Cushman & Wakefield Las Vegas Closes Over $250 Million in
Multifamily Housing Transactions in One Year
A trio of deals with an average value of $280k per unit raises the market price ceiling as transaction volume continues to rise in the Las Vegas Valley.
LAS VEGAS – January 21, 2020 – Las Vegas is leading the charge in the continued growth in the multifamily housing sector and shows no signs of slowing down. While property developers are constantly searching for ways to meet the needs and tastes of an ever-changing population base, the multifamily housing sector continues to attract millennials and baby boomers alike, in and out of Las Vegas.
Just ask Taylor Sims, Director, Multifamily Investments at Cushman & Wakefield Las Vegas. In one year, he’s closed over $250M worth of multifamily transactions, and in the past 24 months he has brokered three transactions over $275k per unit. This trio of deals had an average price per unit of $280k and are a sign of the current trend in the market of larger deals and increased transaction volume in the Valley.
The record- breaking transactions include the following:
- South Beach Resort Apartments, 8920 W Russell Rd, Las Vegas, NV 89148
- Echelon at Centennial Hills, 9051 Echelon Point Dr, Las Vegas, NV 89149
- EVO Apartments, 8760 West Patrick Lane, Las Vegas, NV 89148
“At the tail end of 2018, our Cushman & Wakefield Las Vegas team brokered a historic multifamily sale at $281,818 per unit,” said Sims. “We’ve continued our success in the core market space in 2019, posting another record-breaking sale at $289,516 per unit, and a third at $277,925 per unit. Cushman & Wakefield’s Las Vegas team has now brokered three of the most premiere multifamily transactions in Vegas history, and we’re proud of that. I don’t believe any other team has surpassed the $270k mark before and we’ve managed to do it three times,” Cushman & Wakefield also brokered multiple $100M+ multifamily transactions in 2019 and has over $140M scheduled to close in January 2020.
This string of sales comes as the Las Vegas region continues to add new residents and jobs, spurring increased demand for housing. In May of 2019, the population of Clark County grew over 2% to a total of 2.2M people. This population growth fueled the addition of over 21,000 new jobs through the 12 months ending June 2019. Thanks to this upward trajectory, Las Vegas now ranks among the nation’s leading market in rent growth for the multifamily sector.
The renter by choice demographic is expanding very quickly in Las Vegas, and in turn, so is the luxury rental development pool. Some 50,000 people have moved into Las Vegas in the past 12 months. Many of them are from Southern California, leaving after getting their fair share of what’s known as “SALT”—state, area and local taxes. These new arrivals are coming to Vegas with expectations for a lower cost of living, including new and affordable housing.
In the last several years, Nevada has grown more rapidly than any other state in the country in terms of employment. Companies added 33,000 new positions in the Las Vegas Valley in 2019. This is a 3.2% gain that exceeds the previous five-year average. Most of these jobs were in professional and business services, construction, leisure, and hospitality.
Additionally, baby boomers continue to retire in record numbers, another key factor driving the influx of renter by choice residents. Many have spent years looking forward to a carefree retirement lifestyle without the burden of home repairs and maintenance. Meanwhile, millennials also desire living situations that provide social engagement, high-end features and affordability.
“When it comes to choosing housing, millennials and baby boomers have more in common than you may think,” said Sims. “Increasingly, both groups seek luxury multifamily apartment rentals well located within cities as their first choice for housing—Las Vegas is a natural fit for this. However, given the rising cost in land, soft costs, and other development costs, the units must be smaller nowadays— everything is more expensive development-wise.”
While the units may be smaller, they are no less luxurious. Today’s renters include items like a pool, fitness center and clubroom. But today’s millennials and boomers expect amenities to reach an even higher level. Sample wish lists could include a saltwater pool with an elegant shaded lounge; sleek fitness centers stocked with state-of-the -art equipment; luxury equipped clubrooms with breathtaking views and HDTV everywhere– and that’s just the start.
As the population has grown and the renter by choice demographic expanded, the Las Vegas multifamily market experienced nation-leading growth. In each of the past three years, across A, B, and C class multifamily, Las Vegas has ranked in the top three primary markets for yearly multifamily rent. Through November 2019, Las Vegas posted a year-over-year rent growth figure of over 6%, while the national average reached only 3.10%. There’s a clear path to continued growth here with plenty of room for rents to lift even higher. The average market rent in November 2019 was $1,138 in Las Vegas and $1,473 nationally, making Las Vegas nearly 23% cheaper than the national average. Multifamily investors nation–wide have taken notice of this trend and the investment market has caught fire in response.
While the influx of capital seeking deals in Las Vegas hasn’t resulted in a more active market space (84 assets traded in 2019 versus 85 in 2018), it has made for a more expensive one. In Clark County’s 50+ unit multifamily market space, 2019 transaction volume rose to $3,596,261,725. During 2018, the transaction volume was only $2,565,448,151. More eye-opening, the average pricing through the same time frame in 2019 is $160,361.26 per unit ($176.10 per square foot), up from $122,836.88 per unit ($141.94 per square foot) in 2018.
“The Las Vegas submarket has shown both growth and positive rental absorption at this late stage in the cycle,” said Susan Tjarksen, Managing Director, Cushman & Wakefield. “It’s a true outperformer as compared to other markets across the country.”
In conclusion, Sims states: “We expect this trend to continue into 2020 and the foreseeable future. In the 1990s’ and 2000s, we saw top deals regularly breaking the $200k per unit mark, so we know the rest of the market will follow suit. Most other major markets have been here for a long time, so it’s great that Las Vegas has caught up. We have other deals in the pipeline for 2020 that will break into $300k per unit territory, and it’ll only be a matter of time until our average market rent catches up with the national average and we break the $400k per unit mark.”
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
