sauter Companies / 702.383.3383
Access Recent Transactions COMMUNITY (UNITS)
PER UNIT PRICE
Century Vilage (258)
August 22, 2008
Snug Harbor (64)
August 15, 2008
July 23, 2008
Sentinel Real Estate
Canyon Pointe (670)
July 2, 2008
Artisan Real Estate
Siegel Suites Swenson (328)
July 1, 2008
The Siegel Group
The Pyramid (304)
June 12, 2008
Phillips P. Yee
Casa Suites (137)
June 10, 2008
The Siegel Group
For additional information and / or broker information on Access Investment Offerings and / or Access Recent Transactions contact Bret Holmes at 702.699.9261.
ACCESSLASVEGAS October | November 2008
City Of Henderson Approves Controversial Apartment Project For Casino Workers Development To Be Built With Fewer Units Than Initially Planned But High Profile Multi-Family Builder May Start A New Trend In Las Vegas Source: Jeremy Twitchell, Las Vegas Sun
A controversial apartment complex proposed south of Fiesta Henderson will be built, but with fewer units than the developers wanted. The Henderson City Council unanimously voted on Tuesday to approve 252 units for the complex. Land owner Station Casinos and developer Trammell Crow Co. had requested 380 apartments on 10.5 vacant acres south of the Fiesta Henderson, at Lake Mead Parkway and U.S. 95, to provide housing for Station employees.
The City Council added the conditions that the complex be gated and that developers work out a workforce housing guarantee approved by Henderson City Attorney Shauna Hughes. The council’s unanimous approval elicited cheers from 42 Station Casinos employees in the audience who favored the project and accepting nods from some who had opposed it. Some residents and City Council members made the case that an apartment complex is probably the best project that could be hoped for on the site, which is bordered by a casino, a freeway, a railroad line and a residential neighborhood. Station Casino already had the right to expand the Fiesta Henderson into the lot because of its Tourist Commercial zoning, council members said.
Residents of neighborhoods south and east of the parcel had opposed the proposal, arguing that it was too dense and that it would increase traffic and crime in the area while decreasing property values. The Henderson Planning Commission, which reviewed the project last month, had granted a conditional use permit to allow an apartment complex on the site and recommended it be approved for 380 units on the condition that Station and Trammell Crow guaranteed the project would be workforce housing and that it give Station employees the first right to live there. The Planning Commission has the final say on use permits, so the question for the council was not whether apartments would be built, but how many. “Our hands are somewhat tied on this,” Councilman Andy Hafen said. Attorneys for Station and Trammell Crow argued that the Planning Commission’s decision gave them the right to build 380 units as long as they complied with the workforce housing condition, but Mayor James B. Gibson disagreed. “It’s going to be impossible to convince me that anything more than the lower density should be granted,” he said. Gibson then asked attorneys to talk with Station and Trammell Crow, who had representatives present, and ask them to accept the city’s standard apartment zoning of 24 units per acre to avoid having the matter go to court. After talking it over with representatives of the two companies, attorney Tom Amick consented. “(Station and Trammell Crow) believe in this project,” Amick said. “They believe in the value of this project and in the value it will bring to Station employees. They don’t want it to go away simply because we can’t get the 38 units (per acre).”
"I think that the expansion of the casino back into that neighborhood would be far more detrimental to the neighborhood than multi-family housing," Councilman Jack Clark said. Ten residents from the surrounding neighborhoods spoke against the proposal, and when the last asked for a show of hands from the audience from those who opposed it, a few dozen hands went up. “We have a master-planned community,” resident Gene Emelko said. “To override that plan for the economic benefit of a land owner is simply not right. Constructing high-density apartments is not consistent with the character of the neighborhood.” When attorneys asked for those who were in favor of the project to raise their hands, the number was close to the number of those who opposed it, but neighbors pointed out that all but a small handful of those who favored it didn’t live in the neighborhood. One Fiesta Henderson employee who identified himself as a UNLV student said neighbors in the area would be happy to live next to the kind of people who work at the casino, and said such a project is long overdue. “We look for affordable housing for teachers, for firefighters and police, but what about the ones who built this city -- the hospitality industry?” he said. “We’re being priced out this valley, but we’re the backbone of its economy.”
Las Vegas Rolls Snake Eyes Worst Economic Slump In Two Decades Hits Sin City With A Vengeance Source: National Real Estate Investor
Like a craps player who tosses a winner with every roll of the dice, the Las Vegas economy had been on a long hot streak. But the gaming capital now faces one of its worst economic slumps in two decades. For a city built on neon and the mantra of good times, the slowdown is a rude awakening.
Already saddled with one of the highest residential foreclosure rates in the nation -- one foreclosure filing for every 99 households, more than five times the national average, according to research firm RealtyTrac -- the city's malaise has spread to commercial development. A number of office, condo and hotel projects have reverted to lenders or stalled in mid-construction. “This is the worst I have seen it here in 20 years,” says John Restrepo, an economist and owner of Las Vegas based Restrepo Consulting, which tracks the commercial real estate market. “People are in shock because they are used to the economy bouncing right back, but I don't think we are going to have that quick of a recovery.” One illustration of the problem: On the famed Las Vegas Strip, the $3 billion Cosmopolitan casino resort and high-rise development lies half-built next to the elegant Bellagio hotel. Deutsche Bank, the project's lender, started foreclosure proceedings in January after developer Ian Bruce Eichner failed to secure new financing. The bank has not
even come close to finding a suitable buyer. The Center for Business and Economic Research at the University of Nevada at Las Vegas (UNLV) says the region is officially in recession -- its first since the 1980s. Amid the housing downturn, the local economy stalled this year after fewer tourists arrived to gamble. “We have had such a long period of economic expansion and growth, I don't think anybody thought we could have a recession like this,” says Keith Schwer, director of the UNLV business center. “With housing, we know it was a case where we overbuilt, over lent and over borrowed. I think it was the same with commercial development.” This year, Las Vegas anticipates 37.5 million visitors, 4% fewer than last year, and gaming revenue is expected to fall 3.6%, says Schwer. The culprit: high oil prices. Flying or driving to Nevada costs more and visitors have less to spend. Schwer predicts a recovery won't start until the second half of 2009 when several new resorts open along the Strip, creating tens of thousands of new jobs. That's encouraging for developers, who recorded the region's highest second quarter retail and office vacancy rates in 20 years. The metro Las Vegas office vacancy for all classes of space climbed steeply to 16.7% at the end of June compared with 10.9% two years earlier, reports Las Vegas-based research firm Applied Analysis. During the same period, the retail vacancy rate doubled to 6%, adds Applied Analysis. The value of commercial building permits issued in the second quarter fell to $131 million, a 66% drop from the second-quarter 2007, notes the Associated General Contractors of Las Vegas. Dealing With Job Losses The professional, business and financial services sector lost 8,000 jobs over the year ending in June. Companies are more cautious about relocating or expanding, explains Brian Gordon, a principal with Applied Analysis. Although about 4,600 people moved to Las Vegas monthly during May, that's down from more than 6,000 arrivals in April. Developers had counted on rising demand from architects, accountants and other professionals to fill their space.
Brad Schnepf, president of Marnell Properties, an office and commercial developer, agrees that recovery could take time. Marnell Properties owns a five-story office building near McCarran International Airport that has been only 60% leased since it opened in 2007, Schnepf says his firm isn't planning any new projects in the near term. “You would have to be nuts if you were not concerned,” says Schnepf. “We are having a correction in the commercial market, and I think that is going to bring us back to a more healthy growth pattern long term.” Land prices will then stabilize, he says. “We were appreciating at double digits on an annual basis, and you wondered how far that could go.” While housing lagged -- only 8,700 new home permits were issued for the full year ending in May, the fewest annually since the late 1980’s -- the related home furnishings industry also suffered and several furniture outlets closed. The state's jobless rate reached 6.4% in June compared with the national rate of 5.5% -- highest in Nevada since February 1994. Meanwhile, homeowners have lost alarming amounts of equity. Median home prices dropped more than 20% in the past year. The median price of an existing home declined from $288,000 in February to $215,000 in June. Forecast For Recovery The 30,000 hotel rooms planned along the Strip by late 2010 -- in addition to the existing 136,000 rooms -- may spur a recovery by potentially creating 60,000 jobs and driving population growth. “When you have projects that create tens of thousands of jobs, they are going to have to draw workers from other destinations,” Gordon explains. But not everyone is convinced that will happen. Airlines are so worried that they have cut back on flights to Las Vegas and asked the Clark County Commission to reconsider the need for a terminal under construction and a planned $114 million Heliport project. Recovery could take two years and development won't be rapid, but the city's economy will improve, Restrepo asserts. “It is not going to turn into Detroit.”
ACCESSLASVEGAS October | November 2008
Got Bugs??? Pest Control, A Property Priority For Your Residents Measuring Your Property Management Team: Are They Working for You or Are You Working for Them? Warmer weather makes outdoor activities possible but it also tends to increase pest pressure, too. Providing for pest management service is a fact of life for most property managers. In multi-unit housing settings, a variety of micro-environments, such as kitchens, bathrooms and garbage collection areas, elevate the potential for pest infestations. While the occasional pest problem is common, a serious infestation can lead to lost reputation and, by extension, lost revenue. Besides being a nuisance, some pests cause serious health effects. For example, scientific studies have shown a strong correlation between cockroach populations and increased symptoms of asthma, especially in children. Fire ants are aggressive and inflict painful stings. Flies are known to spread disease-causing germs associated with food such as salmonella and dysentery. Termites can cause extensive property damage. Last, but certainly not least, bed bugs are making national headlines. While they do not spread disease, bed bugs can take a physical and mental toll on their victims through sleepless nights, stress and general embarrassment. In some cases, residents have sought legal damages in response to living with an infestation of bed bugs. The good news is there are proactive steps property resident managers can take to help prevent pest problems. Integrated Pest Management Because your residents’ homes are considered sensitive environments, assign a Pest Management Liaison (PML), who can recommend an “Integrated Pest Management” (IPM) approach to your property. IPM relies on a combination of different control techniques that get
results and minimize people’s exposure to pesticides. Cockroach and fly control can be enhanced by resident education regarding the following: • Keeping kitchens and bathrooms clean plus reducing clutter whenever possible. • Storing food in airtight containers. • Placing garbage and recycled products in containers with tight fitting lids. • Outdoor dumpsters should be cleaned regularly with soap and water.
picnic areas. Bed Bugs: Not the sort of pest that can be eliminated easily with an “over the counter” insecticide. Working in conjunction with your PML, a successful bed bug treatment requires: • A thorough inspection. A clean room to work in. Bed linens should be placed in a plastic bag until washed so as not to transfer bed bugs to other areas. Vacuum bags should be discarded immediately. • The treatment of headboards, bed
Bed bug prevention starts with staff education. Your PML can teach your staff to recognize bed bugs and telltale signs of an infestation. As more people become familiar with these pests, property management must also be able to address concerns from residents and answer questions. Options for Control Today, insecticide baits are the formulation of choice for controlling cockroaches, and are also available for ants and filth flies. Baits are effective, require less advance preparation, and can usually be applied discreetly to “out of the way” places. Some are even specially formulated to be more attractive to pests than alternative food sources commonly found in the kitchen. Cockroach Control: Ask your PML for a bait solution that will provide quick knockdown and long-term control. In some cases, these baits exploit cockroach behavior by employing a delayed-action kill, allowing one roach to spread the active ingredient to other members of its colony, which is known as the domino effect. In addition, some cockroach baits also provide a contact kill, which will control cockroaches whether or not they consume the bait. Outdoor Fly Infestations: Ask your PML for a liquid bait that can be sprayed onto dumpsters and / or around outside
frames, baseboards, and all cracks and crevices with a broad-spectrum, pyrethroid insecticide that provides residual control of adults and eggs and is labeled for use in all areas where bed bugs hide. • The inspection and treatment of perimeter walls, wall voids and surrounding units as necessary, as bed bugs tend to migrate to adjacent units. • Follow-up inspections, and treatment if necessary, because bed bugs can live for up to one year without feeding. A Pest Management Liaison should be able to identify different pests and treatment options that best meet your needs. Once you have contracted with a company, establish a schedule for regular service. If possible, ask the company to assign one or two PML’s to your account so that you are dealing with the same individual(s), who can become familiar with your staff and establishment, on a consistent basis. Above all, it is critical to make pest management a priority, provide full disclosure of the infestation to your PML, allow them to access any and all problem areas, and commit yourself and your staff to becoming your PML’s “partner in pest management.” This collaboration with your PML will go a long way toward preventing infestations and addressing problems quickly.
Dress Up Your Models To Close More Leases No matter how hard you try to sell your rentals by treating potential residents with a warm and welcoming manner, if your model units are not appealing, you’re not likely to be successful in closing a lease. Models that give off an outdated feel and don’t send the right message to potential residents, can ensure deals that don’t close. Putting a few modernized decorating techniques into play, however, can turn the tides in your favor and ensure that potential residents turn into renters. Here are some decorating styles to help you dress up your models to appeal to potential residents: • Create Lifestyle. These are meant to appeal to potential residents with a distinct lifestyle. Every detail should make an apartment look lived in and give off the feel of the theme. A college theme model, for example, might include a room with a loaded bookcase, a smartly located study desk and a “To Do” list on the fridge that includes an exam schedule. A big TV with some DVD’s and a comfortable couch in the living room help complete the look.
• Entertainment Center. Appeal to potential residents’ desire to have their home be the center of their entertainment lifestyle while also entertaining guests on tours. Set up a secondary bedroom as a game room complete with a video game station, pinball or more. Stock the refrigerator with complex personalized snacks and drinks. That extra touch can go a long way in making a lasting impression on a potential resident. • Feng Shui. There’s something to be said for this decorating style. It makes apartment homes feel very inviting. A model designed using these principles will really stand out as special. Decorate with tables that have rounded edges, use mirrors and don’t hang things too high. Incorporate plants and aquariums into the design, too, and keep colors warm or neutral, not bright and blinding.
Renters Will Spend Close To $1,500 On Moving Costs In Current Economy Know your potential residents habits...let’s access the Resident Facts: More than 50 percent of renters said they have either already spent, or anticipate spending more on their move this year compared to years past, according to a national survey by Apartments.com. Soaring energy costs is a major reason, according to the survey. Fifty-four percent of renters cited professional movers and truck rentals as their two biggest expenses. Furniture followed with 17 percent and bedding, bath and home goods account for 9 percent.
• Overload The Senses. Pick a signature scent, color and sound for the rental community. Make sure the offices and the models have this theme carried through. This gives a feeling of continuity and can really help “brand” your product and will work no matter the decorating theme chosen. No matter the theme you choose for your models, be certain they are clean and inviting when you’re showing potential residents around. Little touches, such as master light switches that illuminate an entire apartment home with a single flip or new doorknobs can go a long way in making a model look fantastic. Give it a lived in but “neat” look. Any little touches that make models entice those on a tour to envision themselves “living” there are ideal. Dressing up models can also dress up your occupancy, so dress to impress...
According to the American Moving and Storage Association (AMSA), overall price increases reflected in professional moving costs can be impacted by a variety of factors including rising fuel prices, higher equipment costs and a shortage of qualified truck drivers, further increasing labor costs. However, they are primarily determined by distance and weight. In light of the current economic conditions in the U.S., more and more Americans are open to relocating for
employment opportunities and moving closer to urban centers and public transportation to reduce commuting time and costs. And with 90 percent of Apartments.com survey respondents packing up to move this year, renters across the country are sure to feel the premium price tag associated with their recent or upcoming move. The majority of survey respondents (39 percent) said they will spend between $501 and $1,500 on moving expenses while 16 percent top $2,500.
ACCESSLASVEGAS October | November 2008
Slow Economy, No Problem Advanced Management Group Celebrates Two Year Anniversary With Growth Rough economic conditions have not slowed Advanced Management Group, a real estate management company providing advanced property management, financial and accounting, and asset management services for multi-family properties. With the recent management acquisition of Joshua Hills, Advanced Management Group has expanded their portfolio to 10 properties and over 1,500 multi-family units. Adding to the growth of Advanced Management Group is a separate division of single family home management. The division has exploded to over 90 homes the past several months. The lack of of quality management companies for this segment of the market has helped diversify Advanced Management Group’s portfolio and increase company profits. The single family division has grown over 60% since March. Advanced Management Group celebrates two years in business this November. President Bret Holmes is proud of the growth his company has experienced but stated “maintaining high occupancies in a marketplace full of concessions” has been the biggest challenge. “Creating realistic occupancy goals, staying focused on our competing communities concessions and holding all of our managers accountable have been a staple of our success”, says Holmes. Advanced Management Group can be reached at firstname.lastname@example.org or 702.699.9261. Advanced Management Group delivers “A Better Design for Your Bottom Line”, call them and see for yourself. For information, article consideration and featured columns ACCESSLASVEGAS can be contacted at 702.501.8545. The editor of this newsletter is Michael Fazio.
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