NAI Vegas’ Sauter Multifamily Group announced the sale of Sonoma Shadows (376 units) and Pine Hills Lodge (376 units) apartment portfolio located at 1750 & 1500 Karen Avenue in Las Vegas for $45,496,000 ($60,500 per unit).
Category – Multifamily – Las Vegas
Meiji Sangyo Co Ltd purchased Waikiki Palms Apartments, a 26-unit apartment property located at 2565 Lynnwood Street in Las Vegas, NV. The asset sold for $1,300,000, according to Todd Manning, regional manager of Marcus & Millichap.
Michael R. LaBar and Michael L. Shaffner, both Vice Presidents of Investments in Marcus & Millichap’s Las Vegas office, had the exclusive listing and represented the seller, a private investor, in the transaction.
Andy Crawford with CommCap Advisors arranged an unusual permanent loan for $5,600,000 at Veterans Village 2, located at 50 N 21st Street, in Las Vegas. This 204 unit multi-family property consisting of 75,828 SF was arranged with a community development lender and involved a non-profit borrower, City of Las Vegas grant money, and significant rehab with donated labor & materials. The property is being used to house US veterans.
The Siegel Group Nevada, Inc., announced the acquisition of the former Somerset Apartments. The sale was a quick off-market transaction. Built in 1961 and situated on 1.24 acres, the two-story complex totals approximately 31,500 square feet and is comprised of a mixture of 40 large one and two bedroom apartment units. The property,which will be renamed Siegel Gardens, has an exterior courtyard, outdoor swimming pool and laundry facility and is centrally located on Kishner Drive contiguous to the parking lot of the Las Vegas Convention Center (LVCC) to the east and adjacent to the former site of the Riviera Hotel that was acquired by the LVCC. Additionally, the complex is just one-half block from the Las Vegas Strip and the multi-billion dollar development site for Resorts World Las Vegas. This is the sole property located on the cul-de-sac of Kishner Drive that is not owned or controlled by the Kishner family. For the near term, the property will continue to be operated as a traditional apartment complex while The Siegel Group investigates alternative redevelopment uses and further expansion opportunities.
Stephen Siegel, President of The Siegel Group stated: “I’m pleased to have added this important and strategically located asset to our growing portfolio. This marks the second location we have recently acquired in this vicinity which we believe will be the center of the largest redevelopment plan to occur in Las Vegas since exiting the downturn.”
Marcus & Millichap announced the sale of Sage Point Apartments, a 128-unit apartment property located at 1400 E Reno Ave., in Las Vegas. Built in 1982, the property is located just minutes from UNLV, McCarran International Airport, and the Las Vegas Strip. The asset sold for $7,000,000, according to Todd R. Manning, sales manager of the firm’s Las Vegas office. Cameron Glinton, a senior associate in Marcus & Millichap’s Las Vegas office, had the exclusive listing to market the property on behalf of the seller DT Las Vegas IV LP. The buyer, Westland Sage Poiint LLC, was also secured by Glinton.
NAI Vegas’ Sauter Multifamily Group announced the sale of the 240 unit Majestic Heights Apartments located at 5325 E. Tropicana Avenue in Las Vegas to Aspen Square Management, Inc. Built in 1990, the 94% occupied property closed for $18,600,000 ($77,500/unit) on a 5.51% CAP. Art Carll and Patrick Sauter represented the seller, Majestic Heights Owner, LLC.
The average rent for Las Vegas apartments will reach the highest level on record as strong employment growth and the robust demographic base encourage renting. This year, the local economy regained all jobs lost during the recession, driven by expansion in the tourism industry. Construction and retail trade employers are padding payrolls, placing downward pressure on metrowide unemployment. Job opportunities and steady wage improvements are bolstering the metro’s demographic profile. Population growth, household formation and net migration are all trending upward, supplying a deep pool of renters to Las Vegas property owners. On the supply side, development is set to be on pace with the five-year average. Builders overwhelmingly pursue the top of the renter pool with much of the new construction focused on Class A, resort-style complexes that have creative amenity packages. The strategy seems to be working; a large portion of the development coming online is highly pre-leased and vacancy rates are falling. Tightening market conditions will enable rents to continue their steady climb, particularly in burgeoning hot spots to the west and southwest.
The apartment market is poised for another solid year as relatively higher yields and a positive economic outlook keep demand elevated for Las Vegas assets. Although historically buyers have heavily outnumbered available listings, the pool of sellers is beginning to widen. Camden Property Trust, a publicly traded multifamily REIT, divested the remainder of its Las Vegas apartment portfolio in April for $630 million. This along with heightened activity from non-institutional players contributed to an upswing in transaction velocity. Relatively inexpensive liquidity has encouraged some investors to rehabilitate their properties to capture higher rents, boosting NOIs and property values. Pricing experienced a double-digit hike this year, pushing the average cost per unit past the pre-recession peak. Average cap rates remain in the mid- 6 percent range and will fall to the 5 percent territory for high-end product.
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The Las Vegas apartment market saw an increase in the average asking rent and a decrease in the vacancy rate this quarter, according to data from the Lied Institute’s Apartment Market Trends report. This was the sixth consecutive quarter where the average asking rent increased. This quarter saw a 1.5% increase in the average asking rent and the average asking rent is now $880.
RAAMCO LV, LLC purchased the 192 unit Alterra Apartments located at 2701 N. Decatur Blvd, in Las Vegas for $17,700,000. Built in 1996, the property was 96% occupied at the time of sale. This all cash transaction featured a 5.51% CAP on in-place income and closed in 40 days. Art Carll and Patrick Sauter with NAI Vegas’ Sauter Multifamily Group represented the seller, 2701 Decatur, LLC.
Multi-family construction volume in Las Vegas is at an all-time high, according to Cushman & Wakefield/Commerce. Each year on average, permits for 5,000 to 6,000 units are granted. Currently, permits for nearly 11,000 units have been granted, indicative of growth and improved market conditions.
Although multi-family construction is flourishing across Las Vegas, the area experiencing the highest level of action is in unincorporated Clark County along a five-mile stretch of 215 west of Las Vegas. Land prices in the past years have averaged $10,000 to $15,000 per unit, which have now increased to levels of $35,000 per unit, or more, in some instances. Some of the larger multi-family developments with approved permits are:
- Union – Nevada West: 338 units, 4450 South Hualapai Way, 89147
- Aspire – Ovation: 271 units, 9110 West Tropicana Avenue, 89147
- Elysian West – Calida Group: 466 units, West Hacienda Avenue & Jerry Tarkanian Way, 89148
- SW – Nevada West: 310 units, 6355 South Durango Drive, 89113
- 2One5 – Nevada West: 368 units, 7960 Rafael Rivera Way, 89113
“The amount of undeveloped land in this area has enticed developer interest. Situated between two high-revenue producing areas, Summerlin and Henderson, with easy access on 215, the area is well-suited for multi-family development,” said Carl Sims, executive director with the Las Vegas Office of Cushman & Wakefield/Commerce. “Last year Las Vegas was one of the leaders in overall construction nationwide, so I am not surprised to see multi-family playing a larger role in that mix.”
Lower than normal vacancy coupled with rental rates increasing 4 – 6 percent yearly is spurring new multi-family development. It is important to note everything is cyclical and this current trend is no different. The recent up-tick in land costs is expected to slow the multi-family construction boom and begin a deceleration in current trends.