Commercial Real Estate News / Investing / 2022 Multifamily Market Report: Las Vegas

2022 Multifamily Market Report: Las Vegas

Published: 05-30-22 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Despite the ongoing difficulties in the tourism and hospitality industries associated with the COVID-19 pandemic and related safety initiatives, the multifamily market in Las Vegas, Nevada remains strong.

As more people move to warmer climates and engage in remote work, they want to move to places where they can enjoy attractions like shows and casinos.

Currently, there are 779 multifamily properties in Vegas with more than 50 units. Together, these properties provide 181,604 units to the 22 submarkets located in Las Vegas.

Las Vegas Multifamily Highlights

The Las Vegas multifamily market report shows the potential for a strong post-pandemic market:

Rents continued to improve in Q1 by 0.7%;
Average rents in Las Vegas rose to $1,493 in March 2022;
12.6% job market expansion since 2021;
$850 million in multifamily real estate assets trades in Q1.

The job market expansion in Las Vegas is particularly notable. It is an early sign that the local economy will continue to grow.

The Pacing of Multifamily Rents in Las Vegas

In the United States, rents rose by 11.3% on average in 2021. For a one-bedroom apartment in Clark County:

$791 in 2019;
$937 in 2021.

This makes Las Vegas a relatively affordable option for new residents that want to move to a new city.

Long-Term Changes in Rent

In Las Vegas, rents remain relatively affordable compared to other large cities, considering how much the city has to offer.

While in the short-term rents have increased rapidly, the cost of an apartment is much cheaper in Las Vegas than in New York or San Francisco. This will continue to fuel growth for the Las Vegas market.

Additionally, there is still room to build additional multifamily housing in Las Vegas. With the high population growth rate, there is high demand for new construction.

The city has made great strides in meeting this need and this will continue to fuel growth in the city.

Las Vegas has a thriving economy and is a major gaming center, serving as one of the largest draws in the country. As tourism continues to grow, it will be beneficial to the rental market and economy.

This will lead to strong rental growth and rising property values.

Short-Term Changes in Rent

Over the short term, rents have skyrocketed since 2020. In 2020, the average asking rent was less than $1,200.

In 2022, asking rents were more than $1,500 a month for the same property type. However, smaller apartments in less popular neighborhoods can be found for much less.

The Las Vegas area is still recovering from the COVID-19 pandemic. However, the area seems to be recovering better than other areas of the country.

Multifamily Sales in Las Vegas

There are been several major acquisitions and sales of multifamily properties in Las Vegas over the past year.

Notable Acquisitions So Far

In 2022, a major bank, Sumitomo Mitsui Banking Corporation, made up to $91 million in loans to the Starlight Residential Fund.

Starlight is using the funds to complete the purchase of luxury residential apartments in Las Vegas.

In 2021, The Bascom Group purchased the Sun Chase apartment complex for $40.5 million. The complex has 200 units that are 37-38 years old.

The purchase was made with help from JLL capital as the broker and ACRE Credit as the lender.

Notable Sales So Far

In 2022, 3D Investments sold the Harbor Island Apartments to Laguna Point Acquisitions for $126 million.

The sale was facilitated by Avison Young, a real estate investment firm in Las Vegas.

Sonata, a 312-unit multifamily community, was purchased by Davlyn Investments for $77 million.

Davlyn bought it from RK Properties, who previously bought it from Alliance Residential Co. for $35 million.

Market Forecast for the Rest of 2022

The job market in Las Vegas rose by 12.6%, which is much higher than the 4.7% national rate.

However, unemployment is higher in Las Vegas than in the rest of the state and the nation at 5.3%.

The city has a long way to go before it returns to its pre-pandemic levels of commercial activity.

Despite this, 5,948 multifamily units were under construction in Las Vegas in March 2022.

The city is already seeing a boom in multifamily construction, and this is expected to continue as developers look for ways to accommodate the influx of people.

The construction of new multifamily units is happening across the board, from luxury high-rise apartments to affordable townhomes and student housing.

General Investor Activity: Where is the most money flowing?

Las Vegas still has a huge need for new apartments from both residential and commercial development.

There are plenty of opportunities to serve both markets in Las Vegas, as the market has seen significant growth over the past few years.

Las Vegas has seen strong growth in employment and demand for apartments.

Investors have primarily focused on Las Vegas because it remains an attractive market with rising demand for apartment units.

Takeaways for Multifamily Investors

Due to the Las Vegas increasing need for new residential and commercial property, there will be many opportunities for investors to make a profit in the short term.

Current projections show that the demand for apartments will only continue to increase as more baby boomers and millennials relocate to the city.

These two factors will continue to drive investor interest in Las Vegas.

One of the main reasons why Las Vegas has been attractive to investors is that it has experienced strong demand for multifamily properties.

The city has seen a high rise in new apartment construction, but investors seem to be focusing on purchasing and holding on to real estate.

As the market continues to grow, there will be more opportunities for investors to make a profit in the region.