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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