Q2 2022 Multifamily Real Estate Report: Las Vegas, NV
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What happens in Vegas, stays in Vegas…and this includes the Las Vegas multifamily real estate market.
Even though multifamily vacancies in Southern Nevada increased to 4.2% in the second quarter of 2022, this didn’t deter rising rental rates as more businesses relocated to the Vegas area in Q2 2022, stoking demand for local housing.
The average posted rent for a multifamily unit increased to $1,504 per unit, which is equal to a year-over-year increase over 20%.
Sales of multifamily real estate, while not meeting 2021 numbers, were still brisk.
The biggest deals — over $100 million each — were recorded in the East Las Vegas and Summerlin/The Lakes areas of Las Vegas.
General Area Overview & Demographics
Las Vegas took its first steps to its current status as a legendary resort city in 1931, when the state of Nevada legalized gambling and the six-week divorce.
During the 1930s to 1970, over 325,000 marriages came to an end in Reno, with soon-to-be singles describing their visit as “taking the Reno cure” or “being Reno-vated”.
The city’s population has literally exploded during the past 30 years, with resident numbers nearly doubling between 1990 and 2000.
Today, Las Vegas’ hospitality, restaurant and industrial sectors continue to fuel demand for lower-cost multifamily units priced below the area’s average.
Summary of Las Vegas Multifamily Real Estate Performance in Q2 2022
During the spring of 2022, multifamily properties situated within the popular Las Vegas Strip and Central/West Las Vegas enjoyed low vacancy rates from 2.1% to 2.7%.
Shoppers returned to Las Vegas in droves earlier on in the year, driving up retail demand as well as stoking demand for more housing and dining experiences.
What are multifamily rents like in Las Vegas?
The average monthly rent for a one-bedroom apartment in Southern Nevada rose to $1,464 per unit this quarter.
This represented a 23.8% increase from one year ago, placing Las Vegas in 11th place within the Top 12 Multifamily rent growth markets.
- The priciest submarket was Summerlin/The Lakes, coming in at around $1,803/unit ($1.75 per sq. ft.).
- Summerlin was followed by Southwest at $1,756/unit ($1.72 per sq. ft.) and Henderson at $1,735/unit ($1.70 per sq. ft.).
- The largest annual rent increases were spotted in West Las Vegas, at 25.7%.
- This increase was closely followed by University/The Strip at 24.4%, and 22.2% in the East Las Vegas and Sunrise Manor/Northeast submarkets.
Investors have taken notice of Las Vegas’ continued growth, purchasing larger multifamily buildings as the hospitality and industrial sectors keep demand high.
Purchase & Leasing Activity
A total of 4,405 units of multifamily real estate (buildings with a minimum of 100 units) sold during 2Q 2022.
- Total sales volume added up to $1.03 billion, which added up to lower volume than the previous quarter of 2022.
- The average per-unit sales price was $234,694, which added up to an annual increase of 14.3%.
Several sales of larger apartment complexes were picked up by the local press during 2Q 2022.
Notable Multifamily Real Estate Deals in Vegas in Q2 2022
Among the four purchases of multifamily real estate finalized recently, two were especially notable, with the largest within the popular Summerlin/The Lakes area.
- The 404-unit Palms at Peccole Beach sold for $148.3 million to Kennedy Wilson, as part of a portfolio of three multifamily communities totaling 1,110 apartments.
- The property offers tenants a variety of one to three-bedroom apartments.
- Rental rates for one-bedroom units begin at around $1,300.
A Henderson apartment complex on Tulip Falls Drive, The Verona Apartments, sold for over $103 million to MG Properties, an investor that has already purchased five other multifamily properties within Las Vegas.
- The property includes 275 one to three-bedroom apartments.
- Prospective tenants have several floor plan options to consider.
- Amenities include an updated fitness center, plank flooring, and a resort-style pool.
Even with these larger properties in place, Las Vegas expects its population to continue to grow in the years ahead. Developers are already working on their housing.
New Multifamily Real Estate Development Activity in Vegas in Q2 2022
Since Las Vegas is expecting around 240,000 new residents to arrive during the next five years, developers are concentrating on two areas for building new multifamily housing.
- Completions of new multifamily real estate, each with an average of 300 units, are concentrated in the Southwest Las Vegas and Henderson submarkets.
- Both of these areas have low rental availability and some of the highest rents in the metro area.
In conclusion, real estate investors have some truly unique opportunities waiting for them in the Entertainment Capital of the World.
Market Forecast for Vegas’s Multifamily Real Estate Market
During the Mortgage Bankers’ Association (MBA) Commercial/Multifamily Finance Convention held in February 2022, members stated that multifamily lending figures are expected to rise to $493 billion by the end of 2022.
These numbers help to support the collection of new construction slated for completion by the end of 2022.
Many of these construction projects will feature over 300 units.
So what can Las Vegas’ multifamily real estate investors expect for the rest of 2022 and beyond?
Takeaways for Multifamily Real Estate Investors
2022 began with a vacancy rate below 3%, and is near a five-year low. The continued growth of the Las Vegas population, especially workers seeking jobs in hospitality, casinos, event venues and construction, is stoking demand.
Demand for apartments priced at or below the current metro average will be in especially high demand.
While developers plan to complete new rental properties in the Southwest Las Vegas and Henderson submarkets, the robust migration into the area suggests that these projects will only serve as a short-term solution.
Methodology
All figures presented in this article are based on MyEListing.com’s commercial real estate listing data in corroboration with other freely available data and information covering the commercial real estate industry.
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