Healthy job growth in office-using, hospitality sectors drives rental demand. Amid rising payrolls in the professional and business services and hospitality sectors, household growth is prompting demand for rentals. Elevated demand has prompted multiyear declines in vacancy to below 5 percent through the first half of 2017. Builders have responded to the sharp drops in vacancy, with completions set to rise to a multiyear high this year as 3,500 rentals are delivered. As a result, the three-year delivery total will top 9,100 units, which has begun to weigh on overall vacancy in the metro. While longer-term demand trends remain positive, a backup in vacancy is likely until supply moves more in line with the local need for housing.
Construction rises to multiyear high; projects proliferate in Southwest Las Vegas and Green Valley. Tight conditions are spurring a focus on multifamily and mixed-use projects, particularly in the southwestern submarkets and neighborhoods. Performance in these locations has begun to bifurcate, with many submarkets remaining tight while others struggle with new supply. The influx of properties at the high end is boosting overall rents as tenants lease at rates above the metro average.
