Why Las Vegas Multifamily Is On a Roll

Steve Nostra

While the pandemic hit the Las Vegas economy hard, the multi-family market has remained strong through 2021. High immigration means that the demand for apartment buildings has increased and occupancy is high across the city. Rent prices have risen, vacancies are at a record low of only 2 percent. The multi-family market is strong and developing positively, with further growth forecast for the rest of the year.

The current Las Vegas average cap rate is between 4.25 percent and 4.62 percent, according to Yardi Matrix data, and average rents have climbed to $ 1,662, well above the first quarter average of $ 1,198 – an increase of 22.7 percent compared to the previous year. Las Vegas rental growth is forecast to be one of the highest in the country for 2021. According to Zillow estimates, if we were to continue rental growth before the pandemic, it would be around $ 1,452 per month.

Real estate is being added all the time to meet the demand of our rapidly growing population. As of March, Yardi Matrix is ​​showing 6,410 units under development in Las Vegas and developers are actively working on new proposed properties to complement the growing market. With these numbers, the Las Vegas multi-family market is robust and continues to promise great investment opportunities. Some of these projects include:

• Decatur Commons, 480 units (expected August 2022)
• Elysian at Centennial Hills, 306 units (estimated January 2022)
• Elysian at Tivoli, 359 units (estimated September 2021)
• Auric in Symphony Park, 324 units (expected November 2021)
• Parc Haven, 290 units (expected October 2021)
• UnCommons, 850 units (expected early 2022)

Of the 98 markets evaluated by Yardi Matrix, Las Vegas was # 1 in employment growth and # 7 in rental growth. We have also seen an increase in tenants choosing to rent for the lifestyle as opposed to rent out of necessity, with lifestyle tenants increasingly outperforming emergency tenants.

Last year, Las Vegas had sales of $ 2.17 billion, ranking 16th out of the 98 national markets surveyed by Yardi. Of the 57 apartment buildings sold, the most expensive sale in the past three months was Tuscan Highlands, a 304-unit luxury apartment complex that boasts world-class amenities and a record-breaking $ 378,289 per unit price.

With thousands of jobs restored after the pandemic restrictions were eased and Nevada reopened 100 percent for the first time in over a year, the labor market is currently strong and unemployment is below pre-pandemic rates. Additionally, with the opening of new properties such as Resorts World, Circa and the Raiders Stadium, the job market is not only strong but expanding rapidly and fueling continued growth in Las Vegas, creating a perfect environment for sustainable future growth, the Las Vegas help can also be one of the strongest markets in the country in the years to come.

Las Vegas has proven to be a strong, adaptable and resilient market for apartment buildings, delivering value to residents and businesses alike, ensuring a bright future for the city and expansion into exciting new markets.

Steve Nostrat is a director of the Capital Markets Group at Avison Young.